How Retailers Benefit From Providing Early Wage Access
Why should employees wait for payday to gain access to wages already earned? Turns out that plenty of hourly workers at big-box retailers such as Target, Walmart, and Best Buy don’t have to if they tap into their earned wage access (EWA) benefits.
EWA, particularly during the post-pandemic labor shortage in retail, is an attractive benefit employers use to entice employees back into the workforce and keep them there. If you’re a retailer that hasn’t considered implementing this free service, there are plenty of reasons why you should.
How EWA Works
EWA is an employer-provided third-party service that permits employees to withdraw wages they’ve earned without waiting for the end of the customary pay cycle. It helps workers better manage their finances, which is a huge relief for those undergoing financial stress. And unfortunately, the problem is real for many: A 2020 survey found nearly two-thirds of Americans live paycheck to paycheck.
EWA solutions, delivered through apps, virtual cards, pre-paid cards and mobile wallets, empower workers to tap into their earnings quickly, even if they don’t have a bank account.
A recent study revealed 90 percent of workers surveyed want flexible pay, and that approximately 15 million employees have EWA. In addition, more than three-quarters of those using EWA indicate that it helps decrease stress. A separate report shows EWA services are the third most popular benefit employers can offer, coming in after healthcare and 401(k) plans.
Attract and Retain Employees …
With the Department of Labor estimating close to 965,000 open retail jobs, retailers must get crafty to attract and retain staff. EWA is a tool that shows a company cares about the financial wellness of its workers and helps with retention. For instance, by enabling workers to access earned money prior to payday, employers help them pay bills on time and avoid pricey overdraft fees and payday lenders.
Walmart, which has offered this benefit to its workforce since 2017, finds EWA most effective in employee retention and financial wellness when its associates use it to budget, plan and save. On-demand pay by itself, the study found, wasn't enough; rather, employees using it to shore up their financial wellness are more likely to stick around. And the thing is, many EWA solution providers add features to their apps that include overdraft warnings and financial advice. And perhaps the best part? EWA services don’t cost retailers a thing.
… Including Gig Workers
With the gig economy booming, retailers will be left behind if they don’t start making room for these freelancers. According to Gartner, gig workers comprise approximately 20 percent of the global workforce, with the number increasing to 35 percent to 40 percent by 2025. Gig workers can step in and help with those hard-to-fill retail jobs.
The thing about gig workers is they like choice: to select a one-off job, to pick the hours or days they’ll work, and to have a say in how they’re paid. EWA allows them to tap into earnings when needed, while managing and budgeting different income streams that come from working multiple short-term jobs.
Empowering retail employees with innovative financial wellness solutions like EWA is easy when retailers choose the right provider. Consider a robust platform that’s cloud-based, flexible and API-driven so it can easily integrate into an existing mobile strategy.
Doing so will help bolster your financial wellness program by supporting employees in their financial lives, which is a great way to attract workers and keep them from looking elsewhere.
Brian Brinkley is the CEO of QRails, a cloud-based, API-driven, and developer friendly innovative payment solutions provider.
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Brian has over 30 years of experience in enterprise and start-ups. He is a leader in omnichannel commerce and digital payments technology. Brian founded Zave Networks which was acquired by Google in 2011 and became a key component of Google Wallet. Brian has held executive roles at Sprint PCS and Lucent Technologies. Brian joined QRails as CTO in 2019 and was asked to lead QRails growth strategy as CEO in 2021.