December 2, 2020
A million years ago, around February of this year, an intense war was raging. A significant skills shortage and the evaporation of tenure among current workers was motivating companies to get increasingly creative to establish an edge in the War for Talent. The pandemic upstaged this issue (and countless others) for much of the year, but recent news of successful vaccine trials will undoubtedly bring the ongoing siege for talent back into sharp focus. A handful of payroll-related benefits and services are gaining popularity among employers seeking an edge in attracting and retaining talent. Here’s a quick look at the top contenders.
1. Advance Pay: Early Wage Access
Annual studies by the Federal Reserve report that roughly four in ten US adults would struggle to cover a surprise $400 expense. Companies that employ those living paycheck-to-paycheck know that flexibility is key, and early access to wages earned can help a worker avoid missing a shift. The value of Advance Pay extends to both W2 and 1099 workers: well over half of gig workers report they would consider switching to a platform that offers pay advances. Dynamic advance pay programs offer customizable convenience fees and multiple payment methods – and be sure to steer clear of vendors that carry interest fees.
2. Push To Card: For Faster Payouts
Once the cutting edge of innovation, Direct Deposit (ACH) is now an obstacle to attracting talent – that is, unless you offer other payment types. Push to Bank-Issued Debit Card (Push to Card) is a near-instant payment method made popular by the speed and convenience of P2P payment apps. With P2P transaction valuation projected to be $341B in 2022, consumers love their Zelle and Venmo apps and now expect the same speed and convenience from their employer. What’s more, gig work is predominantly a paycheck-to-paycheck employment situation, making faster payments even more critical.
3. Pay Cards: Access to Underbanked Candidate Pools
Roughly 55 million or 22% of adults in the US are underbanked, meaning that they have a traditional bank account but look to alternative vendors for check cashing, loans and other financial services. Employers can meet workers right where they are by providing a pay card free of charge to employees that opt in, and making wage payments to that card. Not all pay cards are made equal however; be sure to closely assess transaction and ATM usage fees as you compare vendors.
4. Cash Payout: Access to Unbanked Candidate Pools
Around 10 million or 8% of US adults are unbanked, or do not have any type of banking account at an insured institution. They may be averse to the banking system or another piece of plastic in their wallet, or maybe they simply desire greater liquidity. Whatever the reason, innovative employers and payroll providers can issue a one-time code to an employee, who can show it to any convenient franchise office to pick up cash.
5. Integrated Digital W9 onboarding and Tax Summaries
Digital onboarding and 1099s for your contract workers is hardly new. Yet the value here is the coupling of contractor data with your W2 payroll provider, to dramatically streamline your off-cycle payment overhead and improve the overall experience for your contractors. The perpetual threat of TIN mismatch penalties from the IRS is banished, and the year-end ‘1099 Torment’ becomes a thing of the past. Truly a win/win scenario for you and your workers.
6. Split Payments to Make Saving Easier
The subject of retirement has shifted from the employer to the employee in recent years. That transition provides employers a unique opportunity to give W2 and W9 workers alike convenient tools to save for their retirement and other important expenses. For instance, an employee can avoid temptation by setting up their own split, routing 20% of every pay period to an IRA and leaving the rest for bills and daily expenses. Ideally the split can be managed by the employee at their convenience via a web app or your SSO portal. (This benefit is predicated on offering choice in payment methods – a viable subtitle to this article!)
7. Bonus Innovation!: Integrated Services
We’ve all seen the ocean of startups offering variations on one of the services above. It’s a genuine challenge to find the time to evaluate – and then integrate – so many disparate solutions. Whether your payroll is in-house or outsourced, the ideal provider can offer most, if not all of these services from a single point of reconciliation and funding. Reporting will ideally extend across all payment types, affording you access to the information you need for fast decision making. Service integration delivers the most value to your company, consolidates payee data in a single location, and dramatically reduces your overhead.