In 2017, a CareerBuilder survey revealed that 78 percent of Americans live paycheck to paycheck. The quick-service restaurant industry is one of the most heavily impacted by the paycheck to paycheck lifestyle. Workers who can barely make ends meet as it is can end up in situations where they can’t even make it into work, because they don’t have gas money or childcare (which accentuates the problem).
As a result, quick-serve companies end up with high turnover rates and low productivity. However, these companies may not be in a position to offer higher wages for everyone (especially now, thanks to the COVID-19 crisis), so what’s the solution?
A lot of companies and franchise groups are turning to quicker pay, instead of more pay. Here’s why.
Pay Rate is Not the Only Problem
In what should come as no surprise, a survey by 7Shifts found that 62 percent of restaurant employees rank pay increases as the number one thing that can keep them happy at work.
Here’s the problem, though. Aside from the fact that restaurants don’t always have the budget to increase pay, where is the line? Is there a number that would make employees indefinitely happy with their wages, or will they always want more?
The CareerBuilder survey which found that 78% of Americans live paycheck to paycheck also found that one out of every ten Americans earning over $100,000/year live paycheck to paycheck, so salary may not be the problem.
Americans have a hard time managing their money. It’s not always their fault - sometimes their paycheck to paycheck lifestyle is the result of unplanned expenses stemming from medical accidents, natural disasters, rising costs of living, etc. Regardless of how it happens, these workers end up with late fees, overdraft fees, and debt. Since their pay isn’t increasing and their costs aren’t decreasing, climbing out of that debt is quite a challenge.
On-demand pay won’t “fix” the paycheck to paycheck problem. It won’t erase debt. However, it can certainly help families make it from one paycheck to the next without needing to add more debt.
Every day, millions of Americans can’t afford to put food on their tables. The ability to access funds immediately after a shift could change that.
Using On-Demand Pay to Support Employees Through COVID-19
On-demand pay may not be enough to cover months of lost work, but it can help prevent further damage. Employees who were furloughed or had drastically reduced hours can’t wait another two weeks to get paid—they need their money now. The ability to offer employees money right when it’s needed most can really make a business stand out among the rest.
Offering on-demand pay now, during this crisis, will keep your employees happy and encourage them to stay on with you through the rough times. It may also encourage them to take on extra shifts when they are available, knowing that they can get paid for those extra hours right away. In general, people will be much more inspired to return to work when they know that it means being able to purchase what they need that very night. That instant gratification can make a huge difference.
How does on-demand pay help quick serve businesses?
One study by PwC found that one out of every three employees are distracted at work due to personal finances. COVID-19 aside, the first benefit that job applicants look for is pay. They want to know how much they’re getting paid, and how often.
One of the biggest advantages of offering a daily pay option is that other companies are doing it. To be able to compete for the best job applicants, quick serve restaurants need to have “instant pay” listed on their benefits package.
Church’s Chicken, Pizza Hut, and Checkers are just a few examples of fast-food restaurants offering early wage access. Other large fast-food franchises, staffing agencies, and even big corporations like Walmart have also implemented some version of on-demand pay. This benefit will likely become commonplace over the next few years, and companies that don’t offer it will fall behind.
How to Pay Employes Sooner
Daily pay, or even weekly pay, can seem like an administrative nightmare—but it’s not. New technology allows employees to get paid whenever they want, even while their company sticks to a traditional pay cycle.
Thanks to new technological innovations, companies don’t have to manually pay out every day through their payroll system. Instead, there are several different apps that will plug into those systems. The company doesn’t have to change their payroll or timekeeping systems, but the employees get access to their wages any day of the week through the app.
Many on-demand pay vendors offer additional financial wellness benefits, like budgeting tools, saving accounts, and even pay cards. But which one is right for you? Start by talking to your payroll and timekeeping providers to find out what on-demand pay systems they are already connected to. This way, all you have to do is sign up and tell your employees the good news.
Anastasia Iliou is the Marketing Manager at Rain, an on-demand pay provider and financial wellness program. The platform is free for employers to implement and does not require any changes to your current payroll or timekeeping systems. Rain is backed by the same investment firm that funded Credit Karma, Wagestream, and other similar financial wellness platforms.