With every voluntary separation from your company, it’s not just productivity that takes a hit: It costs 33% of an employee’s annual salary to replace them. Coupled with labor shortages and high resignation rates, anything that helps keep workers on the job should lead the priority list for human resources (HR) executives and benefits managers. Earned wage access (EWA) is a highly desirable benefit that’s been shown to reduce turnover by providing employees with the financial flexibility they need.
Across developed nations, there’s about $1 trillion sitting in employer bank accounts at any given time that’s already been earned by employees but hasn’t yet been paid. EWA gives workers access to that money — their money — before the next scheduled payday. And unlike other retention strategies such as health insurance, a retirement benefit or PTO, with Express Wages, EWA won’t cost your organization a penny.
Why does EWA have such a significant impact on a company’s ability to attract — and retain — top talent? HR professionals who’ve implemented it point to a number of important benefits for both employees and employers.
Enhance employee financial wellness. For many workers today, household budgets are stretched thin, and there’s little cushion to fall back on during a financial emergency, such as a medical bill or major car repair. In fact, only 44% of Americans say they can cover an unexpected $1,000 expense from their savings.
With better cash flow management and the ability to draw money earned but not yet received, employees don’t have to rely on predatory payday loans, adding to high-interest credit card debt or raiding their 401(k)s when unexpected expenses arise. All of those options can be devastating to long-term financial health. With credit card interest rates currently averaging above 20%, and payday loans with rates ranging between 115% and 600%, these lending products can wreak havoc on credit health. And while new rules allow taking up to $1,000 from a 401(k) without paying a tax penalty, those who avail themselves of that option can pay a tremendous opportunity cost — assuming a 7% annual rate of return, those funds could grow to almost $4,000 over 20 years if left in their retirement account.
Improve employee satisfaction and productivity. EWA can help improve worker morale, reduce absenteeism and potentially lower stress-related health care costs. Employees who are better able to focus on their job, rather than be distracted by the pile of unpaid bills on their kitchen counter, can be more productive and satisfied at work. A Harvard Business Review study showed that improving the employee experience has the potential to increase revenues by more than 50%.
Strengthen corporate culture. Supporting the financial health of your workforce is good business. EWA fosters a sense of trust in the organization by demonstrating a commitment to the welfare of employees and their families. By prioritizing culture and connection, businesses can enhance both their reputation and their relationship with employees.
Go for the Win-Win With EWA
Nearly one-third of employees say they’ve quit a new job during the first six months. And according to a 2023 survey by consulting firm Gallagher, two-thirds of HR executives say retention is their No. 1 priority. Providing EWA is a proven strategy to retain top talent — and with Express Wages, it literally costs your business nothing. We can help differentiate you as an employer of choice in today’s highly competitive job market, foster a more loyal and engaged workforce and boost your bottom line.
Express Wages is a win-win for organizations and employees. Contact us to learn how we can help create a workplace where both your business and your employees can truly thrive.