G4S, an international security company that posts guards at workplaces and homes noticed a trend that threatens to ruin its bottom line. An entire 72% of US-based G4S hourly employees were quitting their jobs per year. And when the security firm conducted a poll to find out why; staff unanimously said that they were struggling to make a living out of the job.
According to G4S Chief HR Officer Geoff Gerks, low wages and the two-week payment round were the main reason guards left. Being a well-established firm that cares about its staff— or a savvy business looking to retain its employees—the G4S followed a growing trend among a set of brands such as Wal-Mart, Boston Market, Kroger, and Taco Bell.
These companies allow their staff to access a portion of their paychecks earlier than the legacy two-week round. Desperate to find a win-win remedy, Mr. Gerks was counting on this early wage strategy and a slight increase in salary.
Because more brands—particularly those in low-wage sectors— are seeking to hold on to their staff amid the tight job market, Silicon Valley technology startups are engineering an app-driven early payment solution. These apps will help address the growing pains of employees who must wait for their next paycheck.
Early wages are pay for the work that staff have done and will help them deal with life’s unforeseen expenses, according to Wal-Mart spokesperson Michelle Malashock. The giant retailer has collaborated with the fortnight early wage payment solution providers known as PayActiv and Even. Malashok also said a team that is financially secure performs better.
The increase of early wage pay avenues is comparable to strategies by companies like Lyft and Uber, which enable their drivers to get their pay several times a day. Corporations are hoping this step will help change the legacy two-week pay series and help citizens keep away from high-interest loans and accumulating personal credit.
However, some market analysts fear that early wage payment vendors are no better than payday lenders. Rushing pay cycles could cover a bigger crisis: stagnant pay or wages.
Speaking to Bloomberg, Chris Tilly, an economist at the University of California, said early wage pay does not address the problem of insufficient savings. Low wages remain low, and this is being worse due to escalating housing, healthcare as well as other costs of living.
In the meantime, the tech firms behind early wage pay companies are fighting to walk safe past the many regulatory obstacles. These new vendors must now look at regulations on matters like banking, tax compliance, and employee matters in states like California and New York.
Let’s hope early wage payment does not come with the consequences critics have voiced. Employers must find ways to help their staff manage the cost of living and solve the problem of little reserves.
Author Bio: Electronic payments expert Blair Thomas is the co-founder of high risk payment processing company eMerchantBroker. He’s just as passionate about assisting businesses get a payday loan merchant account as he is with traveling and spending time with his dog Cooper.