Earned Wage Access (EWA) is becoming critical to attracting and retaining employees, enhancing productivity, and saving your business time and money. We’ve researched and shared some of the latest thinking about EWA and the benefits of offering it to your employees. Prepaid Technologies is an EWA leader offering your workers fast and easy access to wages through prepaid payroll cards.
The U.S. economy is recovering after the pandemic, and businesses are looking to grow. That means attracting and retaining a skilled and engaged workforce, which is proving to be very challenging. Potential workers have plenty of choice in who they work for, and one area that’s becoming an important differentiator is Earned Wage Access (EWA).
The principle of EWA is simple—giving employees immediate access to their wages as soon as they have earned them, rather than having them wait for two weeks for a paycheck. As the competition to hire and keep employees grows, EWA can make a big difference in attracting the right people to help you scale your business and meet customer needs.
How big a difference? That’s what we’re here to answer, with some powerful reasons to show why offering EWA makes sense for your business and your employees.
One: Earned Wage Access Reduces the Financial Stress of Your Employees
Many workers, especially those in temporary or contract positions, struggle with managing their expenses between paychecks:
- A study by the Fed shows that around 40 percent of the U.S. workforce would have difficulty paying for an unexpected expense of $400.
- A PWC survey discovered the following:
- More than half of all employees feel stressed dealing with their personal financial situation.
- 46 percent of employees say that financial challenges cause them the most stress in their lives.
- More than two-thirds of financially stressed employees struggle to pay their bills each month.
- Half say they are spending three or more hours each week dealing with personal financial issues.
- Employees said that financial stress caused them issues with their health (28 percent), negatively impacted their productivity at work (22 percent), and led to missing work occasionally (12 percent).
- 43 percent of workers spent 3 or more hours per week thinking about or dealing with financial stress.
EWA can significantly reduce that financial stress by letting employees get their money when they most need it—without having to resort to payday lenders and other financing that charges exorbitant interest rates.
Reducing the financial stress on employees increases their engagement as workers. A PWC report says that, “Financial stress may also influence employee engagement. We are seeing some signs that loyalty, appreciation for salary and benefits, and recruiting may be linked to overall financial wellness. For example, employees who are reporting financial stress are less likely to think their employer cares about their financial well-being and more likely to be attracted to an employer who does care about their financial well-being.”
Two: Employees Are More Likely to Work For Employers that Offer Earned Wage Access
There’s a growing demand for EWA, and candidates are seeking out employers that offer immediate access to their earnings.
- Around a quarter of workers that have access to EWA use it each pay period.
- 72 percent of the U.S. workforce wants on-demand access to their wages.
This demand for EWA has a major impact on your employer brand—how working for you is perceived by potential job applicants. As EWA awareness grows, your choice to offer immediate wage access will help you stand out from your competitors.
Three: Employees Are More Likely to Keep Working for Employers that Offer Earned Wage Access
Attracting new applicants to your job roles is only part of the battle—once you’ve hired them, you want to keep them. EWA can help with employee retention, too:
- 77% of HR leaders say that reducing staff turnover was a critical priority or an important priority.
- According to PWC, earned wage access increases employee retention by 36%.
The cost to hire an employee is around a fifth of their yearly salary, meaning it’s critical to minimize turnover in your workforce. EWA helps you to retain your skilled staff and reduce your HR costs.
Four: Earned Wage Access Boosts Employee Productivity and Engagement
So far, we’ve mainly focused on EWA benefits for your employees, and, by extension, your ability to attract and retain a workforce. While these are all critical to growing your business, EWA also offers more direct benefits for employee engagement and productivity.
- Reducing financial stress means employees spend less time being concerned about their money, increasing productivity.
- Assuming three hours more productivity per week, at an average wage of $17.50/hour, that translates to over $2,600 more productivity per employee per year.
- 56% of EWA users said that they were motivated to pick up more shifts due to having access to their service.
EWA provides a win-win situation for employers and employees. They get to reduce financial stress, while you get to:
- Create a pay system that fits in with a company culture of supporting and empowering your employees.
- Increase productivity and employee morale throughout your workforce.
- Run a business that’s socially considerate and responsible.
- Boost your employer brand, helping you attract and keep the right talent.
- Automates time-consuming HR requests like ad-hoc pay advances.
Five: Implementing Earned Wage Access is Fast, Easy, and Inexpensive
EWA can be surprisingly easy to introduce into your business. While you may have some concerns, our experience shows that:
- Employees are more likely to properly record their hours and complete their timesheets on time, so they can take advantage of what they’ve just earned.
- HR processes don’t need to change, as an EWA provider can integrate seamlessly into your payment and wage systems.
- You won’t need to change your payroll company, as EWA payroll cards work alongside your existing payroll processing.
EWA is good for everyone—your business, your employees, and your customers. We think you’re going to love it, so get in touch with us to learn how to get started.