The surprising link between payroll systems financial stress

[Music]

my first

job as an engineer was on a production

line where hundreds of workers

assembled car stereos i was new

young fresh out of college the plant

manager was a wonderful man

ever so often workers would go up to him

with little problems and issues like i

need to step out for a few minutes or i

need to make a phone call

and he was always very understanding

one day i overheard a difficult

conversation

the workers request was simple

it’s the 17th of the month may i get

10 days of pay now and you can deduct it

on payday from my paycheck

the usually polite manager responded

harshly

no he said you need to take control of

your life

and manage your finances better i’m not

a lender

the worker turned and walked back

sheepishly

with embarrassment as she went past me

she said something that i can never ever

forget

she said but they do owe me the money

now i’ll have to take a loan from

someone else

while i wait for them to pay me

this struck me in fact it broke my heart

for a couple of reasons

first this plant manager whose only

goal was to keep the production line

moving

had sabotaged himself how productive

will this worker be

after she had after he had shamed her

how quickly will she look for another

job and how quickly

will she tell her friends what the

company was all about

the second reason that i i was struck

was

thinking of that one sentence it’s my

money

and how she was shamed and it made me

wonder

why do employees have to wait a month to

get

paid years passed in fact decades passed

i moved to the u.s i went to grad school

i worked in the silicon valley tech

industry

i sold a company and i retired free to

think and figure out the future this was

around the 2008-2009 time frame

the economic crisis had hit united

states

the news was full of stories about

families losing their homes

about bailouts and defaults by companies

too big to fail

about lines at food banks and once again

i started thinking about my job on the

production line

where i had seen a worker shamed

for asking for money she had already

earned

so i decided to figure out why do

workers have to wait

two weeks to a month to get paid

in a world where the history of the

recorded music

is available on demand where amazon can

dispatch a drone

in seconds they can deliver and bring

any package to our home

in hours why do workers need to wait

two weeks to a month to get paid

why don’t they have the option to access

their own money

and mind you make no mistake it is their

money

they have performed the work the work

has been received by the employer

so why is the employer borrowing

from the employee interest free

think about it why is it this way

landlords

get paid in advance vendors

get paid upon delivery or they set terms

customers pay us instantly

imagine walking into a starbucks and

saying

i’d like a cup of coffee and i’ll pay

you in two weeks

they’d love you out of the store but

that is what

employees around the world are expected

to do

work and then wait two weeks to get paid

why don’t they have the option to get

paid their wages faster

if you think about it there are a couple

of reasons

the first one and i would rather call

them couple of

blind spot glaring blind spots

that society has missed entirely the

first blind spot

relates to employees

we have failed to recognize that while

waiting to get paid employees end up

taking all kinds of

different loans for instance the worst

ones are the high interest options

like payday loans and title loans but

there are other

challenges that they face overdrafts 30

40 billion dollars a year

late fees nobody knows how much how many

late fees are paid in the u.s

and when you add them all together

that’s 200 billion dollars

why is it 200 billion dollars

every year is small amounts of money

that

employees are taking just to make ends

meet because they live

paycheck to paycheck and the irony is

that hundred million of the people who

take these monies

are the ones who clean buildings

who push wheelchairs in hospitals who

take calls when we complain

who take care of the elderly these are

the 100 million

people who keep the lights on who keep

the economy humming

who we now call the essential workers

thank god for that

it is those people from whom we are

stealing

10 of their bi-weekly wages monthly

wages year after year

the 200 billion amounts to 10 percent of

a per person’s monthly wage

that is the first blind spot employees

are suffering

the second blind spot relates to

employers and businesses

they are not immune from this they are

also suffering

what is happening in the businesses when

a worker is stressed what happens

productivity goes down when productivity

goes down

you are distracted you are physically

present at work but you’re mentally

absent

and studies have shown significant

studies in the us have shown that

stressed financially stressed employees

that i talked about

are the ones that are paying that are

losing

20 hours every month of work so our

typical month is you know 20 22 days

and you work eight hours so it’s about

160 170 hours a month that people work

and 20 hours at 15 dollars an hour that

300

every month that you are losing as

productivity

and that amount in the united states is

about 300 billion dollars

every year so if employees are losing

200 billion dollars pretty much 10 of

their income

employers are losing 300 billion dollars

why hasn’t anything been done about it

and what would i be able to do so i took

on the monumental challenge

and where the first step came out of

retirement

and created something which is called

earned wage

access earned wage access basically

calculates

how much a person has earned at any

point in time

and lets them access that money

instantly either free

or at very little cost way less than

the other options since the money is

already earned by the employee it is

never a loan

it’s not a loan and secondly since

it is money given by me or my company it

does not interfere

with the payroll payday the two-week

payroll cycle of a company

and it works perfectly so once i had

invented that i said how do i take it to

people how do i make them

convince businesses that hey this is

something you should do

and i’ll tell you a story which happened

early on

i was going to go and meet this ceo who

had thousands of employees

and i knew that if he gave me a chance

in his company with the wage access

system

life would be perfect so i went i was

driving up to his um

his factory and i stopped for a cup of

coffee just to calm the nerves

and as i was walking into the coffee

shop i saw

dozens of payday lenders around the

place that i was going to visit the the

business the coffee shop was nearby

and there were lines across one of those

payday lenders and there was a sign

there which said we welcome employees of

abc corp the company that i was going to

visit

anyway i knew what i had to say to him

so i went into the meeting to meet the

ceo

and after the pleasantries

i said to him that there are a lot of

payday lenders in the neighborhood

and he laughed he was a big booming man

he laughed

and he said yeah ever since we’ve grown

our operations they’ve popped up

everywhere it’s very bad and devastating

for my employees i don’t know how to get

rid of them

so i knew that was my cue i said yeah

i’m here to help you with that with our

wage access system

and he says okay what do i need to do

and i said well first of all you need to

understand that

a payday loan is a byproduct or a

function of the way the payroll cycle is

so if you pay your wages faster it will

be good for your employees

so he now got red and angry he said are

you trying to tell me that i’m the

reason that they’re payday loans i said

i gulped because i didn’t know what’s

next so i

i was going like this and he said okay i

hear you

i’m going to implement your system and

put it on

and i’m going to test in a few weeks

how it’s working and in a year we’ll see

how the results are

but before i do that give me one good

reason that i should do it

other than the fact that you’re here to

sell something to me

so i said if they need it and they’ve

earned it

you need to let them access it as moses

said in deuteronomy 24

15 pay them their wages before the sun

sets

because they are poor and counting on it

he winked

and he says okay i’ll do it. a year

passed

and the data was spectacular the surveys

showed that the people took small

amounts of money hundred two hundred

dollars

and used it towards groceries and gas

and things like that

more time flew and in a few years the

business grew

and today i can say with pride that over

one thousand companies in the united

states use it

walmart wayfair are few of the names

it’s humbling to see how millions of

people in america

have been able to save 250 million

dollars a year

on this earned wage access this simple

idea

of an engineer how much they have saved

we’ve moved over five billion dollars

and it kind of

boggles my mind how it all happened

so much so that harvard kennedy school

did a study and found that

employers benefited with 20 improvement

in their turnover

and you know as i think about it as the

last few years have went but

have gone by it makes me wonder

what if what if every business in this

world

did one thing let their employees access

their wages through a wage access system

what would

happen i really believe that earned wage

access is an idea that needs to spread

and what if every business did that

for their employees at no cost to the

business

if they need it and they’ve earned it

let them access it thank you

you