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