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On-demand pay can support your employees’ social mobility… Posted by DiversityQ | 8 Dec 2020 | Comment, Retention, Social Mobility, Tech | 0 |
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…and your bottom line. Here’s why the minority-owned DailyPay app has been working hard to close the U.S. wage gap
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Why is it that those with the least wealth are o en required to front the money for the essentials needed to perform their jobs? That’s a question that struck me one night when ordering pizza. At the time, I was working as a financial engineer on Wall
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Street. As I folded my slice in half, I started chewing over an idea. Low-wage workers like pizza delivery drivers — who are essential to our economy and lifestyles, as evidenced by the COVID-19 pandemic — are expected to not only have enough money to sustain themselves and their families but also to front the costs of gas, car insurance, repairs and auto registration.
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But it doesn’t have to be this way. Our outdated payroll system wasn’t designed to address the needs of today’s employees.
8 Dec 2020 | Comment, Leadership
An on-demand pay model, however, can give employees access to earned income, ultimately enabling them to change their socioeconomic status — while improving the bottom line for employers.
Understanding the debt cycle Due to the nature of the biweekly pay model, workers are required to work for weeks without pay when they start a new job — and they typically must pay for certain essentials and supplies from their own pockets while they wait for their first paycheck. Because they o en lack significant savings, this system negatively impacts low-wage and entry-level workers the most. Restaurant cooks must pay for the public transport or gas required to get to their jobs, in addition to chef’s shoes and other necessities. Teachers are too o en tasked with paying for their school and cleaning supplies. Even entry-level white-collar workers must purchase corporate wardrobes, and interns are o en asked to use (and therefore pay for) their own laptops. In addition to starting a new job saddled with these extra costs — all of which are necessary simply to perform their work —
On-demand pay can support your employees’ social mobility… 8 Dec 2020 | Comment, Retention, Social Mobility, Tech
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employees must then wait until the next pay cycle to receive their first paycheck. By this time, typical living costs like rent, groceries and utilities have already cropped up. So for many, a new opportunity translates to new debt. While some are able to recoup these costs relatively quickly, others don’t have the same advantages. Student loan debt and high costs of living are trapping an increasing number of white-collar workers in vicious debt spirals. As a result, many hardworking employees are forced to overdraw checking (current) accounts, skip debt payments, pay late rent fees or turn to predatory payday loans. While the fees for some of these actions can be nominal — like Chase Bank’s $34 overdra fee — when they are compounded across accounts and over time, the financial e ects can be devastating. But if employees had access to their income as they earned it, they could pay rent, loans and other payments on time, avoiding cumulative late fees and putting that cash toward reducing debt and amassing savings.
The benefits of on-demand pay models Privacy