Financial wellness has become an increasingly important concern for both employees and employers, particularly as many workers struggle to manage expenses between pay periods. Even among individuals with steady employment, unexpected costs can create significant financial stress and lead to reliance on high-cost borrowing options. Earned wage access solutions are emerging as a practical alternative by providing employees with greater control over their cash flow and reducing dependence on payday loans, overdraft fees, and other costly forms of short-term credit. As economic uncertainty continues to affect household finances, employers are increasingly evaluating on-demand pay programs as a way to support employee financial wellness and improve workplace outcomes.
A new survey from the Mercator Advisory Group and DailyPay reveals that:
- One-half (48%) of those surveyed have run out of money before their next pay period
- 24% said that a bill of less than $1,000 would require them to seek alternative funding
- 46% are stressed by having to pay monthly medical bills
- 70% reached out to external sources for funding that often incur high fees
- There is a critical need for on-demand access to earned pay that Americans experience even in typical economic times
A new co-branded survey from the Mercator Advisory Group and DailyPay, of salaried workers earning less than $75,000 per year, reveals that by introducing an on-demand pay benefit, employers can help their workers reduce the stress associated with paying monthly bills. Most notable and relevant today, nearly half (46%) of those polled are stressed by having to pay monthly medical bills.
DailyPay is an employer-offered benefit that allows employees to access money from earned income prior to payday. This financial flexibility and empowerment over their pay reduces stress and increases attendance and productivity at work.
The survey indicates that the timing of cash flow is highly important to workers, and the option of flexible withdrawal of earned income before payday can be critical to their quality of life and quality of work. While those polled are generally confident in their ability to meet most of their basic needs on a regular basis, a single unexpected expense, such as a medical bill, can be financially devastating. COVID-19 has simply underscored this urgency. In fact, one-quarter (24%) of the respondents to the Mercator/DailyPay survey, said that a bill of less than $1,000 would require them to seek alternative funding.
By offering an on-demand pay benefit, employers can provide their workers with the financial flexibility they need, at no expense to the company. This helps employees to avoid more financially crippling options, including using credit cards, drawing down savings, incurring overdraft fees and resorting to payday loans, which can incur high-interest rates, fees and penalties.
Key findings of the survey include:
- Nearly half (48%) of respondents reported having a shortfall between payroll cycles, at least sometimes
- 46% surveyed have difficulty paying medical expenses, at least sometimes
- About seven in 10 reached out to external sources for funding that often incur high fees; among these individuals, many are frustrated with high-interest rates (51%) and fees (26%) associated with borrowing this money
- 23% incurred an unexpected expense they could not pay
- Three in 10 report some difficulty in keeping up with monthly expenses
The research shows that a flexible financial solution would act as a substitute for predatory alternative methods that come with high fees. When presented with the option for on-demand pay, respondents saw the value and an opportunity to stop the cycle of debt. In fact, more than half noted they would also use the DailyPay platform to save money and become more fiscally responsible.
- 34% responded that they would either “definitely use” or “probably use” DailyPay if it were offered to them.
- When asked about services that could be replaced by DailyPay, respondents indicated the same potentially financially draining options that they reported using to obtain extra money to pay a bill, including check-cashing services, pay-day lenders and credit cards.
- 52% noted they would use the “Save” feature that is unique to the DailyPay platform. The “Save” feature allows Daily Pay customers to put away money for future bills and expenses before they even get paid.
The data collected in this survey reveals the critical need for on-demand access to earned pay that Americans face in typical economic times.
“The recent events that have effectively shut down the U.S. economy have only heightened that need for financial relief support, particularly among workers facing medical and other critical expenses,” said Sarah Grotta, Director of the Debit and Alternative Products Advisory Service, Mercator Advisory Group. “Understanding the data that defines this market segment has never been more important.”
Please join us on Thursday, May 28 (1 p.m.-2 p.m. ET) for a joint webinar with the Mercator Advisory Group and DailyPay to discuss the results of the research survey. You can register for this webinar here.
The survey findings highlight the growing need for earned wage access solutions that help workers better manage cash flow management challenges between paychecks. By offering on-demand pay, employers can support employee financial wellness while reducing reliance on payday loan alternative products that often carry significant costs and financial risks. As workers continue to seek greater flexibility and control over their finances, earned wage access programs may become an increasingly valuable tool for improving financial stability, reducing stress, and strengthening employee engagement.
Methodology
Mercator Advisory Group, on behalf of DailyPay, conducted a survey of 1,000 salaried U.S. employed consumers earning less than $75,000. The 10-minute online panel survey was fielded Dec. 26, 2019 – January 4, 2020.