During the webinar “A Global Approach to Earned Wage Access” (EWA), pay flexibility took center stage as payroll experts from CloudPay and Aspect 43 spoke to attendees about the growing popularity of EWA across all industries, and the risks and benefits it can deliver to organizations and their employees.
The panel was moderated by David Barak, Chief Marketing Officer at CloudPay. Barak was joined by Mollie Lombardi, Chief Research Officer at Aspect 43; John Pearce, Senior Vice President of Global Payroll at CloudPay; and Jonny Nash, EWA Operations and Implementation Manager at CloudPay.
At its core, EWA, or on-demand pay, is giving employees access to the money they’ve earned. Lombardi considers EWA as just another way that businesses are “going back to their roots” and paying people in real time.
“People who were day laborers or did piecework would turn their work in at the end of the day and walk away with cash in their pocket,” she said. “That’s become a reality that is far away from us now. Companies want to pay as infrequently as possible because it’s a time-consuming process.”
As technology assumes the important role of making EWA a reality for everyone, companies can now give employees access to their earned wages as the work is completed, instead of having to wait for their monthly or weekly payday.
According to statistics presented during the panel, 35% of employees fall short on meeting their expenses between pay periods, with 75% of these individuals reporting major impact and stress because of these financial shortfalls. The kind of stress that employees might feel when they are unable to meet their financial obligations may negatively impact their workplace productivity. This type of stress has increased during the pandemic, according to the panel.
“The pandemic really impacted household savings,” Lombardi said. “Financial stress caused people to make some difficult decisions. It’s really about giving people access to their funds, so they can avoid some of these pitfalls.”
Nash pointed to some of the different solutions that employees chose in the past when they were faced with the inability to pay a bill or experienced some other form of financial instability. Some of these quick-fix financial solutions included:
- Loan sharks
- Payday loans
- Cash advances
According to Nash, having EWA as an available payday option to employees makes more sense than any of those “primitive” options.
“All of those other things cost a lot of money and take a lot of time out of your day,” Nash said. “EWA is an ethical way to access that cash in real time and allow you to capture what you need when you need it most.”
Employees aren’t the only ones who reap the benefits of EWA. Employers, too, can see important changes take place like:
- Improving employee productivity and lowering workforce absenteeism
- Reducing staff turnover and increasing employee satisfaction
- Eliminating requests for manual payroll advances and associated processes and costs
- Creating smart rules to govern how employees use EWA
“It’s not just about helping people who are out of money at the end of their pay period,” Lombardi said. “It’s really about helping people think about investing and rethinking their relationship with money.”
“A Global Approach to Earned Wage Access” is currently available on demand.
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Kiko Martinez is the Associate Editor of Membership Publications for APA and GPMI.