Mission to Grow: A Small Business Guide to Cash, Compliance, and the War for Talent

MTG - EP 125 - Shirish Lal
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Shirish: [00:00:00] Yeah, I think the key thing with earned wage access versus, you know, historical products that were paycheck advances or payday loans is the lending is done only against wages that are earned, not against the paycheck overall. So that amount can go up Over the course of the pay period, but is not designed so that, let's say at the start of the pay period, you're lending against the entire paycheck.

So, that's where the term earned wage access comes in

Intro: Welcome to Mission to Grow, the small business guide to cash, compliance, and the war for talent. I'm your host, Mike Vannoy. Each week, we'll bring you experts in accounting, finance, human resources, benefits, employment law, and more. You'll learn ways to access capital through creative financing and tax strategies, tactical information you need to stay compliant with ever changing employment laws, and people strategies you need to win the war for talent.

Mission to Grow is sponsored by Asure helps more than [00:01:00] 100, 000 businesses get access to capital. Stay compliant and develop the talent they need to grow. Enjoy the show.

Mike: Earned Wage Access, On Demand Pay, Real Time Pay. This thing's got a lot of names. It's evolved a whole bunch in this last few years in the payroll and HR industry. Um, but whether you plan to use it, you do use it, Or you're just going to compete against somebody else who is using it. There's a bunch of things that small business owners and entrepreneurs really need to understand about this whole concept about employees accessing their pay when they want, not the traditional weekly, bi weekly, some monthly payroll series.

Uh, this world is changing and we need to unpack it. So I've got a great guest to, to, to take us through this information today. Uh, he has, uh, he's a leader with more than 25 years experience growing companies. Uh, he's earned his bachelor of science, uh, electrical engineering from MIT. He's got his MBA from Harvard.

Uh, he held key executive roles, [00:02:00] including an 11 year run as the chief marketing officer at CenturyLink, where he helped scale that business from 2. 6 billion to 18 billion in revenue. Uh, he's currently the co founder and COO at Grit Financial. Welcome to the show, Shirish Lal.

Shirish: Thank you, Mike. I'm really, really happy to be here and really happy to be talking about this subject.

Mike: Yeah. You know what, this, this is, this is a big, so. Uh, you know, lots of talk about the economy and inflation. And I think it's really kind of brought this whole topic to a head. This there's, there's been an evolution of this concept. The industry insiders would call this, uh, EWA earned wage access, but to, to employees, this is on demand payroll when, when, when they want it.

And this thing's just changed a whole bunch. And I think what was maybe a novel concept. Oh, call it three to five years ago is starting to become just a standard way of doing business. And if you're [00:03:00] going to be competitive, you have to either do it or know how to compete against it. So, uh, let, let, let's maybe start with this, uh, Sreesh, can you maybe just kind of give us a, a, a, a working definition of what this, and we'll call it earned wage access for the purpose of this show, knowing it's got a whole bunch of names, give us just a working definition of what this actually is.

That small business owners need to understand.

Shirish: Yeah, I think the key thing with earned wage access versus, you know, historical products that were paycheck advances or payday loans is the lending is done only against wages that are earned, not against the paycheck overall. So that amount can go up Over the course of the pay period, but is not designed so that, let's say at the start of the pay period, you're lending against the entire paycheck.

So, that's where the term earned wage access comes in, and one of the reasons it is not treated as a [00:04:00] loan the same way, in this space historically have been.

Mike: Got it. So, so just practically speaking, most business owners have weekly, bi weekly, semi monthly pay periods. Uh, if it's, uh, let's say it's a, a bi weekly pay period by working from a Sunday to two weeks later, the Monday through two weeks later, the following Sunday, there's my pay period. Maybe that following Friday I get.

I get, uh, as an employee, I get my paycheck. Maybe I get my direct deposit. Maybe they hand me a paper check, uh, different, different flavors there. Just practically speaking, what this means is I, as an employee, can take, use whatever words you want. I can take an advance. I can draw on the wages that I've already earned, right?

Shirish: That's right. And you know, really what you'll find is from an employee's perspective, those who utilize this product, they really don't think of it so much as an advance as they think of [00:05:00] it as on demand pay. So in their minds, it's earnings I've already had, uh, made, and I'm getting access to earnings I've already worked for.

And it's a, it's a subtle but critical difference, uh, because all of the data shows that they are much more satisfied with the concept of on demand pay than the whole concept of taking an advance or a loan against your paycheck.

Mike: Well, and this whole thing has evolved over the last few years. Like this, this kind of goes, this has not so flattering roots, I guess, maybe an evolution, not that it has roots, but it's an evolution out of the payday loan business. Can you just kind of maybe take us through the history? How does the payday loan model work?

What is their business model? How, how they underwrite risk and therefore why they charge these obscene rates? Kind of gouging the people who are most [00:06:00] vulnerable. And how has that kind of morphed over time into, um, into this digitally centric earned wage access business?

Shirish: Yeah, that's a really good question. So if you, if I go back prior to development of earned wage access, you had banks as the primary financial institutions which lend. For the most part, they were focused on customers with deposit balances and good credit scores. That's really where their focus was. So for that segment of the market that ended up with payday loans that didn't appear attractive for banks, given their focus, um, you had this, um, Alternative financial institution developed called Payday Loan Industry.

They've set up initially retail locations, which had a lot of cost associated with them, and relied on the customer themselves to direct the direct [00:07:00] deposit to them. Very high fees, a lot of cost to secure those loans. Um, and they took advantage of the situation, the average interest rate charged in the U.

S. on a payday loan is 391 percent annualized. Um, so that was, but that was all that was there at that point in terms of sort of, a lender of last resort for, for customers who didn't have alternatives.

Mike: And, and let's just talk about the kind of employees who, who, who leverage this, this, these are typically your most vulnerable, right? So they probably don't, you know, you talked about, you know, uh, uh, Employees who don't have access maybe to the credit worthiness or the income to go to a bank, but I don't think we're talking about loans.

I think we're probably talking about credit cards here, right? So, maybe it's an employee who, maybe they got a debit card, maybe it's Visa or [00:08:00] MasterCard branded that they can buy with plastic electronically, but they don't have credit cards because they don't have the credit from a credit card company, or the dollar amounts are so small.

And they've got an emergency. They've got a sick kid. They need groceries. They have a car that broke down. Um, you know, I think it's

Shirish: Yeah. I mean, if you, if you look at it, there's a combination of both emergency issues, uh, just as you said, as well as just sort of, if you are living paycheck to paycheck, the pace of life, you know, a bill comes in with an exorbitant late fee. Or, you know, the alternative is at times is a overdraft,

Mike: Yeah.

Shirish: which is a very expensive form of debt.

So late fees, overdraft fees, and then of course other issues around this area like payday loans. But yeah, typically a lot of these customers don't have that safety net of a credit card, [00:09:00] and this is ends up being their alternative, um, which they're. somewhat forced to go to because they don't have other alternatives.

Mike: Yeah. All right. So, so I think everybody knows what the payday loans places look like. It's typically not the best neighborhoods. Bars on the windows. Uh, the industry itself has a fairly, you know, bad name. Uh, I think regulators are cracking down because of the Uh, uh, uh, uh, implied interest rates, uh, uh, of these things.

How has this thing morphed over time into becoming, uh, a real viable tool for employers to offer to their employees and what makes this now simple for employees to use?

Shirish: Yeah, I, you know, the great thing about this is the power of technology. So you had technology set up to integrate with employer systems, payroll systems and or time and timekeeping [00:10:00] systems so that, a provider could know exactly how much was earned. And through the integration with payroll, put themselves in a position to collect that amount.

So it was much lower touch in terms of no storefront, uh, much more efficient in terms of the way funds were advanced in an app to the customer and collected from the payroll system. That led to a system that you really saw a much simpler approach for the employees, where through an app they would pay. and it still was, you know, those tend to range from 3 to 5 per, advance or on demand pay transaction, if you will. but something that was certainly better than the alternatives they were facing prior to this without the technology advantage of this new product.

Mike: And so do I have it right? So [00:11:00] basically, so you mentioned the brick and mortar nature of the, of the payday loan folks. There's just also the lack of technology. So, I mean, we, it, it's not, it's not difficult to vilify these folks, but they do have legitimate expenses, right? There's the brick and mortar expense, but there's also the risk of someone, Hey, here's the last three pay stubs from my employer, uh, to prove that I make.

500 a week. Can you give me an advance on my next one for 250? They have no. that they have no way of verifying that person could have just got fired or quit that job and there is no next paycheck. And so, uh, they probably have to charge pretty exorbitant fees to underwrite the risk of making that loan.

Is that a fair way to describe it?

Shirish: That's a fair way to think about it. Yeah. I mean, from a lender perspective, If we want this to be efficient and there's only way to bring the cost down is to be efficient, um, you really need the power of technology. You [00:12:00] really need to integrate with the employer systems, the payroll system primarily, and the ability to do that efficiently, um, is critical to this whole process.

So that was, um, that's something that really has come forward and allowed for a much better product to be put in place that, and that's the product that is hit a real need among a large, a large portion of the population in terms of the ability to have access to their pay or on demand pay. So that they can cover sort of the pace of life, what if this bill comes in, or I have this issue, really give some of the flexibility, um, and that's why it's become so popular.

Mike: And so just to kind of unpack what that looks like today. So instead of a brick and mortar business that has. Big overhead and employees to pay in their risky transactions. So they have to charge a lot of money cause they're going to have big losses that they have [00:13:00] to cover in a modern world where the earned wage access provider, the on demand pay provider can plug into payroll systems like ours at Asure and they have electronic verification.

This is, this is an active employee. They're employed right now. Here's their pay history. And so the, the, the, There's no friction. There's very low labor. There's not a bunch of overhead. So it's a low cost transaction, but also much easier, lower risk to lend the money and advance the money because you know, this employee is an active employee and they're, they're working.

So, uh, cost comes out of the entire system. Complexity comes out of the entire system and allows employees to essentially access their money before payday. For, I'd say up until the very recent history for, you know, very near what they would have in an ATM fee, 3 to 5. Am I summarizing?

Shirish: That's right. That is, that's spot [00:14:00] on, and I think you hit one other key point, which was Simple for the customer. An app, it's easy to use. Very, very simple. So much better process for the actual employee, uh, going through it. So low friction, everything it is key to why this has taken off and become a very sought after benefit.

Mike: And I just think about, you know, it's so easy to vilify these folks, you know, for, for those of us who have maybe done well and are not done well, they're living comfortably, you don't know everybody else's story. And it's easy to judge people. Oh, they must be bad with their money. They didn't save for a rainy day.

Um, you don't know what everybody else's story is. They could have a sick kid. They could have a spousal situation. That's just impossible. Um, you just don't know. And for someone who's just working their tail off to have to go into maybe a, a not safe neighborhood, uh, after hours of their [00:15:00] work, because, you know, they can't do it during business hours cause they got to earn money.

Um, the stigma I just, I, you know, I suspect people don't, throw their shoulders back, head held high, walking into a payday loan facility because they have a crisis because their car broke down and they can't get to work Monday if they don't fix this thing and they don't have the money. Here's a private way to just do it all right here for, you know, an ATM fee.

It's just kind of a no brainer from an employee standpoint, right?

Shirish: Uh, that's right. And you hit one other key point in there that has come out in a lot of the research. One of the reasons this is so popular is it's a service that has less social stigma than alternatives such as payday loans or friends and family. It's a dignified way, um, in order because it's from the customer standpoint, it's doing nothing more than accessing what I've [00:16:00] already earned to meet my pace of life.

It be it an emergency, be it a bill that just kind of came in a little faster than you thought. It allows them to really manage their situation with. Only what they've earned and, um, that's very dignified and it's a much, much better experience, I think, all the way around, not just convenience, but for the overall well being and, um, customers who use Earned Wage Access.

overwhelmingly, even from studies from the Financial Health Network, report an improvement in their overall financial health because they have access to on demand pay.

Mike: Say more about that because You know, I was doing some research for our conversation here. It's like 61 percent of all Americans, working Americans live paycheck to paycheck. Um, and so this is not like a small [00:17:00] niche group we're talking about here. Uh, you know, whether it's, whether it's family members or, uh, you know, student debt, certainly wages have not gone up at the same rate as inflation just for the basics of groceries.

So, uh, let, let, let's, let's talk a little bit about financial health of employees, um, how this can help. Why should employers care? about the financial health of their employees? Maybe that's in the past. That would be like a taboo subject. Hey, I love my employees. I want them to be financially well, but that's not really many of my business.

So why, why should employers care about this?

Shirish: There's no question the studies show that, um, financial stress just, uh, takes focus away from the things that matter, um, can be, can be quite consuming for the employee and certainly impacts their overall satisfaction. [00:18:00] And, uh, I'll give you this set of statistics on how it can. 54 percent of American households incur either late fees or overdraft fees.

And of that 54%, on average, they're losing about 600 a year in overdraft fees and late fees. And it's, that's just part of it. There's credit score losses that go with that, on top of that. And that has an impact. And then. Imagine the stress of that, that you're always kind of feeling behind and not in control.

So there's no question, overwhelmingly, um, EDA earned wage access users report benefits here. So, for example, 32 percent before, taking earned wage access or getting access to their wages had reported that they had no overdraft or late fees. [00:19:00] After, using Earned Wage Access, that number went from 32 percent to 74 percent who said they did not incur overdraft fees or late fees.

So you have both the monetary impact, but the stress impact. And, uh, the second part of that is, uh, you know, if you look at employees and what they're saying. 80 plus percent are saying that I would consider changing employers because of having availability of earned wage access. That's how, that's how important it is in terms of reducing stress and feeling in control of your finances.

And it does go back to your number, 60 to 70 percent of American households are living paycheck to paycheck, uh, which is. A high stress situation.

Mike: Yeah, yeah. So we talked about the evolution coming out of, uh, the payday loan business. This is [00:20:00] kind of over the last half decade evolved in a pretty sophisticated, uh, low cost digital, uh, I'd say a mobile first kind of, kind of, uh, uh, an approach. So it doesn't have the social stigma for employees, much, much, much lower cost.

Yeah. Um, and their employer is none the wiser. So they're not asking to ask for an advance from their boss and have some embarrassing situation. But this thing has evolved even further in this last couple of years. Um, you know, we're, uh, you know, do my very best on this show to just make thought leadership, educate, free education for business owners.

We don't pitch products here. Um, but this is certainly the direction we're going for our on demand pay solution is a way to make this zero cost because of changes that are happening in the entire banking industry. Can, can you maybe speak into that Cherish about how

Shirish: Yeah, that's a, so kind of simultaneously [00:21:00] with the rise of earned wage access, you know, in the same general timeframe, you had a class of banks come out, um, digital banks that were no longer built around interest, but around merchant fees earned from debit cards. And so the interesting thing about that is.

You know, this group that might not have been valued by traditional banks actually spend significant amounts of money on debit cards, which of course, um, many of them don't necessarily have easy access to credit cards, so debit cards become, uh, one of their primary means of spending money on cards. So, when you put these two trends together, what we've seen and what we believe the future is going to be is really more of a holistic, uh, service for customers in this category, [00:22:00] where if the earned wage axis is a feature of our overall banking service, and that feature when funds are taken on the card and spent on the card, are at no cost. Um, but we think it goes further than that. We think it's all about what is right for the customer. So that can be things

Mike: And when you say the customer, you're talking employees.

Shirish: the employees. Yes, we're, we, we, if you look at Working American, um, how do you build a great financial product for Working Americans? Obviously earned wage access would be part of it, But it could also include things like customers in this segment are often remitting money to overseas family or friends.

So having that service integrated, uh, credit score repair or credit score establishment is a key concern in this [00:23:00] segment and can really help customers grow, right? Be it purchasing a home or buying a car, being able to establish and improve their credit is really a big deal. So, We're, we kind of think the future is not just about earned wage access, but a service that really, really meets the needs and the concerns of this customer segment.

More broad, of which of course, it's all built around kind of a core banking service. This

Mike: So, again, I'm going back in time. Payday loans. I, I needed money. I had my car broke down. Uh, I can't get to work. I can't buy groceries. So I take my pay stubs. I find a way to get there somehow. I, I show them my pay stubs. They charge me outrageous rates to get advance. So I can fix my car and get to work. A lot of friction, a lot of expense, a lot of social stigma in that process.

It [00:24:00] evolves to a digital process around, uh, payroll. So an employee can make their request on a mobile device. Uh, they pay an ATM ish kind of a fee, uh, to, uh, access the wages that they've already earned. and just haven't received on their paycheck yet. They get that and then those deductions come out at the end of their paycheck.

So it all trues up. No cost, low, very low cost, very low friction, not a stigma problem, but still America's most vulnerable employees, who need this money, are still paying ATM fees. And if you're paying a 5 ATM fee to access, you know, 100 of your money. for groceries. I know people do it all day, every day, but that's a five, that's 5 percent of your hundred bucks on an annualized basis.

That's an obscene interest rate,

Shirish: That's

Mike: right? So, not what you're [00:25:00] saying is now employees have the ability to get advance payment, take it on the wages that they've earned. So this on demand pay for free. And because it's now on a pay card, because this has evolved into a, really a virtual bank account that I can use that bank account and now I can pay my bills.

I can, I can pay for that car repair right from the card. I can pay for the groceries that I need from the card. I can pay that medical bill from the card. And all, all people who use credit cards, who use debit cards, What you don't know is the merchant, the, the grocery store, the restaurant, the whomever is paying that two to 3%, uh, interest on that transaction to the credit card companies.

And it's participation in that, that really funds this entire exercise to make it completely free for employees. Am I saying that right?

Shirish: That's correct. And that's the unique aspect of [00:26:00] where this is going, that this becomes, because the focus now with this new type of bank, digital bank, is all about the spend on the debit card and getting those merchant fees that you mentioned, so it's Walmart, it's Target, it's wherever you go, it's It's the merchant that's really footing the bill.

Um, that really changes the whole dynamic. The whole dynamic of this customer becomes they're a valuable customer, right? They are our spending. Earned wage access is just a feature that is available to them because they're a valuable customer.

Mike: Yeah.

Shirish: And that's the critical thing. I, and I, I think, um, that's going to be the mindset shift, the power of technology.

and structure of the industry is going to turn this customer into a valuable customer. That's going to get, [00:27:00] you know, for some people it'll be their platinum customer, right? It's, I've got a relationship, I've got the technology in place. I want to work really hard to service this customer to earn their banking business, to earn those merchant fees, and those fees are sufficient to fund not only earned wage access at no cost to the employee, but many other services that can be available to that type of customer.

Again, with this new model. And it's really those two elements, what you said, the change in technology that drove what we saw in earned wage access, along with the shift towards a new type of banking model. Those two trends coming together are really powerful in terms of where we see the future for how this group of employees are served.

And the interesting thing about it, at the center of that is the employer. At the center [00:28:00] of it, because the employer, that relationship with the employee, having the payroll system, the employer really becomes a critical element to enable all these capabilities that can be offered to their employees.

Mike: All right. So I think we've covered it. Uh, the evolution from, from, uh, payday loans to this on demand pay for an ATM ish kind of a fee to, there's a new world of virtual banking that there's enough, the providers can make enough money on the interchange fees from their credit cards that they're able to offer services like this for free to employees and free to the employers.

So the cost has come out, the friction has come out, uh, thankfully the stigma has come out because employees can do it privately and securely, uh, uh, from their, from their mobile device. So we've established that. That's really, [00:29:00] really cool. I think, you know, we don't, you know, you know, I probably will have, uh, maybe I'll have you back on another episode.

We can just talk about the new world of banking because this is, this is an exciting place. But I think we've established how we got here to be a very low cost, low, low stigma, uh, uh, freeway for people to, uh, access their earned wages. Now let's kind of shift. So that's employee focus. Let's shift to the employers.

Why should an employer care? beyond altruistic reasons that they would just simply like to be nice to their employees.

Shirish: Yeah, you know, there's some major benefits for employers. First and foremost, it is, all the studies show, this is a highly desirable benefit for which employees will make decisions on where they work, and, um, that's backed up by data from the industry that they're working on. Retention is improved when employees have access [00:30:00] to earn wage access.

So you, the second trend is it's just going to become part of the market. We've already got some of the country's largest, the two largest employers, Walmart and Amazon, many others, Target, Walmart, Yum! Brands, any segment you're in, um, If employee retention is an issue or something that's a focus, and I've spoken to very few business leaders for whom it's not, this is a tool that will help with employee retention as well as recruiting.

The second benefit, perhaps softer, is when you take this whole issue of financial health and you can diminish how much time it's consuming for employees. It just gives them more time to focus on work and their life. We believe that makes them more productive. So given [00:31:00] the cost benefit, the cost is really nothing for employers and the benefit in terms of retention, recruiting more focused and productive employees.

We think it's a huge win for employers.

Mike: Let's focus on the front end here and talk, uh, recruiting first. Cause I think it's important. It will, I want to hit retention because I think that's a little bit softer. I don't think people realize how much value there is there and the productivity that can come with, with a tool like this, but to me, the way I just think this is, I think I try to simplify it as saying, imagine you own a restaurant and you have a competing restaurant across the street.

And that, that restaurant has a sign on the front door, help wanted, get paid at the end of your shift. And you can't do that. I, we assume that all other things equal, where the hell do you think the [00:32:00] employee is going to go to work? Right. And we all know there's a, there's a labor shortage that is not going away anytime soon.

So what can you tell us about some of these competitive advantages for an

Shirish: You know, you, you hit one that's super interesting, right? You, switch jobs and, you know, let's say you, you start at the first day of the pay cycle. you wait two weeks, but then it's typically another week for a payroll processing. Now you're out three weeks without access to your pay when you're used to getting it every two weeks.

And there are situations that are even worse than that. So you're asking the employee to be in a good financial position to make that all work. Whereas I look across the street and I've got access to, I'm not waiting three weeks, I'm getting access to those wages, you know, the next day [00:33:00] as I need them to cover my life.

So even at that moment of making a decision on where to go, it's a, you know, it's a substantive benefit if you've got access to your wages through EW, Earned Wage Access. Obviously that becomes an ongoing benefit over time. So I just, it's a very significant one. When we look at hiring decisions and the attractiveness to employees.

Mike: Yeah. And I think it's probably self evident if I'm hiring, if it's maybe, maybe it's a minimum wage or minimum wage ish job. Um, unemployment today, it's 4. 1%. It's been sub 4 percent for a long time. Um, you know, if you watch the show regularly, you hear me talk all the time about birth rates 30 years ago and baby boomers retiring.

There's a labor shortage that's here for a long time. This is not, this is not going away. [00:34:00] Um, and so, It just seems obvious for your front line entry level workers. Oh, both of these jobs pay the minimum wage and maybe I'm in a county or a city or local municipality pays 15 an hour as my minimum wage. So both restaurants, either I love it or hate it, doesn't matter.

It's the same darn work. It's the same pay. But this one I get, I can take it and pay at the end of my shift. It's kind of just a no brainer, which, which I would choose. I think where people maybe miss a little bit is. In the year I talked earlier, it's the 61 percent of all Americans living paycheck to paycheck and flip back to my to my other note here um Middle income households earning between 50 and a hundred thousand dollars a year It's 65 of them live in paycheck to paycheck higher income hundred thousand or more 44 percent of people making more than a hundred thousand dollars a year are still living paycheck to paycheck.

So this is [00:35:00] not about Um, boy, do I, do I really need to help out the young kids in this entry level job at this restaurant or, uh, look down my nose at another group of employees that, uh, I don't need to help them. In a, in a tight labor market, people are living paycheck to paycheck in ways that you will never understand.

Cause you don't know their story for all kinds of jobs. This is not just an entry level thing anymore. What do you

Shirish: there's no question. There's no question. It's very broad based. I've seen shocking numbers for even income as high as 250, 000. so this is a stress that goes a lot deeper and a lot further than I think any of us imagine unless we're seeing the statistics. And again, it goes back to you're providing a solution that's dignified, right?

That takes stress out of it. [00:36:00] And probably goes a lot further across an employee base than you might imagine because you don't know exactly what the situation is. Um, you know, what each person is dealing with as you add, you know, as you get to older employees that might be in that higher income bracket.

They've got children, they've got other responsibilities that come with time that also put stress, even if you are older. higher income, um, still a tremendous amount of stress, uh, for which a product like this can be highly beneficial.

Mike: Anything else you can think of we should talk about Tricia and the recruiting end and the front end of how employers should be thinking about this as a tool to recruit employees?

Shirish: No, I, I think we've hit that one home. I think that is really, there's just a tremendous benefit and I think the end game here is what [00:37:00] will amount to an expectation. We're on that path.

Mike: Yeah. I, and I think the inevitability here is, man, I don't have the, I don't have the numbers, but I, can just say my own experience five years ago, this was a concept I knew some clients. taking advantage of, now we're in the thousand, a couple of years ago in the thousands, now tens of thousands. This thing is kind of rocket shipping because of all the costs coming out, the stigma coming out, the technology advancements.

This is kind of starting to become a standard way of doing business for many firms. I'd say we're not over the tipping point yet, but it's, we're getting there quickly. if I would go so far as to say, if you're not offering this to your employees as a competitive advantage, just know you're competing against firms that are, right?

Shirish: That's right. You're, you're absolutely, um, at a [00:38:00] disadvantage, uh, if you're not offering this service. And of course, you've got some of the bigger firms like Walmart and Amazon that have more resources, let's say, to implement this type of program. But I think the other part we're going to see, and obviously, uh, quickly is The payroll, the, uh, the payroll companies themselves making it easier for employers of all sizes.

to offer this because it is so fundamental. And I think that's the second piece that you'll quickly see, um, businesses of any size having the option of being able to offer this kind of service, um, without let's say all the resources of an Amazon.

Mike: All right. So let's, so we talked recruiting, either you're going to use it as a competitive advantage by offering on demand pay to your prospective employees, or you're going to compete against the firm that is. So just know that. [00:39:00] Now, now that you've got the employee on board. What is it about this kind of a service that helps to retain employees?

Shirish: So what it really does, and if you think about, um, kind of an employee mindset, the more the employee is You know, if you're in a position where you feel you're doing well financially, your financial health is good, all of the surveys show that, that, uh, employees who use this service feel their financial health is improved.

At that point, if the, if the employee feels good financially, they're more likely to stay. The moment you're feeling behind, you can't keep up, well at that moment, what's your alternative? Your alternative is Maybe I need to go find another job, something that pays more. It just brings this underlying [00:40:00] dissatisfaction, uh, around your financial health.

So, we, what we see in the data is, an improvement in financial health leading to a more stable employment.

Mike: It's not just, uh, it's not theoretical that financial stress impacts performance if, if the, if the financial need is real. From your employee, they can't afford groceries. They've got a sick kid. They're going to do whatever they have to in their own self interest, including maybe it's as simple and seemingly harmless as they're a, they're a doing a grocery delivery or Uber driver, uh, in the evenings and on the weekends.

And

Shirish: That's right. And you know, one of the things we've seen sort of behind the scenes is a tremendous number of employers having informal programs [00:41:00] around lending that are out there. Now those programs You know, our varying sort of qualities, administration is not easy, uh, but this is a real need, um, and it's something we've seen sort of behind the scenes, employers, um, helping sometimes with this type of service in a more informal way.

But that's exactly right. The stress of, I've got a sick child, and I, where am I going to get the funds to get them cared for? Um,

Mike: And let's, let's just give the benefit of the doubt that you're paying a fair wage. You're not taking advantage of these people. You don't know their story. They need the money. So they're gonna, they're gonna Uber all night long tonight and all night long tomorrow night. And then the next day they're going to come in and they're going to be a wreck.

They're not going to be useful to you. And God bless them because they're doing what they have to do to survive and to feed their families. But the, it just seems very obvious, the [00:42:00] productivity loss, you're not going to get the best from that person because how could you, because the, the, the sacrifices that they're having to make, right?

Shirish: there, there's no doubt that once you get into financial stress It's going to detract in many different ways from the on the job performance, the amount of focus they can have for their job, as well as kind of, they start, again, you hit that dissatisfaction point that might cause a job search to start just to relieve stress.

Mike: Something we haven't really talked much about is I'd say the evolution of our workforce. I think about, you know, uh, My, my daughters, they'll, you know, they're the ones in high school, ones in college, uh, when they, they'll babysit for someone like, uh, come home from college in the weekend and babysit for the neighbor across the street, my, my oldest girl, [00:43:00] you know, she'll get paid on the ride home.

Um, Venmo here. There's just this mentality of why would I wait two weeks to get paid for a job? That's not how the world works. Cause it's not the world. It's not how the world works in the world that they grew up in. Right. So I think there's, I'm curious for your thoughts, Sherice, just on this changing of expectations of a workforce in general and how employers need to accommodate that.

Shirish: So there's, there's certainly, uh, you know, Uber drivers, others, and this sort of, um, if you think about apps and putting people to work as what, kind of in a contract, contract or relationship where they would get paid fairly quickly. It started creating this sort of different perception on how pay should work.

Um, [00:44:00] and this product, we think over time, just feeds into this whole concept of why the paycheck, you know, why shouldn't I have access to my wages as I need them? And that evolution, um, brings in the whole gig worker, um, you know, Uber type of concept into this mix. And we've seen this younger generation quick to change the way they think about the world and what they expect.

And if you didn't grow up in that older world, it's not going to take long. And I think we've seen it across many categories. where that young worker or that young consumer all of a sudden has this new set of expectations. And um, this will be another area because you have pressure not just from the growth of earned wage access, you also have pressure from This sort of gig worker economy, [00:45:00] both feeding into this changing perception of how pay should be available to the worker.

Mike: Yeah. Yeah. Can you maybe, I'm curious for your thoughts. I think you have some, some insights on just financial wellness of employees in general, um, and maybe just financial wellness of a workforce. And so share with us what you can, but then I want to, I want, I'd encourage folks to hear this through the lens of you're trying to be an employer of choice.

How, if you know that. your local workforce, your remote workforce, uh, that your, your talent pool you're trying to draw from. If they're feeling these pains, what can you do as an employer to stand out as a great option? what, what can you tell us about financial wellness for employees?

Shirish: Um, so, look, the more knowledge employees [00:46:00] have, the better off they are, right? Having good, good financial services available to them, um, but also the education of, um, What are good ways to save money? What's a good way to think about spending? And making sure they have access to great financial services.

Whatever you can provide. Be that 401ks, be it um, a service like uh, Earned Wage Access. How can you create that environment which makes it, easier for them to maximize their resources that they have in terms of what they're earning. And I think ultimately, if you kind of think about it from that perspective, yeah, you know, employee could be making a lot of money, but if they don't know how to really utilize those funds in the best possible way, it may not be enough money, which would lead to a situation [00:47:00] where they're dissatisfied and could leave versus How do you really put them in the best possible position for long term success?

And it's a combination of using your position as an employer to offer great financial products to your employees and doing everything you can to educate them on how to be financially healthy.

Mike: Yeah. Anything else that we're, we haven't covered? I mean, we, we got a lot. Um, Any other aspect to this earned wage access, the new online virtual banking world, and what that means for employees that employers, especially small and mid sized businesses, need to understand?

Shirish: You know, I think we, we have covered it, but I do think The one thing, if you kind of take this shift to its, um, to its natural end state, the employer, um, by offering is really a key focal [00:48:00] point now for this whole new category of products that can create a lot of value for their employees and they can get a lot of benefit for those.

So it's a key, it's a key position that perhaps has changed with this evolution of technology and I just would hide. It's, I know every employer is busy, particularly small businesses, and, but I would highly, highly recommend just staying abreast of this area because there is, this is changing quickly and it can have a major impact both for your employees and their overall wellness, but also for the business in terms of retention and all the things that come with having a great workforce.

Mike: I'll kind of, I'll maybe recap, uh, we're at a new inflection point, this evolution out of kind of a Maybe a dark [00:49:00] business, uh, for the payday loan business because, because it's been become so digitized, uh, and so much friction has come out of the process and therefore so much cost and risk has come out of the process.

Um, and the most recent, uh, advances in online virtual banking, there just has never been a time before where an employer could offer an incremental capability. for people to get paid as they've earned the wages don't have to wait till the end of the pay period so it's a it's a no brainer obvious win for the employee and at the same time they have an opportunity to out compete your top competitor, the business across the street, or just the same general labor pool.

Maybe you're on a restaurant and the people are, could work for you. It's not the restaurant across the street. Maybe it's the retailer across the street, the manufacturer down the road. It's the same labor pool [00:50:00] that gives you either a competitive advantage, or you're going to have to compete against those folks.

And there's never probably been a time that you could do all that, that wasn't going to cost you a single dime as an employer. Uh, in a, at a time when. Man, just coming out of election. I know that all kinds of, uh, constitutional amendments and propositions and whatnot, uh, there's a, there's a ton of them that, uh, unemployment rates have gone up, uh, paid sick leaves, all kinds of states have added all kinds of additional regulation.

This is going to get more and more complex to run a business and small business owners who don't have the old, have the. Uh, expertise in the, uh, uh, the, the capital to keep up with all this kind of stuff, man, here's a way to, to get a competitive advantage that is a win for you and win for your employees and cost nothing.

You, you, you, you, this is something you've got to, [00:51:00] got to check out.

Shirish: Yeah, we, I, I couldn't agree more that, that this is. such a win win, uh, sort of a unique sort of thing coming about with the changes in technology and really putting these pieces together. It's a tremendous win win, and it's certainly an opportunity you wouldn't want to, you wouldn't want to miss. Um, you'd at least want to really investigate, uh, because it's such a win win.

Mike: Yeah, this is, uh, this is something that Asure does to help small businesses and mid sized companies, uh, employees, uh, from all firms. We'd love to help, but if you're not going to use us, you should be using somebody. Uh, this can be a game changer for you and your business. Uh, Shreesh, thanks for joining me today.

Really enjoyed our conversation.

Shirish: Thank you. Thank you, Mike.

Mike: And thanks to everybody else for the conversation. Until next week, thanks for letting us be part of your mission to grow.

Outro: That's it for this episode of [00:52:00] Mission to Grow. Thanks for joining us today. For show notes and more episodes, visit us at missiontogrow. com. If you found this content valuable, I invite you to share it with a friend and subscribe to the show. If you really want to help, I'd love it if you left a five star review on Apple Podcasts, YouTube, or wherever you listen.

Mission to Grow is sponsored by Asure. Asure helps more than 100, 000 businesses get access to capital, stay compliant, and develop the talent they need To learn more about how Asure can help your business grow, visit AsureSoftware. com. Until next time.