The fact that the U.S. economy added 4.8 million jobs in June might have been missed amid all the bad news, of which there’s been no shortage. The many jobs being added post-pandemic are expanding the gig workforce trend that’s been building for a decade or more.
Paying a changed workforce that ebbs and flows according to the tidal forces of business demand is a challenge – and one that solution providers are stepping up to solve in creative ways.
“Current economic conditions require employers to adopt flexible and dynamic reopening strategies, and the same applies to how they pay their employees,” according to PYMNTS’ latest Next-Gen Payroll Tracker.
“Many service sector workers and other essential employees were already living paycheck to paycheck, and some have accumulated additional expenses during the pandemic,” the Tracker states. “Allowing workers to receive their wages upon request, rather than forcing them to wait two weeks or longer for paydays, could prove crucial for their motivation.”
Big changes to traditional payday are here – and it’s one of the solutions that are improving the lives of gig workers by helping them get paid faster. But workers and platforms must stay alert to new threats contained in this unfamiliar payments ecosystem.
When Any Day Is Payday
June’s hiring bump “was heavily concentrated in the service sector, with the leisure and hospitality industries accounting for almost 40 percent of all job growth,” per the Tracker, with that sector having to rebuild more than most after sustaining what was arguably the worst hit.
With the new “every day is payday” reality comes unwelcome aspects, like predatory lending. “Governments and employers have stepped up in various ways to protect and support workers during the pandemic, but not all developments have been positive,” the Tracker states.
“Advocacy groups have issued new warnings about payday lenders aiming to take advantage of consumers facing difficult economic conditions, often charging annual interest rates of more than 300 percent,” the report continues. “The Federal Trade Commission (FTC) announced in June that it was cracking down on payday lenders, charging one company with stealing millions of dollars from borrowers through invalid charges. Providers that support flexible early payment options noted that such methods could help workers avoid these high-interest and unscrupulous lenders.”
Striking a Balance
“Employers and employees alike will need to balance security and the expectation for newer, faster and more flexible payment options,” noted Belinda Reany, vice president and general manager of new ventures at payroll solutions provider ADP. She also pointed out that services allowing workers daily access to earned wages using trusted third-party partners can ensure tax compliance while increasing protections for gig workers from predatory payday lenders.
And while safety from predators is non-negotiable, most gig workers just want to get paid.
“PYMNTS’ research shows that those who are interested in receiving immediate or advanced payments most commonly cite two main benefits: reducing financial stress and being able to pay their bills,” according to PYMNTS’ Next-Gen Payroll Tracker.
“These options are so compelling that 85 percent of gig workers would work more often if they were paid faster, and 51.8 percent would be interested in switching to gig platforms that enabled them to receive pay advances. Such benefits would likely extend to employers, too, as those who receive on-demand payment options report being more motivated and less stressed,”.