The Ins and Outs of Earned Wage Access

Are we at the beginnings of a time when “payday” could be… every day? With staffing shortages occurring in nearly every industry, workers today have the upper hand in a lot of things—including, it seems, when they get paid. Let us introduce you to the idea of Earned Wage Access, a program that allows employees access to their earned income on a regular basis, not just once payday rolls around. Let’s dive a bit deeper into this one and explore what it is and how it works.

What is Earned Wage Access?

According to the payroll company ADP, “EWA or earned wage access is the ability for employees to access their already earned wages, if needed, outside of a traditional pay cycle. It’s also sometimes referred to as early pay, instant pay or on-demand pay.” Pay is accrued on a daily basis rather than on a fixed schedule like most of us are familiar with.

The idea behind programs like this is to give employees the financial reassurance they need to really focus on their job – rather than worrying how they’ll make ends meet between pay periods. Research by Visa notes that 8 in 10 fulltime workers in the United States are living on a paycheck-to-paycheck basis. The report also found that 68 percent feel as though their financial stress is having a poor effect on their health, and 95 percent of respondents noted they’d like to work for an employer offering Earned Wage Access. These services are often offered to hourly or low-wage employees who are at greater risk of financial instability.

How does Earned Wage Access Work?

EWA programs work in a number of ways. Wages can be loaded onto a card, issued via direct deposit into an employee’s bank account, or they might even be accessed through an app. An employee can withdraw a portion of what they earned during a pay period – and we are emphasizing the word “portion,” since most of their salary is still only paid out at the end of the regular pay period. Folks only have access to what they earned during that time—and there’s no interest to pay, since this isn’t considered a loan.

According to the site Payactiv, “The superior way to execute financial wellness programs like EWA is through API integration with payroll and HR management systems so that the employees’ earnings are automatically available in the mobile app.”

EWA is one of the most important ways you can show your staff you support them and their financial stability. It proves you understand how fragile the economy can be and how easy it is for folks to fall into money troubles while trying to juggle full-time jobs, families, and life. And a happy workforce is one that will also benefit your business—after all, your staff are the ones helping keep the trains running without a hitch.

Over at ARF Financial, we love covering the topics that are most interesting to our clients. And something that’s always at the forefront of folks’ minds is employee retention. If it works for your business, Earned Wage Access may be a great way for you to show your staff how dedicated you are to their financial wellbeing and workplace happiness. Don’t forget to stop by the Financial Pantry every week for more industry news and interesting tips.