Ethel Lawrence normally doesn't have a hard time covering her expenses. But when her husband was prescribed a new medication that cost almost $400 a month, she was in shock.
"The pandemic has accelerated many existing economic trends and the demand from employees for these financial tools is certainly among them," said Luke Pardue, an economist at payroll and benefits firm Gusto. "On-demand pay became an opportunity for individuals who were working more sporadic shifts that needed access to their cash and couldn't afford to wait for the standard pay cycle to complete," said Tom Hammond, vice president of corporate strategy and product management at Paychex. He added that usage has increased recently in the retail, restaurant and home health care industries.
PayPal started offering its US employees early access to wages last fall through on-demand pay app Even, a company it also invests in. According to Paypal, the use of on-demand pay and the budgeting tools in the app is higher among its hourly workers than salaries workers. "[Companies] have to be competitive and have to offer market-leading benefits and value proposition to employees they're recruiting," said Seth Ross, general manager of Dayforce Wallet, a program from human capital management software firm Ceridian that allows early access to pay.