Walmart has announced a new partnership with two financial technology startups, Even Responsible Finance and PayActiv, that will enable its 1.5 million US employees to access wages they have earned before payday, Bloomberg reported on Wednesday. Employees will be allowed eight free uses a year of Even’s Instapay tool, available through its personal finance app. The app links to the employee’s checking or prepaid account and Walmart’s payroll system. Walmart’s Chief People Officer Jacqui Canney described the partnership as an investment in employees’ financial wellbeing, as it will help protect them from having to rely on payday loans when emergency expenses arise:
The move could address a painful reality of low-income hourly workers, whose cash flow is far from predictable. Income volatility has been increasing in recent years, according to research from the Pew Charitable Trusts, and studies from the Federal Reserve show a lack of emergency savings among many workers. The inability to weather an unexpected car repair bill or medical expense can send a low-income worker into a debt spiral, and financially stressed workers can be less engaged and not as productive.
Walmart is the world’s largest private employer, so its HR policies have a tendency to set benchmarks that other major retailers and employers of the same talent cohorts are forced by market pressure to match. Sometimes that means pushing up the real minimum wage, and sometimes it means embracing automation and raising concerns about the displacement of low-wage jobs. In this latest move, Walmart is challenging its competitors to offer their store employees more financial flexibility, using these new payroll and personal finance technologies.
The announcement also reflects (and may well accelerate) the ongoing trend toward employers adding financial wellbeing to their overall employee wellbeing strategies. This is part of a significant expansion of wellbeing programs in the past few years, our research at CEB (now Gartner) has found, as more organizations recognize the value of helping employees take better care of their physical, emotional, and financial health. Our latest study finds that holistic wellbeing offerings that include all three of these elements have a 33 percent greater impact on engagement than those that cover only physical wellbeing.
CEB Total Rewards Leadership Council members can view all our research and tools for designing effective wellbeing programs here.