2020 has been an incredibly challenging year for all of us. One meaningful takeaway that we collectively learned during the global health crisis is to appreciate the efforts of everyday workers. From the nurse putting in 16-hour days to the grocery clerk doing a double shift, we acknowledged that our heroes don’t all wear capes. Back in January, right before the COVID-19 pandemic hit us, an article written by the CEO of JUST Capital Martin Whittaker caught my attention. This article was all about raising awareness of employees’ financial struggles, and I was excited to see initiatives that PayPal implemented to help their financially stressed employees.
Today, I’m really encouraged to see PayPal CEO Dan Schulman take a stand in support of the American Worker by offering his employees on-demand pay.
The news that PayPal is implementing an on-demand pay benefit is not surprising as it fits right in with the fact that many fintech CEOs have a long history of being champions for supporting the financial wellness of employees. Those initiatives include everything from lowering their healthcare costs to increasing pay to creating educational programs on financial planning and health.
PayPal launched its employee financial wellness initiative after conducting an assessment back in 2018 that examined the financial wellness of its hourly and entry-level workers. The company found that despite market pay alignment, many employees were still struggling to pay their bills each month.
This scenario is, unfortunately, very common in many companies.
In response to those findings, PayPal took immediate action to address these issues with the goal of increasing its hourly and entry-level employees’ net disposable income (NDI) to 20%.
On-demand pay aligns perfectly with those worthwhile programs aimed at improving financial wellness. According to their latest announcement, PayPal plans to introduce equivalent early wage access services to its employees in other markets in early 2021.
Just a few months back, DailyPay partnered with the Mercator Advisory Group on a research study and we learned that nearly half (46%) of those polled are stressed by having to pay monthly medical bills. However, the study indicated that by introducing an on-demand pay benefit, employers can help their workers reduce the stress associated with paying monthly bills.
Initiatives like on-demand pay just make good business sense. When an employer shows an understanding of their employees’ financial struggles, and actually does something to alleviate them, it’s a win-win. Financial security increases. Productivity increases. Employees stay longer.
The daily pay benefit has a proven impact on employees’ lives as it gives them choice and control over their pay.
Research shows that on-demand pay increases employee engagement by an average of 64%, while reducing turnover by at least 45% and employee financial stress by 70%. In fact, 56% of on-demand pay users surveyed were more motivated to pick up additional shifts because of an on-demand pay benefit.
But above everything else, it’s another way to let our employees know we are there for them and have their backs during these most difficult times.
I encourage all CEOs to follow in Dan’s footsteps in supporting their employees in such a meaningful way. I’m personally proud and honored to partner with many forward-thinking companies, from Kroger to Target to Dollar Tree, who are resolute in their commitment to the well-being of their valued team members. Because the financial burdens of life can be stressful enough — even for real-life heroes.