Companies Are Giving Paycheques Early To The Workers

Ethel Lawrence normally doesn’t have a hard time covering her expenses. But when her husband has prescribed a new medication that cost almost $400 a month, she was in shock. “I was smacked in the face and low on cash. It wasn’t payday yet,” said the 72-year-old Oklahoma resident. “It’s not like it’s optional. It’s not a luxury item you can choose to buy or not. You have to buy it.”

To cover the unexpected expense, Lawrence was able to request a portion of her pay early, enabling her to avoid taking out a loan. For many workers, two weeks is a long time to wait for a paycheck. And unexpected events — whether it’s an unplanned medical expense or car repair — can be financially devastating. But a growing number of companies have started offering employees early access to their earned pay.

On-demand pay services give workers the option of accessing part of their paycheck if they need it before their regular payday — but sometimes at a cost. Some apps and services charge fees peruse, while some others are subscription-based. Typically, the money can be loaded onto a debit card or into a bank account.

“The pandemic has accelerated many existing economic trends and the demand from employees for these financial tools is certainly among them,” said Luke Pardue, an economist at payroll and benefits firm Gusto.

The company, which mainly works with small businesses, launched its pay-on-demand tool Cashout at the end of 2019. The feature gives workers early access to their pay based on accrued take-home pay. From March to May 2021, Pardue said the company has seen a “significant jump” in the number of small businesses that offer Cashout to workers.