Competing for hourly workers has become increasingly challenging with the ever-tightening labor market. Hourly workers have more choices than ever before and financial wellness is on the forefront of their minds. With companies using creative marketing strategies to lure potential candidates, businesses are turning to innovative benefits, including offering same day pay via a dailypay app .
Like other employees, hourly workers strive to meet the demands of their household budgets, but unfortunately, some struggle to make ends meet. According to a Bloomberg report , two out of five American adults do not have sufficient savings to cover even a $400 emergency, and one in five of the adults surveyed are not able to pay their current month's bills in full. Additionally, many hourly employees want immediate rewards and depend on regular cash flow rather than waiting the whole pay period for the direct deposit to hit that bank account . This is why some are turning to instant daily pay apps that are becoming more popular with both employees and employers.
This blog post will explain why same day pay is an exciting benefit for hourly workers, how does daily pay work, common features found in dailypay apps , and more.
With a multitude of opportunities, tech-savvy job candidates are using social media, online reviews, and word-of-mouth to find the perfect job that suits their lifestyle as well as their wallets. Many hourly-worker candidates are millennials, who are comfortable using their phones and mobile apps to navigate their way into good-paying jobs offering some sense of fulfillment. But most importantly, hourly employees want access to their money and they want to get paid instantaneously, which is where apps like Instant Financial fill in the gap.
Instant Financial offers employees access to their pay within minutes of clocking out of their shift. This daily pay app allows employees to withdraw half the pay they earn on a given day, limiting the money available to 50% of their paychecks, which encourages saving. Currently, about 250,000 employees serving close to 50 companies have access to the service, including franchisees of Outback Steakhouse, Dunkin' Donuts, and McDonald's. Instant Financial says that they have also attracted trucking companies and some retailers, and expect usage from about 1 million workers within the next two years.
Other apps providing similar services include New York -based DailyPay , which launched its service in August 2015. The DailyPay app has about 500,000 users, and charges workers a fee of $1.25 to $2.99 per use, depending on how quickly they'd like to gain access to the funds—immediately or the next day. Like similar apps, DailyPay allows employees to access their paychecks before their company-set payday . Employees are enjoying the convenience of accessing their dailypay available balance on a daily basis, with long-lasting appeal.
Any perk an employer can offer its employees likely lengthens the time an employee stays and increases employee engagement. In a stiff, competitive environment, adding a convenient way for employees to access their pay early only strengthens an organization's employee base.
The way that these daily pay apps work is that they allow employees to request up to 50% of their current day's pay within an hour after their shift ends. The funds go into a debit account that the worker can immediately use as needed, providing instant cash for the employee to (hopefully) use responsibly. The benefits are enormous, particularly compared to the other alternatives for employees that exist today.
With on-demand pay platforms, employees are less likely to seek short-term lending options, such as those at payday lenders. These institutions prey on hourly workers seeking instant relief from the pressure of bill collectors or the desire for a new car, furniture, bling, etc. When employees know they can access their pay immediately at the end of their shift, they are less likely to borrow at exorbitant interest rates and therefore are under less pressure and stress. This creates a healthier emotional and pay cycle.
Several companies using same day pay apps are experiencing tremendous results regarding employee retention. One example is the Caspers Company - the owner of 53 McDonald's franchises in Tampa, Fla., that found that its employee turnover rate decreased by almost 10% over the previous year since the company adopted the instant pay app service, according to a recent USAToday article . A recent Bloomberg Business week piece also reported that employee turnover has decreased at Hoover Foods since Wendy's franchisee introduced the Instant Financial app to its employees.
These apps take the burden off the employer because the app provider does all of the work. The minimal fees vary, with some institutions charging the employee, some the employer, and some both. The good news is that the product has already been tried and tested, and is being used by companies such as Chili's, Papa John's, McDonald's, Flemming's, Bonefish Grill, Carrabba's, and Taco Bell with much success.
DailyPay, like any financial service, comes with its pros and cons. One potential downside is the cost associated with using DailyPay, as it may charge fees or a percentage of the amount being accessed. These fees can add up over time, reducing the total amount of your paycheck.
Additionally, some users might find it tempting to withdraw money frequently, leading to poor financial management habits. It's crucial to use DailyPay responsibly and not rely on it as a long-term solution for financial stability. Lastly, not all employers offer DailyPay as an option, so it might not be available to everyone. It's essential to weigh the costs and benefits to decide if it's the right fit for your financial situation.
It’s hard to say which companies have the employee benefit of DailyPay. Some payroll teams prioritize things like DailyPay while others prioritize other healthcare, paid leave, and vacation days over it. The industry in which the business is in will impact whether or not DailyPay is part of the benefits package.
While DailyPay can provide employees with flexibility in accessing their earned wages, there are some potential catches to consider. First, not all employers offer DailyPay as a benefit, so it's essential to check if your workplace supports this service. Additionally, as mentioned earlier, there can be fees associated with using DailyPay , reducing the amount of your paycheck which is why staying on top of your DailyPay balance is always very important.
Furthermore, DailyPay is not a long-term solution for financial issues, and over-reliance on it can lead to financial instability. It’s not a magic debit card that never runs out of money and users should approach it as a short-term solution for immediate financial needs. Overall, the "catch" with DailyPay lies in understanding its limitations and costs while using it responsibly.
Debt is crippling American workers and part of it is attributed to the fact that workers cannot access their earned income when they need it. When employees turn to payday loans or max out their credit cards , it causes stress, which creates poor performance on the job. A recent Pew Research report found that interest from payday loans alone costs Americans more than $9 billion annually, overdraft fees come to another $15 billion, and credit card debt is way over $931 billion!
By providing employees access to their DailyPay account , you provide a platform for employees to control their financial destinies, reducing stress while creating a more engaged workforce.
In conclusion let’s answer the question, how does DailyPay work ? Simply put, DailyPay allows an employee to access a certain amount of their current day’s pay. This is beneficial to hourly employees and can help with real-time purchases and hopefully ease financial stress if used responsibly. DailyPay is also beneficial to franchisees because it can help improve employee retention and employee experience.