Life happens between pay periods. What are you doing to help your hourly workers when funds run short and pay day is still 5-days away? It’s been a long time since I’ve been an hourly worker, but I do remember on many occasions thinking pay day couldn’t get here soon enough. I don’t believe much has changed over the years…other than you now have predatory lenders lined up trying to convince you they have the answer to your cash flow problems. I put these folks in the category of wolves in sheep’s clothing ready to pounce on your financial calamities and compound your cash flow problems rather than fix them. There is a better way…keep reading.
Here’s what “life” between pay periods often looks like for your hourly workers…
- Pay day is 3-days away and I’m out of gas and short on funds
- Washing machine broke down and it’s going to be a $75 service visit
- Junior got sick and I have a medical co-pay I wasn’t planning on
It would be naive to think some of this isn’t going on too…
- There’s a concert this weekend and pay day isn’t until next week
- I have an opportunity to go out on a date, but funds are short
- Kids want to go the movies, but no money
The above is a contrast between needs and wants, but in either case it’s reality for many of your hourly workers. The good news is that there’s an affordable and ethical fix for all of this without engaging a predatory lender or tapping into your retirement savings. By the way…your bank falls into the category of “predatory lender” with their overdraft protection. Banks make billions of dollars a year off overdraft fees they promote as a “benefit” that can very quickly spiral out of control. You might end up paying $35 for a $12.00 Netflix subscription that hit your account at the wrong time. While they have you down, they hit you again with another $35 for that $1.99 iTunes purchase that came in after your Netflix subscription…and the cycle repeats. All of this could be easily avoided…
Introducing Instant Pay. It’s offered as a company-sponsored third-party employee benefit program where hourly workers can get instant access to their earned wages between pay periods…all through an intuitive mobile app on their smart phone. The cost to the employee is a one-time convenience fee that amounts to that of a typical ATM fee. Imagine the overdraft scenario above and how it all could have been avoided with Instant Pay at the low cost of a simple ATM transaction where funds drawn against your earned wages are instantly deposited into your checking account. Sometimes it just a matter of timing, and Instant Pay is a great benefit to keep your hourly workers above water between pay periods. When pay day finally arrives and the direct deposit lands in the employee’s checking account or pay card, we simply back out any advances given during the pay period plus the associated transaction fee for each advance. No payroll integration required by the employer.
I’ve heard some people argue that this could enable poor financial management. My position is that the life events described above happen with or without Instant Pay. Without offering Instant Pay as a benefit, I believe you’re enabling bad behavior by leaving no other option than predatory lenders or drawing from their retirement savings. Instant Pay is a great voluntary benefit without all the punitive consequences of predatory lenders or drawing funds off your retirement savings.
Instant Pay is clearly a great benefit for hourly workers, but it comes with some great benefits for the employers too. We find that Instant Pay can reduce turnover by up to 13% and reduce absenteeism by as much as 10%. Those that offer Instant Pay as benefit also see an increase in job applicants by as much as 60%. If you crunch the numbers, there is a significant cost savings for something that has zero cost to the employer.
If this article resonates with you, please contact us at info@unruhenterprises.com for more information.