It's one of today's hot potato employee financial wellness topics. Wage flexibility, or put more directly, giving employees early access to their banked pay. So instead of waiting for the obligatory "pay day" transfer of wages into their bank account, employees in may companies can now get paid for their work, basically as early as the same or next day.
Companies that don't pay employees when they want to get paid may be worried they could find themselves with a shortage of staff because of it. Occurring at a time when almost every company out there is at a point where they are searching to hire it's hard for companies to not see this as an enticement to get interest from new employees. Regardless of doing any internal baseline analysis of their overall work force's financial wellness levels.
In late March of this year Visa Canada launched a new wage product that allows DoorDash's drivers in Canada to get paid daily with their compensation pay outs based on real time work accrual. It is trending more and more now that wage flexibility is being looked at as a benefit just as much as dental is defined as a benefit, at least in the eyes of some early adopting employers.
The pertinent question however is no longer can this be done, it's really now a question of should this be done for every employee in every company. The opinions from many employers may vary but the data that backs up overall employee financial wellness points to a resounding , absolutely not!
The problems lie with those employees that are already in a position of financial un-wellness, and this is no small cohort. It's estimated to be over 25% of the total global workforce. Those that have credit card debt or student loans or simply a lack of a good credit scores. Giving this group of employees early access to money can often make their situations much worse, especially if that money is used towards items that are not normally part of their more traditional monthly spending habits.
At least with a payment gate in place of every 2 weeks, it's somewhat harder to spend money that is not yet in hand. Yes this can be done through credit card transactions, but statistics show that those with high credit card debt usually do not continue with that spending practice once they get to a running late balance. Cash in hand early to be spent would obviously be a little more difficult to prevent and or manage.
It's easy to imagine that if this was being introduced into the workforce at any other time than when dealing with a massive labour shortage, way more research would be done before it is actually adopted and rolled out company wide by employers.
The fact is employers simply haven't done any workforce impact research on this. Only time will tell how long this potential bomb ticks, if it decides to one day explode or if it slowly looses it's charge.