EMPLOYEES ARE MAKING THIS A POPULAR PERK: EARNED PAY APPS
Cars always seem to break down between paydays. And for many hourly workers, who may not have a bank account or any savings, a simple car repair, a child’s bad cough, or even an expired parking meter can touch off a debt spiral. Solutions have been limited. Swallow
hard and ask relatives for a loan or a super- visor for an advance. Or go to a payday loan service, where interest rates can be as high as 400 percent. Other expenses may carry heavy late fees. But recently, companies have been roll-
ing out a product that might have better results: Cards and apps that allow workers to tap into their earnings before payday comes along. It can give immediate access to earnings. Under a typical program, employees are
charged per pay period a fixed fee compa- rable to that of an ATM withdrawal. For this, they may get a limited or unlimited number of withdrawals. Another option is prepaid cards, which
work like a hybrid of a debit card and a spending-limit credit card. Employees can load their card with earned income at any time. There are generally no fees to enroll, to load the card, or to withdraw cash at par- ticipating ATMs. The card doesn’t require a credit check, a factor that can also appeal to those with less-than-perfect scores.
“A very welcome perk” “I was a bit reluctant,” Aaron Fenberg, di- rector of human resources at Singh Senior Living, said of the program. “I thought it sounded too good to be true, so I dug into the product. I realized it would be a very welcome perk.” So he signed on in April 2018, and as of August, there were 4,000 transactions. Employees can get their car fixed or pay for extra childcare and get back to work
sooner, he says, which has had a good effect on employees and managers alike. “They wanted to be paid on their sched-
ule, not on our schedule,” Fenberg says. The average amount withdrawn is $158,
he says: “Not large amounts of money, just what they need at the time.” Despite senior living’s unique job quali-
ties, employers have to remember that on one level, they’re in competition with Walmart or Amazon, says Mark Woodka, CEO of OnShift, which offers a range of pay advance options. Walmart offers the cards, for instance—and all else being equal, offering comparable perks can make the difference in a hire.
It’s not about bad choices According to a 2017 study by CareerBuild- er, nearly 80 percent of American workers say they’re living paycheck to paycheck.
Often, the solution is financial literacy or personal finance advice. While it’s fine to offer access to such resources, it may not be the best investment of time. Surveys at OnShift indicated that needing advance money is not an issue of employees having trouble managing their money or spending on a whim (though that image makes it clear why people are reluctant to ask for help). Instead, employees are spending the funds on bills, groceries, rent, and unex- pected expenses—often doing so online. Paying bills on time cuts late fees and helps establish financial resilience. Cards can be paired with a larger financial
management app. The app doesn’t give ad- vice, but it does give tracking and calculations, showing where the money comes and goes. Being able to make their own choices and not go to employers hat in hand helps people keep their dignity, Woodka says.
SEPTEMBER/OCTOBER 2019
ARGENTUM.ORG 15
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52
