Health care workers are quitting in droves. Can flexible paydays help?

The pandemic’s toll on frontline health care workers is almost unfathomable. It’s been a two-year barrage of patients, stress and fatigue that’s contributed to staffing shortages at a time when the need is greatest.

Employers are responding by reevaluating every aspect of their offers to new workers, including the way they receive their salaries.

IntelyCare, a Boston-based placement service for nursing professionals, has begun offering earned wage access, a benefit that enables employees to receive the earned portion of their paychecks ahead of the regular biweekly schedule.

“The power curve has shifted,” said John Shagoury, president and chief operating officer of IntelyCare. “Nurses have more control over whether they want to work and how. Having control over when they get paid contributes to work-life balance.”

“We’ve been thinking about them struggling to pay bills and make ends meet. A quicker access to funds could make a difference for them,” said John Shagoury, president and chief operating officer of IntelyCare.

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Earned wage access, also called early wage access or EWA, gained popularity early on in the pandemic. As a result, leading mainstream payment companies such as Mastercard and the bank technology vendor Fiserv entered new partnerships with EWA companies during 2021.

EWA providers say the product is proving its value as a retention and recruitment tool.

IntelyCare, which has about 30,000 nurses on its platform, launched DailyPay’s EWA product in June 2021 through a partnership with Denver-based human resources outsourcing firm ADP. Shortly after, IntelyCare reported a 300% rise in placements over 2020. EWA is not solely responsible for that growth, but it is a perk in a labor market in which the professionals have an unusual mix of financial challenges and burnout, but lots of options for where to find employment.

“We’ve been thinking about them struggling to pay bills and make ends meet. A quicker access to funds could make a difference for them,” Shagoury said. Health care staff access IntelyCare’s app to find shifts at hospitals, long-term care and other facilities, while the facilities also use the app to find staff. It’s a two-sided market that Shagoury likens to an “Uber for nurses.”

Total employment for licensed practical nurses fell 20% between April 2020 and June 2021, according to a January 2022 study from Health Affairs. Employment for nurses’ aids fell 10% and registered nurses fell 1%. Total employment across nursing categories is still 10% below prepandemic levels. The shortage is substantial enough to create larger economic pressure on hospitals and other medical providers.

The decline is due to a lack of available staff, Health Affairs reports. For example, in Vermont, about 600 students graduate from nursing school each year, short of the 9,000 that will be needed in the next seven years to fill vacancies.

Research from the Minneapolis-based EWA provider Branch found 86% of its client employers saw an average increase of 38% in applications when Branch was included in job postings. In a survey of 3,000 hourly employees in food service, retail and health care, 94% said accessing pay early helps ease financial concerns; and staff enrolled in EWA stayed at their jobs 60% longer. Another 71% felt “more incentivized” to go to work at an employer that offered instant or early pay.

“Along with offering instant earned wage access for free, we’ve found that accelerating payments in other ways and eliminating fees can help workers as well, such as distributing cashless tips right after each shift or providing rewards to earn cash back on everyday spending,” said Atif Siddiqi, founder and CEO of Branch.

DailyPay, an EWA firm based in New York launched a digital wallet in January that supports EWA disbursement. The wallet loads each day a user works. DailyPay is positioning the wallet as a way to mitigate overdrafts, as well as a retention play for its base of 500 employers, including Dick’s Tractor and Supply, and Kroger. DailyPay’s wallet connects to more than 6,000 financial institutions and supports bill pay, investing and digital payments. DailyPay’s bank partners include PNC, for which it supports real-time salary advances.

“So many people are focused on saving and building emergency funds,” said Jeenniey Walden, chief innovation and marketing officer at DailyPay. “Flexible payroll puts people in a position to know if they can take time off, or if they should schedule additional shifts.”

EWA firms traditionally positioned their products as a safer alternative to payday lending, though consumer groups have called for regulations that treat EWA advances as credit. Business models differ, but EWA companies usually charge fees of under $10 per transaction. The Consumer Financial Protection Bureau has generally taken a lighter touch on EWA than on payday lending.

Gartner reports EWA has “emerged as a cost-effective alternative that helps employees meet urgent unexpected needs and, thus, reduces financial stress.” Gartner adds retention may also improve since workers are less likely to leave for another employer that does not have a similar benefit.

“If I’m looking at three companies and one allows you to get paid when you want and the others say you have to get paid every other Friday, there’s a value in that,” said Matt Pierce, founder and CEO of Immediate, an EWA provider based in Birmingham, Alabama.

Immediate recently partnered with Automatic Payroll Systems, a human resources outsourcer based in Shreveport, Louisiana, to offer a range of financial wellness products including EWA. Immediate also allows salary advances to directly load onto prepaid cards that can be used to pay bills.

“As the Great Resignation continues, this is a way for companies to get in front of people,” Pierce said. “That makes earned wage access a super fast-growing space.”

The nursing shortage mirrors employment issues in other areas. More than 4.5 million workers quit their jobs in November, a month that usually sees an uptick in hiring ahead of the holidays, according to the U.S. Bureau of Labor Statistics. The shortages are expected to last through 2022 and impact categories that are favorable to payroll alternatives such as EWA such as food service, health care, utilities, and transportation.

“As the world tries to come back from the pandemic, we’re finding more types of employers are seeing early wage access,” said Peter Mullen, senior vice president at PayActiv in San Francisco.

Gig workers, freelancers and contractors are the traditional sweet spot for EWA, and today they are being joined by staff at quick-service restaurants, in-home care providers and call centers, Mullen said. PayActiv has also increased its efforts to place its service in recruitment advertisements.

“An HR person can offer prospective employees greater control and access to liquidity as part of their daily lives,” Mullen said.

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