February 24, 2022
Average Read Time: 4 min
Businesses impacted by the pandemic and the Great Resignation have become more creative with their recruiting and retention strategies. They’re offering expanded benefits, flexible work arrangements, signing bonuses, and more to address the talent shortage.
One competitive hiring advantage quickly gaining traction in today’s competitive market is same day pay.
A service sometimes called Instant payments, on-demand payments, or known by MerchantE as EmployeePlus Payouts, this benefit refers to the ability for employees to work and receive their paycheck all in the same day. It helps with recruiting and retention strategies because it speaks to what employees want and need most: fast access to their wages.
In a survey of 1,180 American adults, more than 61% of employees in the healthcare, retail, manufacturing, and construction industry cited they would prefer immediate access to their wages. Even more shocking is that more than half stated that on-demand pay would be a more attractive benefit than paid time off.
Financial anxiety has a huge impact on employee wellbeing, which can impact your bottom line. When employees are living to make ends meet, it could be reflected in their productivity and efficiency. At the end of 2021, 61% of American's fall into that category of living paycheck to paycheck.
Employees who face financial anxiety are 11 times more likely to experience sleepless nights and 10 times more likely to have trouble completing daily tasks. Providing employees with instant payment helps to alleviate this stress by giving them access to their wages in real-time.
It also empowers employees to take control of their financial health with a more cost-effective option than taking out a payday or auto title loan, which might be challenging to pay back later. This could provide a much-needed relief for employees as many faced difficult times during the pandemic and continue to struggle.
More than 59 million Americans have participated in the freelance and gig economy since the start of the pandemic, according to Upwork. And that number is expected to hit 90.1 million by 2028.
If you’re considering tapping into the freelance/gig workforce, offering instant payouts can go a long way in recruiting and retaining them. In a study by PYMNTS.com, 85% of gig workers said they would work more often if they could get paid faster.
Additionally fueling this need is the fact that many gig and freelance workers face income volatility. For example, during the pandemic, demand for home deliveries went up, whereas demand for services like Uber and Lyft went down.
Same day payouts provide freelance workers with the immediacy they need to address income inconsistencies and better manage their financial health. Plus, in today’s competitive hiring market, this group of “free agents” may decide which gig to accept based on who pays faster.
People are no longer walking to the bank to deposit a check or a lump sum of money. Traditional bank lobbies see fewer and fewer visitors as more customers use mobile apps and online banking to manage their finances. And when it comes time to pay bills or make purchases using those funds, well, those are happening digitally as well.
Digital transactions continue to grow, and a primary driver for this is convenience. This holds just as true for the appeal of instant payments. Once the funds are transferred into an account, the employee can conveniently access their funds to continue shopping or pay a bill online.
Additionally, this is also good for businesses. Because you can securely deposit payments directly to an account, you reduce the hassle of issuing and delivering paper checks. This can translate to a $170,000 saving per year. It also saves you about 135 labor hours to issue and process them. Plus there are no more worries of loss or stolen checks.
More and more companies are starting to see the value of offering instant payments as part of their benefits package. It’s a great way to stand out from the competition and provides employees with an incentive to keep coming in to work.
For example, a nursing home staffing agency in Massachusetts started providing instant payment as part of its recruiting strategies. Since its launch in August 2021, nurses that have been staffed and used instant payment have reported overwhelmingly positive feedback. Of the 30,000 nurses using instant payment, about 21,000 use the daily option regularly. That means 70% are choosing this option over the traditional paychecks despite being charged additional fees.
As instant payments become more mainstream, employees consider this benefit as more than just a perk. A Harris Poll revealed that four out of five workers in the U.S. believe they should have access to earned wages at the end of each day, and 8 out of 10 preferred to have their wages deposited automatically into their accounts. And just as important as recruiting, is retention. In the same survey found that 78% said same day pay would increase their loyalty to an employer.
Offering employees instant payment is a no-brainer in today’s tight labor market. Businesses that can provide attractive solutions to address workers’ priorities will be rewarded with their loyalty and commitment. Getting employees paid fast reduces the struggle for those living paycheck to paycheck. And removing that barrier makes you a much more attractive employer.
Interested in learning more about same day payments? See how MerchantE’s EmployeePlus Payouts can help you gain a competitive edge.
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