Financial stress among employees is becoming a significant problem for companies and is costing billions of dollars in lost productivity. Ceridian, a global leader in human capital management (HCM) technology, partnered with the Financial Wellness Lab of Canada to create a survey of more than 4,200 workers across the United States and Canada to analyze three clusters of people—Stressed, Unsettled, and Comfortable—and to understand how each demographic is adapting to challenging economic developments such as inflation and rising interest rates.
The findings are staggering. Approximately 61% of employed survey respondents report that they are more stressed about their finances than they were one year ago, making the current level of financial stress the highest since the economic crisis of 2008. The survey revealed that 82% of employed individuals contemplate issues related to their personal finances while on the job. Nearly one in four (23%) of all respondents spend an hour or more doing this every working day, with most of those in the “Stressed” cluster. Using government sources for the average hourly wage of workers, we can extrapolate a potential productivity loss of $664 billion for employers—$50 billion in Canada plus $614 billion in the United States—because employees are spending time thinking about their finances while at work.
Furthermore, 78% of employed survey respondents hope to boost their income to reduce financial strain in 2023. One in three (33%) of them plan to do this by taking on a second job or a side hustle. While their income may indeed go up because of these measures, the extra work is almost guaranteed to increase stress, decrease sleep, and further reduce productivity.
Ceridian is using Dayforce, its all-in-one HR, payroll, and talent management solution, to take action against financial stress and the productivity threat it creates. With Dayforce Wallet and on-demand earned wage access (EWA) pay, the company is helping organizations of every size provide employees with more financial flexibility to help them remain productive and increase their well-being.
Dayforce Wallet is a tool that expands the functionality of Dayforce Payroll, allowing employees to access their wages as soon as they are earned—ahead of their normally scheduled payday. This is made possible through the Dayforce Wallet app, available in the Google Play Store and Apple App Store, and the Dayforce Wallet Prepaid MasterCard, all of which Ceridian designed with ease of use in mind.
Debit cards are often used to access earned wages because they are a convenient way to access pay in advance of an employee’s regular pay cycle. Additionally, debit cards are a secure means to access funds, as they are backed by fraud protection and other security features.
EWA is gaining traction among employees because it helps them bridge the gap between paychecks to manage financial needs. The EWA system allows employees to request a portion of their earned wages, which is then transferred to the employee’s bank account. The employer deducts that amount from the employee’s next paycheck.
EWA is also gaining popularity among employers who recognize the advantages it creates for their workers. Employers also benefit from better worker retention and productivity when employees can manage their finances without worrying about stretching their paychecks too thin.
Several financial technology vendors offer EWA now. Some of the most popular companies providing it include Ceridian, ADP, PayActiv, and FlexWage. For employees, the main difference between Ceridian’s Dayforce Wallet and other solutions is the user experience. For employers, it can be more attractive to obtain EWA capability via an all-in-one payroll and talent management solution rather than a standalone EWA tool.
Additional advantages of Dayforce Wallet include no standard or monthly fees for employees, with access to up to 100% of net pay; no change in the timing or funding of payroll, real-time tax, garnishment, and deduction calculations; and no ongoing integrations or reconciliations for payroll administrators.
Employers offering EWA access include Amazon, CVS Health, Danone, Home Depot, Lowe’s, McDonald’s, Starbucks, Target, UPS, and Whole Foods. According to Ceridian, EWA helps companies retain workers, particularly among those who are trading in traditional hourly jobs for gigs that provide a more flexible schedule and frequency of payment.
Ceridian says that its customers believe on-demand pay gives employers an edge. Ceridian customers using EWA have seen a 21% reduction in 90-day attrition rates and a 15% reduction in the time it takes to fill open positions. These statistics suggest that EWA is a robust retention and recruitment tool.
Earned wage access and accessibility
According to the Ceridian survey, 54% of workers with an emergency savings account used it in 2022 to pay for necessities. This increased to 67% among the “Stressed” demographic.
The 2021 FDIC National Survey of Unbanked and Underbanked Households reported that 4.5% of households (5.9 million) in the US were “unbanked,” meaning no one in the home had a checking or savings account at a bank or credit union. Another 14.1% of households (18.7 million) were “underbanked,” meaning the household was banked but had also used nonbank transaction or credit products or services, such as money orders, check cashing, and international remittance services, over the past 12 months. Having access to a prepaid debit card can help these households avoid costly fees associated with non-traditional banking services.
The Ceridian study also found that more than half (54%) of all respondents had trouble covering expenses between pay periods over the preceding six months, citing inflation and high expenses as some of the most significant causes. EWA helps workers stop the practices of tapping into savings, maxing out credit cards, taking out payday loans, and paying onerous check-cashing or overdraft fees, all of which contribute to financial stress.
The feature, and future, set
Dayforce Wallet is currently accessed only through the app. It features a user-friendly dashboard that shows all transactions, including available funds for access, what taxes have already been accounted for, garnishments or child support (if any), and medical premiums, so users have a clear picture of their finances in real time. The included rewards program gives cash back from thousands of brands—without needing promo codes—using the Dayforce Card, including at local businesses and online stores. There are no fees to the end user, including a no-fee ATM network and ATM locator in the app. The solution interfaces with Apple Wallet and Google Wallet for seamless mobile checkout, even without carrying the card. Users can also earn referral bonuses by sharing the app with colleagues.
I hope to see more financial wellness and convenience products added to Dayforce Wallet, such as peer-to-peer payments, more robust budgeting tools, access to financial advisor networks, retirement planning, credit building, investments, and more.
As more sophisticated financial tools become available for users, employers can use Dayforce Wallet to provide their employees with more financial education and resources. This should resonate particularly with Millennials and Gen Z in the workforce, who feel that workplaces should provide financial wellness resources. If Ceridian can build a loyal user base with Dayforce Wallet, the opportunities to offer financial services, marketplaces, and other embedded financial products are unlimited—especially considering the company’s large customer base and addressable market.
Last month I attended Dayforce Insights 2022, an annual conference of Ceridian customers, and had a chance to speak to some of the HR professionals who are implementing Dayforce Wallet. They expressed a preference among employers for an EWA model that would not change existing payroll processes, introduce incremental costs or effort, or limit the frequency of EWA transactions. This suggests employers desire a model that prioritizes flexibility without introducing complexity or cost. With compliance, implementation costs, and complexity as the main drivers for decision making, Dayforce Wallet has compelling features.
All compliance-related issues are baked into the solution, making it a seamless, turnkey integration. Regulations around earned wage access vary by jurisdiction, but employers must provide employees with access to their wages as soon as they are earned without incurring fees or other charges. Additionally, employers must provide clear and transparent information to employees about the terms of the earned wage access program and any fees or additional costs that may apply. Employers also cannot mandate using a pay card, so the technology must be opt-in alongside other choices for payment method. In addition, in some countries, state and provincial departments of labor have their own laws about which methods of compensation are permissible, so Ceridian layers that kind of granular compliance into the software to adjust to different domains.
I spoke with Steven DelVecchio, senior director of people technology and analytics at Gannett, about the company’s implementation of Dayforce Wallet across Gannett’s 13,000-person workforce, many of whom are hourly manufacturing and distribution workers. Before launching, he and his team had to sell the solution to the company’s finance department. Ceridian funds early withdrawals and EWA, which made convincing his colleagues in finance easier from a cash-flow perspective. Gannett completed a successful beta launch of the solution in Q4 2022 and will roll it out to the entire workforce in January 2023. “What we are really looking at is something that sets us apart from competitors,” DelVecchio said. “We want to do everything we can to add to people’s lives and deliver wins.”
While many of Ceridian’s customers use Dayforce Wallet to address similar needs shared by hourly, lower-wage, financially stressed workers, in talking to customers anecdotally, I found something remarkably interesting. High earners—in some cases, senior executives making six-figure salaries—also use EWA regularly. High earners may use it to make better financial decisions, budget and save more effectively, and take advantage of investment opportunities by having access to their wages ahead of their regular pay cycle. This strategy makes sense for people focused on making their money work for them, because earlier liquidity opens a myriad of opportunities at that pay grade.
Educating employees against risk
The EWA system is not without its critics. Some worry that allowing employees early access to wages could lead to overspending and financial instability. When employees have access to their earned wages ahead of their regular pay cycle, they may be more likely to make impulse purchases or spend more than they usually would. However, Ceridian’s early data shows that this is not typical. The company and its customers have built-in comprehensive onboarding, education, and dedicated support teams to help workers with training that promotes their financial health.
Earned wage access is certainly a better option than payday loans, which many lower-wage workers turn to in times of financial stress. The main drawback of these loans is that they can carry annual percentage rates as high as 450%, along with high fees. EWA has none of that; also, unlike many loans, it does not require a credit check, which can damage a borrower’s credit scores.
While it is true that employees must be responsible with their money, and employers must support financial education tied to EWA programs, the potential benefits of EWA for both far outweigh the risks. “It’s not a replacement for good financial habits. It’s a tool to create more financial options for employees,” Seth Ross, general manager of wallet and consumer services at Ceridian, said.
The bottom line
The future of earned wage access looks promising, and Dayforce is an emerging leader in the space. EWA is becoming increasingly popular with employers and employees alike, and I expect it to continue to grow in popularity in the years to come. As more employers offer EWA solutions and more providers offer new technologies, employees will have greater access to critical financial tools beyond earned wages, and employers will benefit from reduced employee turnover and improved employee satisfaction. Offering additional services such as loans, insurance, mortgages, and investments through the app would also open up a very lucrative revenue stream if Ceridian chooses to take that path.