Kroger began thinking about adding an earned wage access benefit—which allows employees to receive some of their earned wages ahead of their scheduled payday—in 2019 to “meet the needs of our associates who get paid weekly and who typically live paycheck to paycheck,” says Theresa Monti, vice president of total rewards for Kroger. It was planning to first pilot a program before it rolled it out to a significant number of its workers.
Then COVID-19 hit. The pandemic, which saw many employees struggling financially with layoffs, furloughs and reduced hours, made Kroger quickly rethink its slow rollout plans.
“When the COVID pandemic hit, we stepped back and said, ‘What can we do to help our associates fast?’ We knew we had to implement [instant pay] quickly,” Monti said Wednesday at the virtual Spring HR Technology Conference & Exposition. The grocer partnered with DailyPay, an app that tells workers how much they have earned since their last payday, and gives them access to their wages earned prior to their next check.
“A lot of times if you’re in an hourly role—with overtime, with shifts shifting, with different hours—you’re not really able to know for sure how much your paycheck is going to be,” Jeanniey Walden, chief innovation and marketing officer at DailyPay, said during the session. “But with an earned wage access, employees log into the app to see how much they have earned from their employer, so they can associate that with their budget and their bill. For example, if I made $417 dollars so far and there’s only three days left until payday, but I know I need $500 to take care of my rent and my other expenses, I might decide to pick up another shift.”
Instead of a long-term pilot program as it initially planned, Kroger rolled the app out to all of its workers in stores nationwide in a matter of weeks early last year—one of the fastest benefits rollouts the company has ever done.
The employer also made sure to market and communicate the new benefit by putting up signs in the grocery stores, adding information about the benefit on the company’s intranet page and training managers and workers about its use.
The DailyPay app was a welcome relief for Kroger’s 400,000-plus employees, Monti said: “Overall, the feedback is extremely positive. People see it as insurance. ‘It’s there if I need it, I have the app, I’ve downloaded it, I don’t use it all the time, but I know it’s there if I absolutely need it,’” she said. The app was also a big help recently during the snowstorms in the South. With many workers in Texas having trouble getting their paper checks in the mail during the storms, many workers turned to DailyPay to get paid.
Earned wage access has been a growing HR tech tool, and employee benefit, for the last several years. But COVID-19 is rapidly accelerating its growth due to the pandemic’s changing economic situations, Mike West, vice president of Visa Direct at Visa, said during the panel.
“COVID has disrupted labor markets quickly,” he said. “We’ve seen millions of people furloughed or lose their job; others had to adjust to working from home. Many others deemed essential continued to work. Workers having access to money can be critical to make ends meet.”
Even before the pandemic, 78% of workers were living paycheck to paycheck, he said, referring to a Harris poll. And 44% of those workers had less than $500 dollars saved for unexpected expenses. Now, financial fragilities are even worse due to the pandemic.
As a result, “earned wage access or on-demand pay has been surging in popularity, especially in the last year,” West said.
Walden said satisfaction is high among employees who use the app and it increases their loyalty to their company. Employers, meanwhile, see “tremendous benefits in productivity and a significant reduction in turnover, which saves them money on recruiting and onboarding costs when you don’t have to constantly hire,” she said.
Because of that, she expects the benefit to become an even bigger trend in the coming years.
“For the employees, we see the future of earned wage access as not an if but a when,” she said. “There’s no reason why you shouldn’t be able to access your money as you earn it. The only thing that’s really holding us back is traditional paydays and payroll systems.”