Part 1: New Research Explains How Our Workforce Has Changed Forever in Just 4 Months
Part 1: New Research Explains How Our Workforce Has Changed Forever in Just 4 Months
In this webinar you will learn about…
- Financial stability and spending trends pre-COVID, during COVID and now
- Ways HR leaders have adapted to and are continuing to adapt to the new hiring landscape
- Why pay has evolved into one of the key ways every company can create an experience to reach a “new normal” and rebuild their business
We’ve spent the last few months collecting and analyzing data from our partners, users and other market leaders to understand how the past few months have truly impacted the workforce and businesses and what steps every company needs to take to support positive outcomes.
We learned the global pandemic was a wake-up call to millions of American workers as it relates to their finances. Far too many realized the importance of having a real long-term savings plan as they were faced with, either themselves or someone in their household, losing their job or having their hours reduced at work.
Join us to take a look at how COVID-19 has impacted specific industry sectors and the way we support our employees.
This is the first webinar in our 3-part webinar series. Here’s what else you can expect:
Part 2: “How a Pay Experience Will Accelerate Strategic Goals in the New World of Work”
Part 3: “Why Freebirds Created a Pay Experience as a Strategy to Lead Through Crisis”
Chief Innovation & Marketing Officer
VP of Operations – Payments Division
Director of Economic Policy
Bipartisan Policy Center
Natalie Wendl (NW):
Hello again everybody and Happy Tuesday. I’m Natalie from DailyPay’s event team, and I’d like to welcome you to part one of our three part webinar series. Today we’ll be discussing new research on the changing workforce. Before we get started, I’d like to go over a few items so you know how to participate in today’s event. You will have the opportunity to submit text questions to today’s presenters by typing your questions into the questions pane of the control panel. You may send in your questions at any time during the presentation, and we will collect these and address them during the Q&A session at the end of today’s presentation.
We highly encourage this. We have three experts on the line, so this is the time to ask your question. Now, I would like to introduce Jeanniey Walden (JW), DailyPay’s Chief Innovation and Marketing Officer, SA, the Director of Economic Policy at the Bipartisan Policy Center, and Anthony Peculic, VP of Operations, The Payments division at ADP.
Jeanniey Walden (JW):
Thanks so much Natalie and Shai Anthony, thanks so much for joining us today in the first of our three part webinar. I’m the Chief Information and Marketing Officer at DailyPay. At DailyPay, in addition to working with incredible companies like yours, to provide employees access to their earned pay before the traditional pay day, we’ve also been following a lot of data around how employees are using their pay prior to the pandemic and since the pandemic, and partnering with incredible companies like ADP and the Bipartisan Policy Center to create some research and insights to be shared with all of you today, to help you improve the way that you’re working with your employees and running your business.
Before we get started, I think it would be great Shai if you could just introduce yourself and give the audience a little more information about what you and your company do.
Shai Akabas (SA):
Sure. Well, thanks to Jeanniey and DailyPay for having us here today and to all of you for joining us. My name is Shai Akabas, and I direct the Economic Policy Project at the Bipartisan Policy Center, which is an organization in Washington DC that works on policies that bring the two parties together. We work in a whole variety of issues. My focus is as the title suggests economic policy and within that retirement and financial security is a big part of the work that we do on our project. I’m here today wearing two hats though, because out of the Bipartisan Policy Center, we also run what we call the funding our future campaign, which we’re pleased that both DailyPay and ADP are partners of ours in and we have about 45 partners in this campaign.
The campaign was founded a couple years ago, and it’s a coalition of organizations that are all focused on improving retirement security for Americans across the country. We more recently have also been taking a heavier focus on issues of financial security, because obviously in the current moment, people are having trouble just thinking about a month or two from now much less decades from now. That’s really why I’m excited to be here for the conversation today. Thank you again and looking forward to the discussion.
Thanks Shai. Anthony. How about introducing yourself and telling us a little bit about what you and ADP are up to?
Anthony Peculic (AP):
Sure, absolutely. Hi, everyone. Anthony Peculic, again, Vice President of Operations with the wage payments team at ADP. I’m responsible for the day-to-day management of our Wisely business. We grew or we started Wisely a few years ago to really focus on looking at the financial wellness of workers and employees, across the clients and everyone that we support. In the last few years we’ve created multiple Wisely products to really focus on and think about, how do we provide accounts or how do we provide solutions that help employees not only get paid, but also save money and do so and be better at managing their money?
I think partners such as DailyPay, we’ve had a great relationship. Because what we’re trying to do, again is to drive various solutions that we feel and we endorse, that will help the worker and you as an employer, if you will provide solutions that we think are beneficial to your employees, not only again to help them save money, but also to help retain your workforce.
Great, fantastic. Thanks so much for the introductions and let’s talk about why we’re all here today. As Shai mentioned, earlier this year DailyPay joined with Funding Our Future Coalition, an alliance of organizations including our friends like Anthony at ADP, dedicated to making secure retirement possible for all Americans. The alliance, as Shai mentioned, informs the public about the barriers to retirement security, and calls on policymakers to strengthen retirement policies, it’s top priority. It’s a perfect fit for DailyPay and we’re proud to be partners with them.
From day one, DailyPay has been dedicated to the financial wellness of the American worker, by providing them with the opportunity to have full control over their earned income so that they can make decisions on how to pay bills more responsibly, and even start to save. We’re going to talk about that today. Nat, if you go to the next slide, I’ll share the agenda. We really wanted to focus with all of you today on the ways that HR leaders have adapted to and are continuing to adapt to the new hiring landscape.
Everything is changing, maintaining employees, hiring new staff, filling the gaps when your existing staff may have found other jobs, potentially been furloughed or even have health risks that are preventing them from coming back to work. We’re also going to share some insights about why pay has evolved into one of the key ways that every company can create an experience, to reach a new normal and really help to get us back on track again. Not just financially from an economic standpoint, but also catering to the needs of the new generations in the workforce.
Then finally, looking at some of the research that we’ve done around financial stability and saving trends, pre-COVID, during COVID and now that we’re in this crazy, somewhat of a second wave, hoping to get to a vaccine and get back to normal very soon. With that said, let’s get started. As I mentioned and as Shai and Anthony mentioned, DailyPay and Funding Our Future conducted a survey of hourly workers to understand exactly how the global pandemic has affected them financially, and how it’s changed their views on saving for the future. Here are some of the questions, here are some of the answers.
I’m going to share some of the headlines and then open it up for Shai and Anthony to chime in as we go. One of the questions that we asked were, how are hourly workers doing financially since COVID began? Our beginning date for this was March 18th. 50% of the people that took the survey said that they were either finding it difficult to get by or are just getting by. I think that’s happening for a couple reasons. One of the reasons is certainly personally, a number of Americans over 87% are already living paycheck to paycheck.
But now that the pandemic started, it’s impacting the entire household, and we at DailyPay are seeing that employees who haven’t needed to use DailyPay to access their pay early have started to need to use it, not because of their individual situation, but because of the situation for their household. Somebody else in the household, a roommate, a spouse, an elderly parent, an adult child has been negatively impacted financially by COVID, and the other working partner is now needing to jump into cover rent, to cover other food expenses, to cover just basic expenses, to help get by.
This is a shocking 50% and even more shocking 40% say they are worse off since the pandemic. That’s really something that makes it a challenge for all of us to recover from even with the stimulus. I don’t know Shai, Anthony, what you have to add to that. I’m sure you’re seeing the same types of feedback.
Yeah, I totally agree. If you look at some of the national data, it’s very consistent with this. The Census Bureau conducts what they call a household pulse survey now to try to get a weekly barometer on how the average American is doing. They’ve now found that more than 50% of households have had some type of disruption to their employment, so as you said, that could be a relative or somebody else living with them. But that means a shock in income and that means that people are likely to be feeling the pinch and worse off than they were previously.
Yeah, from an ADP perspective I think we’ve seen, so we see the accounts, the number of people that are getting unemployment benefits has dramatically spiked on our portfolio. I think that’s always a sign that clearly, people are losing their jobs. They’re relying on government benefits. Also you’re seeing, what happened was spending behavior changed. What you have to realize is that there was a panic at the beginning to get groceries, to buy Lysol, to buy all the things you needed, and the average expenses went up dramatically, because people were buying in bulk, because there was a fear that the food system wouldn’t supply. All of these things impacted, and I think that’s why you saw people using DailyPay probably more so too, because they were advancing themselves so that they can go spend an extra 50, $100 at the grocery store that they normally would not, because they had this budget going during a normal time, so definitely a lot of change.
Yeah, huge change. You’re right about that, early on in the pandemic, it was bulk purchasing. Soon after people were actually taking out money early so that they could shop during non high risk hours, because they were older or they had a previous illness, and they didn’t want to go to the stores at the same time everybody else was at the stores. We saw something funny though, and then we’ll get to the next set of findings that we saw. We saw, around April, we started to see that people were taking out their money for their cell phone.
At first we were like, “You’re stuck at home. Why in the world is there this huge number of people all of a sudden taking money out to pay their cell phone bills?” That’s when it clicked that with everybody homeschooling and working from home, and usually three or four laptops online at any time, a lot of people don’t have unlimited data plans, and so they were running out of data and it became different issues and as you said, definitely different economic needs. A lot of people were then diving into their savings. I think on the next slide, we actually, that was one of the questions that we looked at, which is, let’s see …
How are our hourly workers doing financially since COVID? 57% of them said that they’ve had to dip into their savings. Early on for the bulk purchasing, looking at what’s coming up down the road, moving into just increase in groceries, increased prices at the grocery store, or especially for those essential workers, all the safety gear, and 40% saying they’re having difficulty paying their bills each month. I think that was happening early on, when we started to do our survey, and we’re continuing to see that effect.
Shai, do you think that this is going to lead up before the economy is fully back or do you think this is going to be a continued challenge for all working Americans for years to come?
I think unfortunately, the latter based on what we’re seeing in the macro economy and our research, and the lack of Congress’s motivation to take action frankly right now. My guess is that this is going to be a long recovery, and we’re going to see this type of pain continue. What’s troubling especially is that as you mentioned, Jeanniey, so many households were living paycheck to paycheck or something relatively close to that even before this crisis. We have similar polling and obviously, there’s a lot of different metrics out there that you can use.
But about, we did a poll in the spring that was asking people about their pre-COVID situation, and about 40% of working age respondents, excuse me, said that they would be unable to cover much more than a month of their spending if they lost their job, or had some shock to their income. Fewer than that, the rest of the 60% many fewer can cover more than two or three months. The amount of people that can really withstand a persistent shock to their income is very small. Now what we’ve seen during the COVID crises is more and more people having to dip deeper and deeper into those savings.
Yeah. It’s really interesting. Anthony, on the ADP and Wisely side of the house, have you seen shifts in the way that businesses are having to accommodate this? I know at DailyPay, we’ve heard that companies are having to put in zero interest loans to manage helping their employees through delayed unemployment benefits during a furlough. We’ve seen the use of pay cards is increasing. We’ve heard all these changes. What are you saying?
Yeah, I think it’s a mixed bag for sure. We have several pretty large retailers that have seen credible spikes in terms of their demand and need for pay cards. Because they’re actually growing because people, there was more need for groceries, there’s more need for deliveries and things like that. We’ve definitely seen some clients, where we’re seeing one client order 50% more cards than they have in the past. But then you go on the alternative side, where we support a lot of restaurants and retailers, traditional retailers, where it is the complete opposite in terms of unfortunately, what they’ve had to go through.
We did see a very, and I will say, a very quick termination of employees because we do termination pay solutions unfortunately, because it’s necessary in the market. We saw a huge spike pretty quickly on, but I think that speaks to Shai’s comments, not only just from an individual perspective, how we … most Americans don’t have $400 as the survey once said, to even save up, where I think the issue is also on the company side where a lot of companies did not plan for this. Times were good, everything was rolling, and so I don’t think companies had planned to put aside money in the event that they have to cover payroll for X period of time.
Most of these companies felt they couldn’t even cover a month of payroll if there was no revenue coming in. We’ve definitely seen both sides of the equation, and on the other side, I think if you think about just the trends, so electronic pay has … the demand for it has obviously gone up. The government and the regulators have not helped with laws to help make it better or easier, so we haven’t seen that impact yet to help companies, for example, push more electronic pay in some states where it’s very difficult to do.
Again, very different stories, but again it does speak to the overall American if you will, economic way of how we manage economics, in terms of both from a corporate and from an individual perspective.
Yeah, and I think you bring up a great point there. It’s not just the employees who might not have been financially prepared, but it’s the employers as well not expecting that anything like this could ever happen. I think that’s definitely something to keep in mind. Along that topic, we have our first poll question. We put a few poll questions in here to see for all of you in the audience, how intuitive you are about what’s been happening and how spot on you are. Our first poll question is, what percentage of people do you think in our survey with Funding The Future said they don’t have any type of savings account at all? 25%, 45%, 65% or 75%.
Great, so it looks like the majority of people are suggesting 65%. Let’s find out what the real answer is. I think we’ve got a very informed audience today gentlemen. Did COVID inspire hourly workers to save for the future? 65% of those surveyed said they don’t have any type of savings account. This is shocking. It was shocking to us when we saw the results. I think it’s a shocking reality to come to terms with understanding that a majority of Americans, not that they haven’t saved for retirement, they haven’t saved at all and they truly are living paycheck to paycheck.
But the good news is, if there is any silver lining with this, 51% of those polled said that they are more likely to save for the future. I think we’ve started to see that but first, let’s spend a minute on this 65%. There’s been a lot of debate between whether it is the employees responsibility to save, whether they’re not getting paid enough in their job, whether hero pay or bonus pay, essential worker pay is something that we should mandate continuously, whether the government should come in and offer some relief on an ongoing basis. What do you both think about this 65% stat?
Do you think it’s just a wake up call for everyone? Or do you think it’s indicative of future change that needs to happen for working Americans?
Well, it’s definitely indicative of the need for change. I think one thing to note is that this is of hourly workers, and so it is a little bit different than nationwide. I would expect that the number nationwide might be closer to 50%. But that’s still a remarkable number, in terms of the amount of people that really haven’t been able to accumulate any significant amount of savings for their future. What’s also I think, worth noting, especially in this moment, is that there’s significant racial disparities along those lines too.
It can be even higher percentages of Black and Hispanic households that haven’t been able to put aside money for their future, and so when we think about solutions, I think we need to be specific and thinking about what can really help those communities get out of these challenging financial circumstances. When it comes to rationale or not rationale, but explanation for how we got to this place, I think it’s twofold. One is obviously the broader economic picture and wages play into this quite a bit.
If you’re earning the minimum wage, which in some places in the country is $7.25 cents, it’s really hard to even save a quarter out of how much you’re making each hour, much less any significant amount of money. I think that plays into it, and how we can make sure that we have more equitable outcomes into the future, I think is a key part of it. But even putting that aside, most people, even if they’re on moderate income should have the capacity to put something away, some limited amount of money, and access to a product that can allow you to do that is really important.
What we see is that a lot of people don’t have access to standard banking products, or just don’t have the wherewithal to know what’s right for them and how to go about doing that. The easier that we can make it for people to put aside money for their own future and prevent them from having to go towards sources like payday lending, which a pretty high share of the population unfortunately has to use. We did polling this spring that showed, I think it was 9% of Black families, households, and 8% of Hispanic households have listed payday debt as among their highest household debts.
If you think about sort of the bottom half of the income distribution that you would think would be likely to or potential to go to that form, we’re talking about one in five people in those populations. The more that we can do to help those people put aside money or solutions like those that DailyPay is offering, those are the types of things that can help these people get on their financial, better financial footing so that they can plan for their future.
Yeah. Anthony, any thoughts on this?
Yeah, I mean, I think, unfortunately, I’m not too surprised on these numbers. I’ve been in this space for over a decade. Those of us that if they’re old enough to see multiple recessions, multiple situations, going back … the late 2000s to 9/11, so everything that you see, you kind of go through these waves and regardless, I think the prepaid industry as a whole, for example was developed, because there were no banking solutions for probably, let’s call it 50 million Americans at that point 20 years ago.
I think there’s been a lot of movement in the positive direction because of that, including both from a general purpose reloadable consumer side to payroll sites to really try to drive that. But a lot of our products didn’t have savings accounts or purses or anything of that effect, because the reality was unfortunately, you would have single digit usage of it when you did do it. I remember one program, years back had 2% of people actually put money aside into their savings, even though they were offering 3% interest, because the reality is that they didn’t have it, they couldn’t do it.
Look, I think that there’s a lot at play here. I agree, it does … unfortunately it does skew and impact those of both Black and Hispanic families more so than anybody else in this country. It does speak to, definitely from an income inequality perspective, but it also speaks to access and it speaks to a lot of times that employers unfortunately haven’t had the tools that they do today. I do think, again, to be positive, I do believe there’s been a lot of progress made. I think a lot of us and I think, solutions coming out like DailyPay, Wisely and all these others that are in the market, both competitors and others, I think it’s just good for us and everybody and for Americans.
But I do believe at the end of the day again, we have to try to get people and it is difficult to do because of income, but we do have to try to get people onto it, to understand that times can get tough, and sometimes they come out of nowhere, like they did this time so to speak. How do we get … It is our duty to educate and do a better job of educating. I think companies are focused on of course, you can’t give things away for free, we understand. But we do have to educate and have people use things in a better way, give them solutions so that they can, even if they save $1, 50 cents here and there, it makes a huge difference.
We’ll talk later about some of those things, but I do believe that and unfortunately, I’m not surprised by this whatsoever, unfortunately.
Yeah. We were talking before this webinar started offline about my trip to the outer banks, and we stayed in this very small town that had no stoplights, and there were … It was a little sleepy fishing town, but wouldn’t you know, there was a payday loan company right in the middle of town, and maybe it’s because I work at DailyPay that I noticed it. But I was just surprised that no matter where you go, it seems to be challenging for every American, and there’s alternatives out there that are not positive.
I think, we started to see that a DailyPay and that’s why we started to get more involved with how to save for the future, and build three different ways to save and our products. I know we’ll talk about that later. But let’s continue with the statistics here and share more insights. The question we asked here was, did COVID-19 inspire hourly workers to save for the future? 41 stated that they almost never put money away for the future, and 38% said that keeping cash stored at home was their primary means of savings.
Now we’re talking to an audience of real American employees, who are working hard every day to keep our economy running, with not just the inability to save right now, but 41% of them saying they’ve never put money away. I know in a conversation I had with Rick Adelman last week, I think the number is shockingly low. Only 5% of people are even investing in the stock market right now, especially in this demographic, and it just shines a light on, you’re stuck and with no way to get out.
You need to have some help as you said, Anthony, some education, support from your employers, looking for other resources to be able to change that habit of not saving, and not just keeping cash at home, which I know I’ve also done in the past. My grandparents used to hide nickels in their wall in case the depression came again. I don’t know if we’re that bad yet. But, we’ve got to take some positive action, where there can be continued positive reinforcement for us and some kind of payoff. Shai, do you have thoughts on these stats?
Yeah, I think part of it definitely leads to trust and certainly in communities of color, I think there have been more issues of trust with the financial services community over the years, many of them justified because of prior practices, some of those practices still probably going on today. But I think another part of it speaks to just the automation of this, and the easier the inertia that people have when there are several steps that they have to take to save, which is not something that people like to do anyway, they’d much rather be able to consume it on present needs as we all would as human beings.
When you’re talking about something that takes that type of commitment anyway, every step that we can to make it easier for people so that it’s just as easy as hiding it under the mattress, which you literally just walk in the door and put it there and it’s done. The easier that we can make it or even simpler than that, if it’s automated, what we’ve seen in the retirement space as most people probably know is that, once automatic enrollment really came online, and people were put into these accounts automatically and each paycheck, there was a contribution made to their retirement account, participation rates went way up, savings rates went way up
I think in the short term savings sector, we have not seen quite that type of shift yet. But that’s really the type of ease with which people need to be able to put aside money, in order to start accumulating it and not have that many impediments to that ultimate success.
Yeah, absolutely. I love your comment on an ease of use. I think, Anthony correct me if I’m wrong, but things like the Wisely pay card have made it really easy for people to get their pay, to access their money and you to really have a seamless experience and combined with what we’re doing a DailyPay, it’s a great way to access and also save.
Yeah, we put … One of the first things, when we built our product was we knew we needed a savings component. We’ve been looking at that for a little bit of time. Now that we moved it over to our own platform, we had much more technology at looking at it, but what we wanted to do was, again, make sure it wasn’t a process in which it was very difficult to move money over and we did a few things. I think Shai hit the nail on the head so to speak. One is that, when you didn’t move money over, it sat in a separate purse if you will, and you couldn’t use that for purchases unless you purposely went in and moved it over.
It wasn’t like your overdraft. We did it on spike, but we did it on purpose because again, it was to, what we heard from surveys and talking to our customers, they said, “Please save me from myself, because if I don’t, I’m going to go and spend it. If I see an extra $20, I’m going to go buy the latte at Starbucks for $5 or whatever instead of the $2 coffee.” There is a motivation to do that. The second thing is, we’re building actually more tools. We’re going to be launching a couple of new things soon, where you’ll automate almost like your 401K, you can establish an automated shift to your savings.
We call them savings envelopes and I’ll tell you why we did that as well, is because you will automatically, you could say, “Hey, put $10, every time I get paid automatically into my savings,” and that’ll automatically trigger, you don’t have to do anything to do that. The third thing we’re doing is, we’re looking at a cashback process to help people when they do buy some things, and we’re working with two partners to do this. Then instead of giving them a discount on the purchase, immediately, we’re going to take that discount and we’re going to put it straight into a savings purse, so they could see that they’re accumulating savings throughout the year.
Again, it’s for two reasons. One, it’s to hopefully get them to start building a savings profile. But secondly, it’s also to show them by doing the right thing by not going and using cash and running and using checks and going running to an ATM which a lot of folks are used to and then just going and paying cash, that they pay $1 fee here $2, $5 here, that by doing it electronically, it’s actually more beneficial. Just one quick thing on the envelopes thing, and it’s like your nickel story, but it’s amazing no matter where in the world and all of us, and I’m a son of immigrants.
My parents used to put money in envelopes and they used to write, and my mother used to write this is for this, this is for graduation and whatever. We talk to our customers and they’re still doing that today. That’s their budget system.
“This is my rent money,” because they don’t have enough money to pay rent with one check, they take money out, and then they start compiling it, and then they have these little compartments. Right? That’s why we created the savings envelopes concept because people are familiar with it, so you can create different envelopes, and then put money aside so you can almost manage it as if you had cash under your mattress.
That’s really interesting. I would just add to that. There was a really interesting research study that came out in the last couple years. It was in some African country, I believe, where they experimented with envelopes in particular, and giving people one that was marked for short term savings, and the other one that was marked for long term savings, and did a variety of experiments to see when people tapped into those envelopes. What they found was once people open an envelope, all the money comes out.
Even if you start tapping into a little bit of your retirement savings, because that’s all you have, you’re likely to continue draining that because now you view it as just another source that you can draw from. Whereas if you’re able to build up that other envelope for short term savings, and that’s the place that you draw from, and the other envelope can stay closed, you’re much more likely to have success in that type of savings habit. I just found that really interesting and consistent with the terminology that you’re using.
That was great. That’s great. I know and speaking to a lot of HR leaders, they cringe when someone asks if they can take a 401K loan because they’re required to not just give them access to the loan for the amount they want, maybe it’s small amount of money, a few hundred dollars, they have to disclose how much is in the 401K and what the max is that they can give out of the loan. They see, more often than not, that people take out the max of what they can pay for the loan, and then have challenges trying to repay it back. I love the envelope name. I love the envelope idea. I think that’s great.
In DailyPay, we have three ways to save. We call our first one roundup save, when you take money out. If you’re taking $25 out to pay a bill, we ask if you just want to save one extra dollar and take $26 out and put that into savings, because we found that 89% of people that we had reached out to said that the hardest thing about saving was getting started. It was just trying to start that first good habit, and it sounds like you’re doing that at ADP with everything that you’re focused on as well. I mean, it really does make a difference. It’s like any kind of creating a good habit, but that brings us to our next phone question.
If anything good is coming out of COVID, the next phone question, what percentage of people do you think that, now that have gone through this, said it would be easier to save if there was an easier way to put out aside a portion of their paycheck. The options for choice are 22%, 42%, 62% and 72%. It’s easy to put money under your mattress. It’s easier to throw your change in the change jar.
You just heard from Shai and from Anthony, talking about how to make it seamless, how to make it easier. At DailyPay, we’re trying to make it as easy as if you’re taking money out, trying to set a little bit aside. That is really the first way to get started. On our side, as innovators and vendors, and solution providers, we are looking at ways to make it easier for your employees to start saving. As employers, we challenge all of you to do the same thing, whether it’s through company programs, communications, even incentives to save. A lot of organizations will give incentives with 401K matches, or other ways to save, which I think is really good. As employees, I think it’s all our responsibility to look for fast ways to save.
I know that as weird and silly as it sounds, I use Wikibuy. When I’m buying something, I love seeing that I get a half percent or a 2% rebate, and it adds up. You get excited when you can see even those small dollars add up to something that is material, because it’s a nice surprise to have and it certainly comes in handy. Focus on the 62%. This is one of the final stats that we’re sharing today. We’re going to continue to talk about how Pay is helping to control the positivity in the future. But we do have the full report that we’ve prepared with Funding Our Future. You will receive the full report for attending this webinar. Shai, do you have any more comments about the study that we did? Or Anthony. Then do you have thoughts on how effective this can be if you’re an employer?
Well, I totally agree, Jeanniey, and one other study that I find really interesting that speaks to this point is Shlomo Benartzi, the behavioral economist did a study where they asked people, I think it was whether they’d be able to put aside $150 every month towards savings. Almost nobody said yes, it was like 5%, 7%. Then they asked them the question, “Well, could you put aside $5 a day” which, as most of us know, is the same thing, “towards your future savings?” They got something like a third of people saying yes, and it was the exact same amount of money, but it’s just framed in a different way. If you can make it easy for people to get started in a small fashion, then they’re much more likely to stick with it, and just let the savings happen by itself and then wind up with a more successful outcome in the future.
That’s a fantastic point that was just made, and I want to make sure we’ll think about that because we tend to think about our situation. When we see the 50 cents off sometimes, we’re lucky enough to be like, “Well, who cares? I’ll go pay gas if it’s 20 cents more, because it’s just closer,” right? Or those types of things, but we have to put ourselves in the mindset of a lot of Americans where that makes a fundamental difference. I think it’s overwhelming to ask someone, when they say $100, that’s a lot of money to a lot of people, and that’s why I agree with the approach and what we tried to do.
When you try to tell our leaders that, you have to make them understand, again, this is not for you, this is for someone else. Saving 50 cents, $1, $2, and showing them that it’s accumulating makes a fundamental difference in their lives and it helps them become more loyal to you, and to your product, and not only to you as an employer. Just one stat to share with you on actual usage so you know what ends up happening during recessions is a strange behavior that we see. You would think that … obviously most people are unemployed. They tend to spend less, of course, and they have less money, but we’re actually seeing savings increase on our carts.
That is a sign usually of a recession or another situation where people are panicking. If you go back to the pre COVID, early this year to now, our average per card is up 40%. Right? We call it left balance on card., and what that means is, what’s the leftover money, or what are they holding on their cards? That money is increasing, which tells us that people are starting to realize … are panicking in a way, but also realizing, “You know what? I have to start … stopping spending on things, maybe, that I was able to do, even going to the movies once, or doing whatever.” That’s slowly accumulated, as we said, over time. You’re starting to see the behavior happen, regardless of whatever happens. I think that was a very important thing to share.
Yeah, I think that’s super insightful, because I’ve been in conversations with people where they’ve said, “Well, of course, people aren’t spending as much and they’re saving more, because you can’t do anything.” You can’t go out to the movies. You can’t go to concerts. There’s not entertainment. As soon as the economy reopens, we’re going to start spending again and be irresponsible, but there’s also that segment of people that are spending just everything that they have. They’re not enjoying those luxuries anyway. They’re spending just to survive, so I do think that it’s really a positive sign when we can start to see the group that has been living paycheck to paycheck starting to put some money aside, and starting to at least create some nest egg for the future.
Hopefully, those good opportunities to save will continue as the economy reopens. Certainly, while we can’t enjoy a lot of entertainment and we’re not eating inside restaurants in many states, there is still the offset of the increased price of groceries and the increased prices that are going up because of the supply chain challenges. It’s tough times for everybody. I think that there’s a good balance there that everybody needs to focus on. Great. Well, we have about 15 minutes left. I do know that there are some questions and answers, but we have a few slides left. We wanted, really, now to shift to talk about how pay is contributing to the new normal.
I think, before the pandemic, your pay was your pay. You got paid, you spent it, you moved on. Now, pay has become so central to us just surviving as households and families. As I said before, we saw at DailyPay a huge shift from this is how I’m spending my pay on my things that I need to, this is how I need to take my pay and support an entire household, whether it’s a roommate or a spouse, and we’ve seen a lot of families coming together during the quarantine. You’ve got adult children that aren’t going to school, you’ve got homeschooling, you’ve got older adults and parents, elderly parents in the household that need more medical expenses.
Pay has almost become the center of attention, to the point where it’s something that is creating the ability for you to have an experience at home. At DailyPay, we put together a video pretty early on in the pandemic, using mostly employees, friends and families to talk about how the world has shifted and how people are starting to really appreciate and enjoy things. I think we’re going to play that now, and shared this with a lot of our employers and partners, and asked them to share it with their family to give them some semblance of hope.
Yeah, absolutely. From our perspective, and I’ll be quick just because I know we have limited time, we’ve, again, partnered with DailyPay on many occasions. You’ve seen some logos of some of our clients, and what’s great about this connection between us is because there is a tie in, right? The Wisely product is geared towards a lower income American, usually those under 50,000. Those tend to be the most that need help, right? They need the early access to earned wages, right? I think that that capability and integrating in having DailyPay be a partner in the ADP marketplace, right, for our clients so that they can easily share data with DailyPay and have an easier integration, all of these things come together.
From our perspective, we support DailyPay in the way that what they’re providing, we feel, is absolutely necessary for not only our customers, but for many Americans, because responsible ways to give access to money that has been earned with little risk and at a low price is important, because if we do not do these things, then what will happen is, they will go and seek out higher cost solutions like payday lending, or aggressive payday lending or other means, because there’s just no way around it. We can’t say to people, “Do not do these things.”
In a perfect world, it would be great that they don’t need our solutions, but we’re not in a perfect world. Therefore, we’re very excited about being able to partner, having our accounts receive these funds, and use the funds in a responsible way, right, is what we want to do, and what we want to educate our clients to inform their workers, right, that they should be doing these things in a responsible way. When we do that, I think this is, like I said, just going to make people save more money and do more, and live a better life, if they manage this appropriately.
Absolutely. Thank you for that. Now for the last topic of discussion before we move on to the Q&A. How does this situation pose a challenge or an opportunity for HR executives to help their employees begin a path towards financial wellness? Where does that line live between the employer expectation and the employee expectation around savings? Shai or Anthony, do you have any thoughts about that.
Sorry. I’ll chime in quickly and then turn it over to Anthony for thoughts he has, but what I think we’ve seen in the research is that financial wellness really ties in to overall wellness and mental health, and performance at work. Polling frequently shows that people who are financially stressed, or a quarter of them say that they’re losing sleep over it, an eighth of them are missing some time at work, they’re not performing as well as they could be.
One of our partners at the George Washington Research Center finds that 55% of workers feel anxious when thinking about their personal finances. These are things that weigh on your employees, if you’re an HR executive on a daily basis, and so providing employees with solutions that they may not even realize they need, but once they’re in place, can be really helpful to alleviating that financial stress, can both benefit the individual and ultimately benefit the business, and its performance and its bottom line.
Yeah, I couldn’t agree more. Look, I think there are many things that are out there now, and as I mentioned earlier, there are so many solutions that have come to market, including DailyPays Wiselys of the world, right, that are geared to help you provide solutions to your employees. I want to make something clear. Look, I don’t want employees to feel that it is their responsibility to make people save more. That’s an impossible task. However, I think that to Shai’s points that are being made, we have to think about, when someone goes into work and they’re dealing with financial hardships, or they’re having situations where they’re worried that they’re not going to pay their next bill, that happens, actually, we did a survey, over 60% of the time, right?
People come into work and they’ve had a situation, and they get distracted. They don’t work as effectively. These are all things that impact productivity. I think that there’s a respect and a loyalty given by an employee to companies or organizations that do look at this and feel the need to stress, and to provide benefits that can be out there. My only advice is always make sure, number one, that they’re compliant, of course, but I think on top of it is, look at what an employee has to pay for things. What type of solution, what are people positioning themselves as? Is it just throwing money on something?
No. Look, I mean, financial wellness, or they’re trying to provide a solution that has low fees or has fees that can be avoided? Are there ways to save … Look, I think there’s even things beyond what we do. Student loan repayments. Student loans are a huge burden, right, to us as a whole. Think about our young people. 60% of our account holders are Gen Z or millennials, right? They are faced with student loans. I think whatever solutions that we can think about and you can provide, are only going to help you and help your company from a productivity perspective.
Again, a survey we did years back, but we’ve looked at over and over again, two thirds, or more than two thirds, it’s like three quarters of employees that said, when companies offer a solution, like our solution or other solutions, like DailyPay, they’re more content at work, and they feel more of a sense of loyalty to companies that do versus don’t offer those. I think it’s going to be important, especially as we get out of this, which I know we will. We’re going to be positive. Things will get back. You want to think about recruiting again. Well, people are going to remember this, and they’re going to use this as one of the criteria to be like, “If I’m going to go find a job, and I have four or five places I could go, I’m going to be more likely to go somewhere that offers me these things versus one that does not.
Yeah, absolutely. Anthony, Shai, those are such great comments. I know we’re going to roll into questions. Natalie’s going to run those in case my computer dies again, but I do want to say, our feedback that we have, in addition to what you’ve both said, is flexibility. What we’ve learned through this pandemic is that there is no one solution that fits for all of the families and individuals that are going through financially challenging times. Giving employees control of when and how they access their pay is key, gives them the ability to do what they need to with it, make some individual choices that could be the difference for taking care of their family now, and as we get out of the pandemic.
I think flexibility, giving your employees control is key, and really continuing to keep the education up, and just options. I mean, I love the fact that some companies did zero interest loans while unemployment benefits were delayed. I love the fact that other companies really looked at community food banks, and just really reaching out there for the public, and making everything available for their employees that they could think of, and letting their employees choose. I know there’s one company that we work with, who said they went to volunteer at a community food bank and realized that a lot of their well paid managers knew the people at the food bank, because they’ve been there in the past.
I think financially challenging times happen, regardless of a pandemic or not. You never know when something’s going to happen to you, but I think all three of us could say that at some time, we’ve been surprised by a financial issue that’s taken us back, and being prepared really helps. We’ve got to do what we can to enable all working Americans to be prepared and start to save for the future. I know I only have a few minutes left to take a couple questions. Nat, I’ll turn it back to run those. We have a lot of questions, so if we don’t get to yours right now, we will get back into that … you and answer that. Before my internet dies again, Shai, Anthony, thank you both so much for joining us today. Nat, over to you for questions.
Absolutely. We have one here, obviously, with Wisely and DailyPay, those are contactless types of payments, but what other changes are you guys seeing in the contactless payments world, as a result of COVID?
Yeah, so I could speak. I could start there. From our perspective, we’ve offered the access to mobile wallets. We’ve seen, and both these and MasterCard have gone out with stats that show at least, I believe, 150% increase in usage of mobile wallets and tap to pay. Not surprising given, probably the fear of virus and everything else, but I think you’re seeing acceleration in those things. I think for us, the other things that you’re seeing are definitely more online purchases. Definitely in those cases, people are, again, pushing or trying to get more access to ways to not use their card to get cash.
Cash usage is down. We’ve seen that across the board as well, but I think out of this will come more innovations, I believe, being able to easily send money, whether it be with biometrics and other things. I think all of those contactless features are going to continue to expand aggressively. Again, something like this will probably resonate on many of us for a long time. I actually am expecting a change in behavior, similar to what we’ve seen with the onset of the iPhone and all the other things that have come into our lives, and how we’ve changed. I think this will lead to probably a change in that as well.
Yeah, and I would add to that. We saw it happened with QR codes. I thought QR codes died and would never have a purpose in life [inaudible 00:56:03] retail. We all started to go outdoor eating, and every menu has a QR code, so that there is that contactless experience. Thank goodness that the iPhones have made the camera your QR code reader, and we don’t have to download those anymore. I agree with you, Anthony. The innovations that come out of this are going to be a lot of fun, really interesting and will change permanently.
I was on a different conversation with someone talking about branded face masks and some of the innovations in face masks. Opening up that you can see what people’s actual expressions are, because it’s hard in America to not smile when you see someone, so that covered smiling culture has had impact on depression. But someone was talking about being able to put payment chips into face masks, so that you could just do a biometric scan with a face mask on.
I think we’re going to see a lot more coming down the road, but moving companies on to direct deposit as much as possible, I think, is going to be key to save the people in the payroll teams a lot of work and any potential health risk of processing payments. I told the story once before of someone … I recently got married, and I asked how to change my social security card, and the Social Security Office says, “You have to mail something. There’s no way around it,” but we have to let the mail sit for two days before anyone can physically touch it, because they’re still trying to come up with contactless ways for safety. I think that safety and security is going to drive a lot of contactless innovation.
Absolutely. Then before we wrap up, Funding Our Future and Shai have an important event announcement.
Sure, thanks very much. Yes, we at the Funding Our Future Campaign in the Bipartisan Policy Center have a very relevant event, actually, to this discussion, that we’re putting on, on Monday, August 24th. Would encourage anyone here who’s interested to join us for that. It’s going to focus more on the policy side of this conversation, so what can policymakers do to make it easier for employers and employees to have access to these types of solutions?
One element that we didn’t really touch on today, but plays a large part of this, is the barriers right now to automatically enrolling employees into these types of savings accounts. Right now, it needs to be a proactive decision, which as we’ve discussed, makes it more challenging, and you get less participation out of that. One of the reforms that’s on the potential agenda is to make it easier for employers to automatically put their employees into these short term savings accounts, like they do with retirement accounts. That, plus a whole lot of other policy options we’ll be what we’re discussing with our partner, the other partner, the Aspen Institute, on the 24th, so we encourage anyone who’s interested to join.
Yeah, I was going to say, as soon as I get on the phone with Comcast after this, please join us for part two and part three of our upcoming webinar. August 25th, we’re going to be talking about how a pay experience accelerates the strategic goals inside your organization as we prepare for our future, and part three on September 10th, why Freebirds created a pay experience as a strategy to lead them through a crisis. We hope you can join for both of those and share this with others. Again, Shai, Anthony, thank you so much for your expertise. This was a fantastic conversation. I think we’ve all learned a lot and really appreciate your time.
Thanks for having us. It’s great to be with you.
Thank you so much.
Thanks so much.
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