More demographics are demanding access to payroll in something other than a traditional two-week payroll cycle, leading banks and payment companies to become more aggressive in offering alternative ways to manage payroll. .
“By giving their employees access to money they’ve already earned, employees have more short-term cash flow to avoid overdrafts, late fees and costly payday loans,” Ram said. Palaniappan, CEO of Earnin, a company that provides access to earned wages. (EWA), which allows employers to offer a portion of employee earnings before a regular payday.
In addition to buy now/pay later loans, E.W.A. is a product that has gained momentum in recent months as consumers turn to short-term liquidity solutions.
Consumers’ financial health is in decline, a trend that began during the pandemic and accelerated amid high inflation and fears of an economic downturn.
Workers earning more than $100,000 a year who live paycheck to paycheck doubled between 2019 and 2020, from 18% to 36%, according to W.T.W., a workplace consulting firm. WTW surveyed 9,600 workers in the United States in December 2021 and January 2022 for a report released in June 2022, accumulating its data mostly before the recent spike in inflation, which would likely exacerbate the challenges.
Additionally, 53% of single parents, 52% of workers earning less than $50,000, and 57% of those in poor health live paycheck to paycheck. Someone who would not be able to pay basic monthly expenses if unemployed is considered to be living paycheck to paycheck.
“In a world where unforeseen expenses have become all too common and prices are rising due to unprecedented inflation, we hear from customers that their employees often need or want access to their salary on an ad hoc basis,” said said Doug McKinley, senior vice president and chief innovation officer for PNC Treasury Management.
Here are a few companies that have recently added flexible salary options for their employees.