The traditional weekly payroll system has been the standard for how employees are compensated for their work. However, the landscape of payroll management is changing, and one of the key catalysts for change is Earned Wage Access (EWA). As EWA gains momentum, experts are questioning whether it could eventually replace the traditional weekly payroll cycle.
In this blog, we’ll explore the rise of EWA and its potential to revolutionize the way we get paid.
What is Earned Wage Access?
Earned Wage Access is a financial service that allows employees to access a portion of their earned wages before the scheduled payday. Instead of waiting for the traditional pay cycles, EWA allows workers to access their earnings as they accumulate them. It’s a modern, tech-driven solution to the problem of managing cash flow between paydays.
The Traditional Weekly Payroll System
Historically, the weekly payroll system has been the standard. It offers employees a predictable schedule for receiving their paychecks. Weekly payroll has always been the most flexible option for employees; however, it may not be the most flexible option for today’s workforce.
Why Demand is Growing
The pandemic changed employee expectations. Employees are now demanding more flexibility in the hours they work and in the location they work in, alongside flexibility in how and when they get paid.
Younger generations, like Gen Z and Millennials, are more motivated by financial security and believe it’s only fair that they have access to their wages as they earn. Millennials and Gen Zers have on-demand access to most in life and want the same for their pay.
Financial worries play a big role in today’s world. Research found that 51% of employees are more stressed about their finances today than they were during the height of the pandemic and spend 25% of their workweek dealing with financial issues. EWA provides a financial safety net and reduces the stress associated with unexpected costs.
EWA: A Game-Changer for Payroll
The rise of EWA is reshaping how employees think about and access their earnings. Here’s how EWA can potentially replace the traditional weekly payroll system:
- Reduced Financial Stress & Improved Flexibility: Nowadays, weekly isn’t enough. The fixed weekly pay schedule does not always accommodate workers financial needs. Although weekly pay cycles have always been seen as the most flexible option, EWA takes a step further, offering employees an alternative. EWA means employees can use their earned wages to pay for unexpected expenses that are unaffordable using their last week’s wage. This flexibility alleviates financial stress and improves overall wellbeing.
- Reduced Administrative Workload: Managing a weekly payroll can be labour-intensive for payroll departments, with a constant cycle of calculations, processing, and distribution. EWA providers take this burden away from business’, improving productivity by freeing up time to focus on other business needs.
- Improved Employee Job Satisfaction: EWA is an attractive benefit for employees. It can enhance job satisfaction and improve financial wellbeing, leading to increased morale in the workplace and more productive workforce. The appeal of EWA to employees can also makes recruiting talent easier for businesses.
The Future of Payroll: Coexistence or Replacement?
While EWA offers undeniable benefits, it’s essential to remember that it might not entirely replace the weekly payroll system. The future of payroll will most likely involve a coexistence of traditional payroll schedules and EWA services, allowing employees to choose the method that suits their financial preferences.
The adoption of EWA depends on various factors, including regulatory changes, industry norms, and employee preferences. The traditional weekly payroll will likely continue to be an option, especially in sectors with higher earnings where employees don’t rely on an EWA service.
To conclude, Earned Wage Access is revolutionizing the way employees access their earnings and has already begun to reduce the traditional weekly payroll’s dominance. However, while EWA does offer compelling advantages, it may not replace weekly payroll entirely. Instead, it introduces an alternative, more flexible approach to pay, making the future of payroll a blend of tradition and innovation.
Start your EWA journey with Income Group today.