Instant Wage Payouts Could Aid Employers as Workers Eye Better-Paying Jobs

Wage growth is still on the rise despite the recently cooling job market, leading some employers to turn to pay-related “perks” in order to retain workers.

Bureau of Labor Statistics data published earlier this month noted that hiring has cooled from its previous breakneck pace. However, the same can’t be said for wages, which are still on the rise. This may be due to companies addressing inflation by raising salaries to retain employees and bring on new talent for open positions.

Wage growth as a retention and hiring tool may be necessary in today’s rocky consumer finance landscape. Currently, 62% of consumers are dissatisfied with their earnings; 30% of those agreeing with that sentiment are planning to seek a new role. This dissatisfaction with earnings not matching the rising cost of living may be well-founded. Despite spending an average 22% on essentials such as food, clothing and shelter, consumers are increasingly pulling from their savings to manage debt.

Given these economic headwinds, no wonder consumers want their income and earnings paid instantly, as noted in the PYMNTS collaboration with Ingo Money, “Disbursement Satisfaction Report 2023.”

That 40% of surveyed consumers are willing to pay a fee on their income and earnings in order to receive their payments instantly may signify that speedy payouts are vitally important to workers. Offering that access to current and potential employees in lieu of the standard biweekly checks or ACH transfers may be a benefit to employers seeking a competitive advantage in hiring.

While instant payouts as a retention tool may most impact gig platforms and the food and hospitality sector most, there are benefits for nearly all businesses. In an interview with PYMNTS, Fifth Third Bank Director of Product Management Ben Mendelson explains why faster and instant wage payout is attractive to workers across financial lifestyles. “Once FinTechs and other companies began offering faster direct deposit access and similar products, it was not much of a leap for Fifth Third to take its progress in early funds availability and expand it to serve more customers. Regardless of where it is coming from, everyone wants to have the money they are owed available to them as soon as possible. As such, products that allow for quick access to funds appeal to customers across the economic spectrum.”

With wage growth continuing to rise and a significant share of consumers considering other work, employers may choose to leverage instant payments as a retention tool. The change could mean the make-or-break difference when it comes to keeping valued employees.