6 days ago
How employers can help workers break the paycheck-to-paycheck cycle
A recent study from PYMNTS concluded that two in three Americans fall into the category of living 'paycheck to paycheck.' The term generally means that a worker can make ends meet and pay for basic necessities, but has little or no money for savings or unexpected expenses. But this very prevalent problem goes deeper.
The issue lies in that people are expected to budget for two weeks or a month at a time. The stark reality is that it is incredibly challenging to forecast their needs in two-week increments as opposed to managing their costs on a daily basis.
Compounding the problem is today's economic uncertainty. Everyone is watching and wondering what will happen with inflation, tariffs, and recession fears while monitoring the rising prices of gas, food, and basic necessities. With this uncertainty comes the question: How will these forces affect jobs? And for people living paycheck to paycheck, this stress is even more acute—especially when there is no safety net or financial cushion to fall back on.
As employees face uncertainty around making ends meet, employers have a unique opportunity to help ease some of those pressures. But simply offering a pay raise does not necessarily address the obstacles that workers face on their path to financial security.
To break the paycheck-to-paycheck cycle, employees need to be equipped with tools that empower them to take control of their financial lives. Research shows that most workers actually look to their employers for help with their financial health.
This speaks to the change in expectations from workers. In the past, when the employee's workday was done, whatever happened until they showed up for work the next day was no business of the boss. But times have changed. Employees now bring their stress about money from home to the workplace, and this can show up in the quality of their work. Workers who are financially stressed are less productive, less engaged, and frequently call out sick —and this is costing companies billions of dollars each year.
Instead of actually being sick, many workers are also calling out to their day jobs so they can do a gig job for the day to get paid when their shift ends. Over one in three (36%) people in the U.S. workforce, or about 57 million Americans, have a gig job either as their primary or secondary job—a dramatic increase from just a few years ago. The reason for many is to work somewhere where they feel in control of their financial outcomes.
It's now become a financial imperative for companies to provide the tools for their employees to succeed and bring the best version of themselves to work each day, and to help them alleviate the stressors that are preventing them from succeeding at work.
Here are three ways you can help your employees break the paycheck-to-paycheck cycle and establish a level of financial security.
1. FACILITATE FINANCIAL EDUCATION
Knowledge is power—yet balancing a personal budget is not taught in most schools. For many workers, especially those just starting out in their career journeys, offering concrete, actionable financial education can be incredibly valuable.
This education should be relatable and include relevant areas that impact workers on a daily basis, including learning how to create and stick to a daily budget. Understanding their daily costs for rent, car payments/transportation, and utilities is critical to understanding their spending money.
2. PROVIDE SHIFT MANAGEMENT OPTIONS
The needs and expectations of today's workforce have evolved, especially coming out of the global pandemic five years ago. They crave flexibility and a sustainable work-life balance. When employees have the option and flexibility to pick the shifts that align with their needs and priorities, they can be more engaged and productive. This also helps empower them to take extra shifts to help their bottom line and meet their own financial responsibilities.
3. OFFER FINANCIAL WELLNESS BENEFITS
In a 2024 survey, over one in three Americans said they were charged a late fee on a bill in the previous 12 months. For someone living paycheck to paycheck, each late fee is another step toward falling into the never-ending cycle of debt. Oftentimes, a late fee is a result of the misalignment of a bill and the timing of the paycheck.
Employers now can offer financial wellness benefits such as on-demand pay that enables workers to pay bills on their own schedule (full disclosure: DailyPay offers this solution). By empowering your employees with choice and flexibility with their pay, they can avoid late fees, incur less credit card debt, and avoid expensive options such as payday loans to make ends meet.
The greatest asset of any company is its people. Success is directly related to the day-to-day success of your workforce, so are you doing enough to make them successful? Are you equipping them with the tools they need to bring their best to work? Because when they succeed, you succeed. The time is now to support your employees on their financial wellness journey and help break the paycheck-to-paycheck cycle once and for all.
