In today’s fast-paced world, financial stability is increasingly important to overall well-being and productivity. Unfortunately, traditional payroll systems often leave employees waiting for their hard-earned wages until the end of the pay cycle. That is, unless you’ve heard of Earned Wage Access (EWA).
This game-changing solution grants employees access to their earned wages before the scheduled payday. The innovative financial tool has proven to be a huge boon for employees. It has numerous benefits that positively impact their lives and work performance.
Let’s take a look at a few of them.
Financial Flexibility with Earned Wage Access
One of EWA’s most significant advantages is the newfound financial flexibility it provides for your employees. Employees no longer have to worry about living paycheck to paycheck or relying on high-interest loans during emergencies.
EWA empowers employees to cover unexpected expenses, such as medical bills or car repairs, without resorting to borrowing money, reducing their financial stress. And an employee free of financial stress is likely to be far more engaged and focused.
EWA gives your employees the ability to access their earned wages whenever needed, helping them to budget more effectively. By gaining visibility into their upcoming expenses and available funds, they can plan better and prioritize expenses.
According to economist Mary Zaki*, this enables “smooth consumption over time.” And that smooth consumption over time is a key element to helping your employees achieve financial stability and independence.
EWA and Boosting Employee Satisfaction
Offering your employees EWA demonstrates your commitment to their financial well-being. The gesture fosters loyalty and appreciation in your employees and can lead to increased satisfaction and engagement.
According to a joint paper from Harvard Business School and Yale University, “EWA is associated with a higher employee retention, suggestive of improved welfare.”** A happy and content workforce is more likely to stay with your organization for the long haul, reducing turnover and the related recruitment costs.
Minimizing Debt Burden
EWA significantly reduces the need for employees to borrow money from lenders. By implementing EWA, you can help your employees avoid costly payday loans and credit card debt. In doing that, you’ll also help them steer clear of debt traps and work towards long-term financial security.
Several authors have discussed EWA as a replacement for payday loans. According to Parsons and Van Wesep, payday loans “can act as a very expensive form of revolving debt when pay is frequent.”*** EWA does not have the same predatory lending characteristics. That puts employees in a better long-term financial position.
The Benefits of Earned Wage Access
EWA is a transformative financial benefit for employees. It addresses the challenges of traditional payroll systems and provides numerous advantages. From financial flexibility and enhanced budgeting to improved job satisfaction and productivity, EWA creates a more financially empowered and resilient workforce.
Companies that embrace this innovative solution stand to gain a competitive edge. Not only will you attract and retain top talent, but you’ll also foster a culture of financial well-being within your organization. If that sounds like a benefit, you need to talk to Axsium about how to start implementing EWA.
* Hawkins, J. (2021). Earned wage access and the end of payday lending. BUL Rev., 101, 705.
** Murillo, J., Vallee, B., & Yu, D. (2022). Fintech to the (Worker) Rescue: Earned Wage Access and Employee Retention. Available at SSRN 4067701.
*** Donner, H., & Siciliano, D. (2022). The impact of earned wage access on household liquidity and financial well-being. Working Paper, Stanford GSB.