The rise of on-demand pay

I’m going to ignore social and political commentary and, as is our focus, just stick to the facts (although the economist in me is reeling). Evelyn McMullen recently published a research report looking at the rise of on-demand pay solutions (w5 – More workers need on-demand pay). She and her team surveyed over 200 hourly workers across multiple industries and found a high percentage of workers looking for organizations that can offer immediate end-of-shift pay. In fact, over 70% of workers would leave a current position for an organization that offered immediate pay.

From living “paycheck to paycheck” to living “day to day”

Any quick internet search will uncover stories showing the unsavory reputation of the payday loan industry, and most people are aware of the high fees associated with using that type of service. For hourly workers these extra fees can be significant and make it hard to get out of a recurring payday loan trap. What might be surprising is that Nucleus found 40% of hourly workers have turned to payday loans to make it to the next paycheck. For employers, that’s a hidden tax on your hourly employees that impacts their quality of life. Implementing an on-demand solution is an easy technology change with a big employee impact.

What’s in it for the company? That cold, black-hearted CFO will warm up after realizing 31% of employees have missed a work shift because that can’t afford the transportation costs to work and when Evelyn’s team looked at the data against past ROI case studies, they estimated an on-demand pay solution could reduce absenteeism by up to 70%. Just imagine how much easier it would be to convince someone to work a last-minute shift if they knew their earned pay would be available to them at the end of their shift.

We might not be able to address the broader social issues that got us to this point, but technology is available now that can eliminate the financial burden of a payday loan. If you have hourly workers, consider implementing and on-demand pay solution.