Abandoning the traditional structure of weekly, bi-weekly, or even monthly pay days, some employers are now are testing ways to give employees faster access to wages they’ve already accumulated.
According to a report by The New York Times, Goodwill of Silicon Valley began testing a system eight months ago which lets workers withdraw up to half of the wages that they’ve already earned from their next paycheck, to a limit of $500.
“When you have people living on the edge, very small things can cause a rapid acceleration into very bad conditions,” chief executive Michael Fox told the news outlet.
“If you’re just $60 or $90 short, and can’t make a rent payment or buy medicine, it spirals,” he added. “One little thing creates a huge disaster.”
More than half of Goodwill’s 300 eligible employees have used the option at least once.
While the services that provide on-demand wages do charge fees every time a worker uses them, the cost is nothing compared to payday loans and could save employees from serious financial stress.
In a time when financial stress is often cited as the leading worry for employees across multiple industries, the alternative approach could let employers help workers out without actually giving them a costly pay rise.
For all the latest HR news and info straight to your inbox, subscribe here
More like this:
First strike action in 30 years
Auckland employers hit hard by housing crisis
Tell-all book attacks Facebook
A pay day revolution could be on the way as a growing number of employers experiment with alternative salary systems that let workers access their cash as soon as they earn it.