The last time an unexpected expense popped up in your life, how did you handle it? Did you have enough money saved away for that rainy day, or did you need to resort to credit cards or loans? Unfortunately, the reality for most people in the United States is they need to rely on tools that hurt their financial well-being. The most commonly used tools at their disposal are credit cards, pay-day loans, or borrowing from a retirement fund.
Today, many employees feel lucky to have a job, yet also feel like their finances are not in their control. 78% of Americans today live paycheck to paycheck. The COVID-19 pandemic has accelerated this reality for many, and most employers are not offering solutions that meet the needs of their workforce.
Employees today need a better option than payday loans or credit cards to meet cash flow needs between pay periods. One solution employers can adopt to combat these issues is an Earned Wages Access program (EWA). Financial wellness programs like EWA are the foundations of a framework that have immediate impacts on recruitment and retention.
What Does Earned Wages Access Mean?
Earned Wages Access solutions enable employees to any day a payday. Wage access means that employers can allow their employees to get paid immediately after their shift or haul. EWA tools plug into a business’s payroll or time-tracking system and allow Human Resources departments to set their program rules.
Employees with access to an EWA solution can stay away from financially threatening alternatives, like payday loans. They can stay away because instead of waiting for the regular bi-weekly or weekly paycheck from an employer, they can withdraw their earned wages whenever they want. Tools like this enable employees to stay away from less-sustainable alternatives, like predatory loans with high-interest late fees and deadlines.
Why Should Companies Adopt EWA?
A recent survey by Immediate, an EWA solution partnered with FATj.com, shows that more than 75% of employees say that a wage access solution would help alleviate their financial stress. “In a pandemic, it’s shocking that so many CEOs and HR leaders think their employees are in excellent financial health,” said Matt Pierce, Immediate founder, and CEO. “They have a much bigger problem than they’re aware of when 9 in 10 employees are saying financial stress impacts their job performance. You know that’s going to hit a business’ bottom line, or worse, in the healthcare industry, cause a negative patient outcome. With resources like earned wage access available, which cost a company nothing, there is no reason this should happen, especially when they can make such a significant positive impact on employees’ lives.”
There are significant recruitment and retention benefits to adopting financial wellness tools. Market research shows companies that adopt an earned wage access solutions reduce employee attrition rates by up to 30%. In addition, companies have also reported that 8/10 employees would recommend their employer to their friends. “These unprecedented times are producing vulnerable employees that need help,” said Mason Beard, chief strategy officer at Immediate. “It’s an opportunity for employers—by answering that call, they will create gratitude which strengthens employee loyalty. Loyal employees help optimize business performance.”
So while an EWA solution can improve an employee’s financial well-being, there are positive impacts on a company’s recruitment and retention. This is especially important in the transportation industry, as the driver shortage affects every corner of the market.
Businesses that adopt Earned Wages Access solution are telling the best candidates that they care about their financial wellness. EWA adoption is a necessary strategy to implement if an employer has a goal of standing out from the competition. Financial wellness solutions ultimately become employee recruitment and retention solutions as well. It opens the door to a more sustainable and healthier relationship between employers and employees. After all, giving employees access to their income
Are you curious about how an EWA solution fits into your recruitment process and retention strategy? Reach out to our team at FATj.com, where we can explain how it works for transportation businesses.