Workers at some Wendy’s restaurants in metro Atlanta face a big decision almost every day.
They can collect a chunk of their pay almost immediately after clocking out, or they can wait for the end of their normal two-week pay cycle.
Getting money right away can come in handy if they have crucial expenses to cover. But fast money is easy to blow.
Increasingly, employees at other companies, including Walmart, are facing the same decision, in one of the biggest changes to traditional pay practices in years. Through a range of new apps — one by a company based in Atlanta — employers allow hourly employees more immediate access to wages they’ve already earned.
Giants in the world of pay transactions predict the model will spread as workers come to expect it and companies try to attract and retain staff in a tight labor market.
“I love it,” said Christian Talpes, a 22-year-old Wendy’s manager who uses an app on his smartphone to load part of his paycheck on a debit card. “I can’t wait a whole week to get my paycheck to get gas in my car.”
Mercedes Parjus, an assistant manager at a Suwanee Wendy’s, collects 50 percent of her pay — the most her employer allows — the morning after every shift. She said she just likes the security of quick access.
Fellow employee Skiteafa Allen, 22, also appreciates the system. She recently used it to pay for food and drinks for a birthday gathering and to buy necessities for her young daughter.
“For important things, it’s real helpful,” she said. But Allen, who makes $8 an hour before taxes, said she has to be careful.
Every dollar she takes out early leaves less that she will get on her regular payday. Once, she said, she found she was more than $100 short of what she owed her mom for monthly rent.
“I feel like it makes me spend more,” Allen said. “I have to slow my roll with that.”
Most U.S. workers still get paid weekly or every other week, according to the Bureau of Labor Statistics.
But that dynamic started shifting with gig economy businesses. Uber drivers can get payouts as many as five times a day. The demand has spread to hourly wage workers.
“Within the last two years, it’s been a lot more prevalent,” said Chris Poelma, the president of NCR Small Business, an arm of Atlanta-based payments tech company NCR. About 5% of the company’s small business base currently offers instant pay options, he said, but more employers are asking about how they can get into it, particularly those in service industries.
Employers know many workers are under financial stress and struggling to make do until the next paycheck.
Drew Golin saw spikes in sick calls just before normal paydays at InterSolutions, a New Jersey-based temp agency that recently launched operations in metro Atlanta.
Workers were running short of money and had to ration what they had, said Golin, the company’s executive vice president. Sometimes that meant not having enough to cover public transit fees or gas to get to work the next day.
InterSolutions, which serves apartment complex operators, recently advertised the fast-pay option on its Atlanta job postings.
“This is another tool to take the stress off,” Golin said. “They have earned the wages. Why would we hold that back?”
Tech companies such as Instant Financial, Earnin, DailyPay, PayActiv and Even.com offer technology that helps with the instant payment process.
More than 350,000 of Walmart’s 1.4 million hourly and salaried associates use third-party systems that help automatically plan for bills and savings goals and offer early access to earned wages. That helps “when life’s unexpected events occur — a surprise bill, car repairs, a vet bill,” according to emailed statements from David Hoke, Walmart’s senior director of associate health and well-being.
Pay cycles really hadn’t evolved in half a century, said Steve Barha, the chief executive of Instant, a company he founded in Vancouver and later moved to Alpharetta.
“We are helping people in putting them in control of their pay,” he said. That can help prevent costly overdrafts on bank accounts or taking out payday loans that carry steep interest rates.
About 100 employers use his system, from call centers and a cruise line to restaurant owners, such as Bloomin’ Brands, which includes Outback Steakhouse, Bonefish Grill and other chains.
Each pay tech company’s system works differently, and individual employers can regulate how much pay can be divvied out and when.
There are costs. Most of the providers charge employers. Some also charge workers. The Even.com system that Walmart uses carries a $6 monthly charge for access to the immediate pay option. Every third month is free for Walmart employees.
Instant, meanwhile, charges employers $1 a month for each worker who opts into its system. But workers generally can use the system without incurring any fees, according to Barha.
About half of the workers given access to the Instant system use it regularly, taking out an average of $28 each time, he said.
Under Instant’s system, workers can withdraw no more than half of their before-taxes pay for each shift.
Barha said that helps keep workers from overextending themselves.
But the rise of immediate pay options is likely to make it more difficult for workers to budget and build savings, said Kristen Berman, who co-founded the Common Cents Lab at Duke University. “The paycheck is actually a helpful savings device.”
Research shows that people tend to spend more than they normally would on paydays. That creates a problem if every day becomes payday, Berman said. “We should be very worried.”
Glenn Varner, who heads up operations at Suwanee-based Hoover Foods, said he had the same concerns. He only gradually rolled out the new pay option to the franchisee’s 50 or so Wendy’s restaurants.
But he saw no indication that it caused problems. It’s now available to all 1,000 or so of Hoover’s hourly employees, 65 percent of whom use it.
He had hoped it would attract job applicants. “It did help us, but it wasn’t the game changer I thought it would be.”
It did boost employee retention, though, Varner said. Turnover is 20 percent lower among employees who opt for the quick pay option versus those who don’t.
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