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Does your payroll need a makeover? How earned wage access can help employees take financial control

Read more at www.benefitnews.com

The economic pressures of the COVID-19 crisis have highlighted the need for employers to support their employees’ financial well-being, and one way organizations are doing this is by offering earned wage access, which allows workers to access their real-time earnings prior to pay day.

Also known as early wage access or on-demand pay, the benefit is offered by just 5% of large U.S. companies with a majority of hourly paid workers, according to the Society for Human Resource Management. However, that figure is expected to jump to 20% by 2023.

Read More: Benefits in action: How one employee went from financial stress to financial security

“Financial stress can significantly and negatively impact an employee’s ability to work well and work focused,” says Vicki Salemi, a career expert with Monster. “It can be a significant factor, not only for their work output, but financial stress can weigh heavily and impact their mental well-being, which can impact every other area of their life.”

In an exclusive report on earned wage access by Arizent, parent company of Employee Benefit News, research shows that lower income employees are struggling more with day-to-day living costs, while middle-income users need help handling life’s unexpected expenses:33% of lower-income users said that they would utilize EWA funds to pay their rent or mortgage, compared to 21% of middle-income employees and 16% of higher-income employees.

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No matter their income level, employees need better budgeting and personal finance management. Using earned wage access to pay for basic necessities could result in the employees becoming dependent on this tool, but there are actionable steps employers can take to avoid this outcome.

Re-evaluating the benefits package employers offer can go a long way in providing the support employees need, Salemi says. Tuition reimbursement, student loan payments, more competitive healthcare, flexible work schedules, spot award bonuses throughout the year, and professional financial coaching can help create holistic financial security.

Read More: Bank of America debuts digital retirement program to help employees get on track

“Employers have recognized that employees’ financial needs have become more complex, so they have to take more responsibility to help them,” Kevin Crain, the head of workplace solutions integration at Bank of America, recently told Employee Benefit News. “[We’ve seen] tremendous increases in terms of offering education, guidance and tools around budgeting, saving for college, and debt management.”

Read more at www.benefitnews.com

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