How Changes in the Workforce Have Impacted Pay
A business's commitment to using the latest technology for pay often helps people choose where they work and how they work. Understanding what those employees expect will help your organization prepare for the future of pay.
Other than throwing a party, there may be no better way to observe National Payroll Week than to look at how changes in the workforce have affected pay.
After all, pay is perhaps the most significant measure of how an organization values its employees. A business that understands the transformations in the way people work and expect to be compensated will be in a strong position to retain its current workforce and attract new employees.
The changes illustrate how employees rely on technology more than ever. Whether it's benefiting from cloud services or mobile devices, people find so much worth in technology when they're not working that they expect their employers to offer the same easy-to-use, responsive digital tools.
An organization's commitment to using the latest technology for pay often helps people choose where they work and how they work. Understanding what those employees expect will help your organization prepare for the future of pay.
It's an Instant, Mobile World
First, it helps to consider the impending tidal wave of demographic changes in employment. By 2020, millennials will represent 50 percent of the global workforce, according to PwC. They are followed by an even larger demographic: Generation Z, whose oldest members are soon set to graduate from college.
Both generations have had electronics in their hands since they were children. Now young consumers, they're accustomed to using apps for shopping, entertainment and banking. They're not the only ones. Even a majority of Gen Xers are now conducting financial transactions on a mobile device, The Financial Brand reports.
These digitally-inclined customers use their banks' mobile platforms before stepping inside a brick-and-mortar branch. They also rely on applications like Venmo, Zelle and PayPal to leapfrog the traditional day-long waiting period for banks to transfer funds via the Automated Clearing House (ACH). These apps permit money to change hands faster than before. This expectation for real-time, mobile financial services extends beyond money. Employees also use mobile HR apps more frequently than they do stationary HR apps — as much as 60 percent more often, according to ADP Research Institute®.
Businesses need to consider moving elements of their payroll processes to accommodate their employees' mobile routines if they want to be attractive places to work. There's simply no stopping the "mobile movement."
Freelancers Expect No-Hassle Pay
Other changes in the workforce have affected pay. While many of these changes include mobile services, they're also unique in their own way and call for further study by businesses.
The gig economy, for one, has upended the longstanding concept that employees have to work for an employer. Freelancers are growing in number and are increasingly becoming a go-to resource for services. More than 57 million Americans, which equates to 36 percent of the U.S. workforce, are freelancing and contributing about $1.4 trillion annually to the economy, according to a recent survey by Upwork and the Freelancers Union.
What's striking about the survey is that many people want to work on their own. Sixty-three percent of the surveyed freelancers said they go it alone by choice.
As businesses increasingly use contracted workers, they'll find that freelancers have set expectations about pay. Promising to send a check in the mail won't assuage them. Many organizations are ahead of the curve and already pay freelancers through direct pay services. Skilled and veteran freelancers will prefer to work with those businesses, and will pass on organizations that can't pay in an efficient manner.
Other Developments in Pay
Going electronic doesn't mean organizations can offer only mobile payments. They can also transfer employees' wages onto payroll cards. Think of it as giving your employees a debit or credit card. A payroll card can be used to purchase goods and services, or to withdraw money at a bank ATM. There is a drawback: card-related fees. But paycards still offer several advantages. They are regulated and can be subject to federal and state legal requirements, particularly when used to pay wages. And they give unbanked and underbanked employees — those who don't have bank accounts and those who do have accounts but barely use banking services — a convenient way to spend their money. According to CNBC, 30 percent of U.S. households are unbanked or underbanked.
Also, some businesses, including Walmart and McDonald's, have started giving their employees immediate access to part of their earned pay. This could quickly become a popular payment method. Early access to earned wages gives employees an opportunity to handle financial emergencies like hospital visits, major car repairs and other unexpected expenses before the scheduled payday.
These sweeping changes will only continue to influence where people want to work. Take some time this National Payroll Week to review your business's commitment to improving and modernizing the delivery of pay.