As business owners and executive-level employees become financially independent, it gets easy to forget that 64% of Americans still live paycheck to paycheck.1
The cited stat comes from a 2022 LendingClub survey that also showed that nearly half of people earning over $100,000.00 per year also live paycheck to paycheck. Wages are by no means at an all-time low. However, they are not keeping up with the fastest inflation growth rate that the U.S. has seen in more than 40 years.
But why is this significant? Why should employers take this statistic into consideration?
According to Investopedia, those living paycheck to paycheck predominantly devote their salaries to expenses. Living paycheck to paycheck may also mean living with limited or no savings, which implies that people living paycheck to paycheck are at greater financial risk than individuals who have amassed a cushion of savings.2
Simply put, two-thirds of your employees are likely at high risk of financial hardship. Something as simple as car trouble could set them back significantly, making paying the rent or mortgage after an unforeseen expense difficult or nearly impossible.
Eventualities such as the car breaking down, an unexpected medical bill or pet emergency, or home repairs, back those living paycheck to paycheck into a corner and force them to incur extra credit card debt, or worse for those without good credit, take a payday loan with high interest rates and often predatory terms.
On-Demand Pay Helps You Stand Out Amid Worker Shortages
Paying attention to your workers’ needs will help improve employee retention and also attract new talent to your workforce.
In 2021, over 47 million Americans quit their jobs during 'The Great Resignation.' The landscape doesn't look much better as we plow our way towards 2023. Employers need to think outside the box if they want to rebuild and retain their workforce.
But what’s the labor force looking for in 2022?
According to the US Chamber of Commerce, the top reasons people resigned during the height of the pandemic and after is because they are looking for improved work-life balance and flexibility, increased compensation, and strong company culture.3
Company culture and compensation are two primary concerns of today's workforce. As for culture, most are looking for an inclusive environment. One where the company also demonstrates that workers are more than just 'human resources'—a term that inherently implies 'to be exploited. Actions speak louder than words, and employees need to be shown that their employers care about their well-being. Regarding compensation, along with offering a competitive salary, employers can provide more payroll flexibility to make their employees’ lives easier.
On-demand pay takes care of both of these employee concerns. By offering unique perks that address your employee needs, you can stand out in a crowded market of employers trying to attract and retain valuable employees.
What Is On-Demand Pay?
On-demand pay services provide employees with access to their earned wages before their scheduled payday. They work like this: the employee signs up for the service and links it to their bank account. When employees want to access their earned wages, they request a payout through the on-demand pay service’s app. The service transfers the funds to the employee's bank account within a few hours.
It’s important to note that on-demand pay is wholly different from payday loans which tend to help loanees with their immediate issue but creates more problems down the road.
Payday lenders often prey on people who are struggling financially. They lure borrowers with promises of quick and easy money to get them out of a jam, then charge high-interest rates and fees. As a result, many borrowers find themselves unable to pay back the loan plus the additional fees and end up trapped in a cycle of debt.
Is On-Demand Pay Right For Your Company?
On-demand pay services are becoming increasingly popular. It’s a meaningful way for companies to show they have a caring company culture by offering their employees financial flexibility.
If an affordable means to increase employee loyalty, reduce turnover, and improve productivity is critical to your operations, then on-demand pay may be a good fit for your company. A recent survey showed that 50 percent of employees felt their work performance suffers when experiencing financial hardship. Additionally, a recent Harris Poll revealed that 78% of employees would feel more loyal if their employer offered on-demand pay.
Although various on-demand pay services are available, Clair's on-demand pay service stands out because neither the employee nor employer incurs transaction fees for using the service. It works more like a payroll draw, as the advanced amount is deducted directly from the employee's payroll. This benefit also comes at no financial risk to the employer because the money is drawn against hours the employee has already worked.
On-demand pay with Clair is a fantastic way for companies to offer financial empowerment to their employees a reap the benefits of a more productive, loyal workforce.
Click here to learn more about the industry-leading on-demand pay services.