Employee Benefits
December 10, 2018

Why Hourly Workers Are Boosted By Instant Pay

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If you’re looking for a job, you’ve got a pretty decent job of landing it. If you’re looking to hop from your job to a better one, it’s never been a better time to do so.

Bottom line: It’s an employees market.

Successive industry reports have been illustrating these trends for the past six months. In November, the U.S. economy added 250,000 jobs and the unemployment rate held steady at 3.7 percent. That’s the lowest unemployment level since 1969.

On the outset, this sounds like great news for the majority of American workers. It’s a healthy market and jobs are available in record highs. Even workers who have been displaced in the last recession and those who have long been out of the workforce are seeing opportunities in the workforce.

Yet, that’s not quite the case for many of our hourly workers thanks in part to the growing disparity in wages. While the labor market looks a lot like it did in the early 2000s, it feels a lot differently, primarily because wage growth is hovering around 4.2 percent, or relatively unchanged since it was right before the Great Recession.

Hourly Employees Represent Huge Part of Workforce

Today, 78 million Americans hold an hourly job.

A majority of the American workforce is represented by hourly workers in a variety of industries including fast food, retail, and manufacturing representing a myriad of roles like cashier, crew member, and associate.

They also represent a wide cross-section of the population. The majority are under the age of 30, and just entering the workforce in their first part of a career. According to research from LinkedIn and Snagajob, 71 percent are under the age of 30 -- with more than 40 percent in their twenties.

While they’re just starting out careers, there are also plenty of older, educated hourly workers, too. Young or old, they seek out hourly roles for many different reasons, including gaining extra income while going to school, or supplementing other jobs or pay later in life.

Difficulty Covering Emergencies, Other Costs

Rarely do such events discriminate: car mechanical issues, winter furnace malfunctions, major health scares for children. For hourly workers that we’ve talked to, these are the things that keep them up at night. In addition to the lurking emergencies, other issues also keep them worried like paying for regularly recurring obligations like rent, car payments, and student loan payments.

According to a Federal Reserve report, 44 percent of Americans are not prepared to handle a relatively small $400 out-of-pocket emergency, for example a minor, but troubling issue such as mechanical issues with a car or basic home repairs.

Even more concerning is the fact that most Americans cannot withstand the cost of more serious emergency situations costing more than $1,000. The lowest estimate for the most serious issues is at least $2,500.

When we do run into unforeseen situations that uproot our plans, there are a few options that we have to quickly pay for things, but many of them can just lead to even more financial distress. A recent Bankrate report revealed that while tapping into savings is the ideal choice, most of us don’t have that option because of insufficient savings. “While tapping savings to pay off an emergency was the most common response, more than a third of Americans would sink into one type of debt or another, potentially harming their financial security," according to a Bankrate.

Currently, hourly employees have a number of ways to try to make ends meet.

Here are the typical options we have when facing financial emergencies:

  • Tap into existing savings
  • Finance with a credit card, paid over extensive period of time
  • Reduce spending on other items
  • Borrow from family or friends
  • Take out a personal loan
  • Incur high overdraft fees

We interviewed a variety of workers across hourly industries. Using a cohort of employees from a major fast food restaurant, we were able to see just how much this became a concern as a majority of them had taken some of these measures. According to our survey results, more than half of respondents were unsure the amount of money that would be in their paycheck next.

Do you know how much money you will be paid next?

No: 64%
Yes: 36%

This hindrance of payday transparency was a major contributor to more than fifty percent of respondents having to incur overdraft fees or request help from family and friends.

Have you ever borrowed money from a family member / friend in the past 90 days?

No: 47%
Yes: 53%

Many Hourly Workers Still Worrying

One of the most consistent stories we’ve heard from our users is that the burden of worrying about financial issues is something that causes a great deal of stress. And, any increased stress in addition to the worries they already carry at work, is a detriment to job performance, stability, and productivity.

Seventy-one percent of our users said they stressed about their personal finances.

Are you ever stressed at work about your personal finances?

Yes: 71%
No: 29%

Increased Business Costs From Stress

These stresses not only carry a toll on the employees themselves, but also on their employer.

According to Health Affairs, the average health care costs for workers facing stress due to financial issues skyrocketed more than $413. In addition, there’s an increase in absenteeism and lost productivity in the workplace.

Absenteeism comes at a major price for employers. According to one recent survey, employees worried about finances were gone from the workplace, on average, 3.5 days every year.

Branch Research Reveals Hourly Workers Want Funds Earlier

With the release of our instant payment solution, Branch Pay, we’ve begun to hear from hourly employees about how having access to their pay sooner was a major benefit to their work productivity and their desire to remain at an employer.

Would you be more willing to pick up a shift if you could get paid immediately?

Yes: 86%
No: 14%

They also told us that being paid instantly after shifts was a major positive. In fact, more than 86 percent of users told us that if they could get paid immediately, they’d be more willing to pick up a shift -- signifying that not only is instant pay a way to give funds to users faster, reducing financial stress, it’s also a way for a fast food location to get increased shift coverage.

Would you use the Branch Messenger mobile app at your location if you could get paid after each shift?
Yes: 74%
No: 26%

When we talk to these employees, the consistent message we hear from them is this: Employees simply want more hours and more money.

Hourly employees are either looking for more hours, or an additional job to supplement their income.

With Branch Pay, that’s now much easier. If you’d like to see the full survey results of this fast food research about how hourly employees are dealing with financial stress, get in contact with us.

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