Recently, I had the opportunity to sit down with Safwan Shah, the founder and CEO of our partner company, Payactiv. Payactiv, a Public Benefit Corporation and Certified B-Corp, gives employees financial peace of mind with access to earned wages between paychecks via OnShift Wallet.
In 2020, nearly $50 million in earned wages were accessed by healthcare workers, helping to avoid late fees or high-interest payday loans to cover bills or unplanned expenses. Currently, more than 400,000 employees have access to OnShift Wallet through their employers.
In the video below, I chat with Safwan about how our companies came together, the value of earned wage access for caregivers and some of the incredible results we are seeing. We’re happy to share this pre-recorded fireside chat with all of you.
This conversation took place on on April 28, 2021. Watch now and be sure to check out the highlights below.
Hello everyone. My name is Safwan Shah. I’m the founder and CEO of Payactiv. I’m here with Mark Woodka, the CEO of OnShift.
I’m the CEO of OnShift. We are a human capital management software provider for long-term care and post-acute providers. That’s a pretty fancy term for we’re a people platform. We provide software that does everything from employee recruiting to applicant tracking, onboarding, workforce scheduling, employee engagement, and financial wellness apps for our partnership with Payactiv.
We’ve had a longstanding, almost four-year relationship where we do the financial wellness component of their suite of services.
Payactiv makes access to earned wages real time. A worker can actually access what they’ve earned before payday. We are B2B, so we work with businesses and our clients utilize our services to improve financial health.
We provide software and services exclusively to skilled nursing, senior living, continuing care, retirement, or life plan communities, memory care, etc. We service about 6,000 clients around North America, touching almost a million caregivers.
By caregiver, I really mean frontline staff. That could be caregivers. It could be dietary. It could be housekeepers. The people that interact with the residents in our clients’ buildings day in and day out. We have been in the business for about 10 years.
It became really obvious to me, this is a passionate group of people that do an incredibly hard job and do it with skill, with passion, with dedication, and their lives can be difficult. In many cases, these people are earning 11, 12, $13 an hour. As you know, that can be a stressful situation for people.
People think that by holding somebody’s wages, you’re in some way improving their lives. The fact is actually opposite because this is just one of those things that is counterintuitive and a blind spot in society.
Why do we pay people on a two-week cycle? Because we always have, and because payroll is a batch process and you don’t think about any other way to do it.
People tend to be on an 80-hour pay period. Every two weeks they get paid. Guess what? Payment cycles for bills don’t happen on the same cycle. The rent is due the first of the month, whether that lands on a payday, three days before a payday, or seven days after a payday.
Giving people access to their earned but unpaid wages between paychecks enabled them to meet their obligations in a timely manner, without doing things like payday lending or check cashing services, which are exorbitantly expensive for low-income workers.
We call it Earned Wage Access, not early and not advanced, because there is no debt involved here. Nobody creates any debt here because you’re accessing money you’ve earned already. It’s a payment solution, not a credit solution.
That was a big understanding that we had to communicate to people, that your employee doesn’t have to take on debt if they’re taking or accessing their own money. I think it matters to employers also because they feel that they are in some ways responsible for the well-being of their employees and the services they offer. Earned Wage Access became the good service, the anti-payday loan service.
When you are paid is something that is entirely in the hands of employers. Without any cost, it’s almost like an infinite ROI by letting people access what they’ve already earned. When OnShift went live with it, it brought a large pool of people in a very important vertical.
First of all, they couldn’t get over the fact it wasn’t debt, because the first thing they went to was, “This is just a payday loan that maybe is cheaper.” I’m like, “No. That’s not it at all. Your people have earned the money. We’re giving them access to it.”
Then there was a parochial approach of, “Well, but am I training my people not to manage their money effectively?” As customers got involved, they quickly realized that wasn’t the case at all. Our stats indicated that the vast majority of the money goes to groceries and paying rent and paying bills.
We’ve gotten some stories from caregivers over the course of the years that are just heartening to hear the impact that we’re having on the lives of people in helping them achieve things that they just haven’t been able to.
Now, fast-forward to last year with the pandemic.
Our access to earned wages last year went over 50 million bucks, which was phenomenal. This really helped out the caregivers tremendously through a very, very difficult time. The beauty of it is, it didn’t cost the employers anything, and they didn’t take any risk. It’s purely a benefit to them and it engenders loyalty too from their employees to the employer in a tremendous way, because this is a perk that their employer is providing to them.
Granted, it’s through our partnership, but it’s a perk that engenders tremendous loyalty. I think we’re in the neighborhood of 93% of people would recommend OnShift Wallet to a colleague, and 89% of people would recommend their employer as a place of employment to colleagues, which in this industry is phenomenal. That’s off the charts, employee satisfaction.
And this is something that I’ve continuously tracked over the last seven/eight years, that there is a cost of waiting to get paid.
Let’s take a two-week period, if 150 million people (which is the working population of the U.S.) is waiting two weeks to get paid, and let’s say they’re getting paid $2,000 every two weeks, per capita that’s about 50,000. Let’s say it’s an even hundred million dollars for easier math. $2,000, every two weeks, that’s $200 billion. That’s every two weeks that’s stuck in the system.
What Payactiv does is it moves a fraction of that money a little faster. When it moves a little faster, the downstream effect is amazing. For instance, some of the data in the U.S. Alternative Financial Services is that a typical person, who could be an hourly worker, is losing 200 to $250 every month in overdrafts, payday loans, title loan fees and other dings and penalties.
If 200 to $250 a month is $3,000 a year, 12 times 250, and that is on a 40, $50,000 salary, that’s 7% of their purchasing power lost. Earned Wage Access is giving people an increase in purchasing power.
And if you think about it from our perspective, at a 12 or 13 or $14 an hour, it’s a 26 to $30,000 a year. It’s probably closer to 10 or 11% that they’re paying in those fees. Being able to eliminate that and let them spend that money on things they need to spend it on like food and bills is a huge benefit to this population.
It’s remarkable that the first place that they spend is usually on food. In fact, it evolved our thinking around this. Food, fuel, auto, shelter, and sometimes they pay various types of insurances and shelter could be daycare as well. It is amazing to see that the money is spent on livelihood needs.
One story that we had was from a caregiver, who had a problem when her car battery died. She was able to access her earned wages, and she got her car jumped and was able to get to work.
The way she told the story was that it didn’t just prevent her from a bounced check fee or going to a payday lender to get this. She thinks it saved her job.
That happens every day in our industry where workers can’t get to work for whatever reason and they end up getting terminated in a lot of cases. This woman was so thankful that she had access to Wallet because she was able to not only get to work, but get to work on time and make sure she didn’t lose her job.
Some people use the wallet as a recruiting tool. They’ll say, “Look, if you come to work here, you get access to your wages between paydays. It’s automatic.” It’s leading to better hiring and retention rates.
There is a portion of the population that is too proud to go ask their employer for an advance on their wages. They don’t want their employer to know that they need money between paychecks so they just don’t do it.
They get that feedback directly from their staff, that now they’ve got a solution to financial wellness that is contained to them, and they don’t have to share their financial challenges with their coworkers or their employers. They feel a higher level of dignity in avoiding that.
With Payactiv’s help, you guys were fantastic. We got people implemented as quickly as we could and it was accessed immediately and provided a lot. There’s a lot of people that felt like our partnership with you and the wallet really, really helped save their workforce a tremendous amount of difficulty through the pandemic when it first started last March and April.
When we started and where we are today, this word that you used comes up often, and that is dignity. I mean, how fortunate are we to be doing something which actually makes lives better? As business people, we look for meaning and purpose and when your work leads to somebody else’s improvement in their life.
Not only that, but for employers and businesses, this is amazing, almost like a ventilation system where people do not have to lose their dignity and ask for money.
It just works behind the scenes and everyone gets something which they can … And it cannot hurt them, unlike a loan or something because there should be no shame in some of these things.
Another thing, we always thought of it as financial wellness. What does that mean? Does financial wellness mean saving money or avoiding dings and penalties? We, in our world at least, started using the word livelihood. If your livelihood needs are met, that’s the beginning of financial wellness.
Yeah. I think livelihood is a great way to define it because for a lot of our clients’ staff it’s, do I have enough money to pay my rent when the bill comes due? I think everyone’s looking to satisfy their basic needs in their livelihood.
Why do we work? We work so we can get a paycheck and we can afford to feed our families and we can afford to buy a car and ideally do the things we want to do and meet our livelihood needs. If you’re a lower-income worker, that’s harder to do. A service like OnShift Wallet with Payactiv just enables that and enables a frictionless way to do it.
One of the beauties for me is we’re able to offer this benefit to our clients at no risk. There’s no cost and no risk for something that helps your employees achieve their livelihood objectives.
The goodwill accrues to you as an employer to say, “We’re offering this program to help make your lives better.” I think it’s a very, very positive experience. We talk a lot about it internally at OnShift with our team members.
There’s this dawning realization of what a hard job these people do. They should be able to have a good life. They should be able to meet their livelihood objectives. They should be able to pay their rent on time and have a decent life, and so it feels good all the way around to be in a position to be able to provide these solutions to the industry we serve, which does such a tremendous service to our society.
That hits all three key variables: ability to recruit, ability to reduce turnover, and the engagement it creates. Just the fact that you got a shift that you wanted, the window that you wanted to get that work, and then you get paid right after this. This is very empowering.
We see a very strong correlation between people just checking their balance in the launch of Wallet app, and then picking up additional shifts because it’s right there.
It’s tough to fill night and weekend shifts or to have in our industry, a part-time worker and an on-call. It’s hard to get those people to work because I might work a shift on Monday and get paid two Fridays from now for it. I work eight hours and I gross $200. I’m going to get $170 net and I’m waiting 13 days for that paycheck. There’s a complete disconnect between providing the work and the value of doing the work.
With TimelyPay and Wallet, they can work that shift on Monday, get paid on Tuesday. That’s a huge benefit to the employer. It’s helping them get those difficult shifts filled and it’s an incentive to the employees to fill those shifts. Knowing that they’ll get the money right away is a huge incentive.
I hope, like everyone else, you and I, and most of the world believes that we are going to come out of this pandemic like the Roaring Twenties, and everything will be better before the pandemic put so many people in such a situation. Do you think that some of these services will mean much more after things come back to normal?
I do. This is going to be the rule and not the exception. I think we’re going to move to an [on-demand pay] environment one way or the other, or at least access to wages in that format. It’s going to be an option that’s going to have to be offered.
The smart employers are getting ahead of the curve. There’s a continued war for talent. Our industry is still struggling to hire. Fundamentally, we’ve got a lot of workers on the sidelines because they’re getting strong unemployment benefits and stimulus checks, and we need to get them back to the workforce. I think this is an important part of getting them back in to say, “Look, you can come back and work and you’ll get paid right away. You don’t have to wait two weeks.”
When you start a new job, sometimes it’s four weeks. If you miss that pay cycle and then start, there’s usually a one-week holdback or a two-week holdback and now it’s a month before you get paid. Well, that puts you in a really, really difficult position. Solutions like Payactiv and OnShift Wallets solve that problem. It’s not a problem anymore because we’ve got a very frictionless solution to it.
To me the relationship with OnShift is very empowering and it is the kind of thing which allows this service to go to millions and millions of people. To me, that is just the most fantastic part of this.
I’ve said, “Look, if I’m an employer, this is a no-brainer. This is just a benefit that engenders loyalty, helps me hire, helps me retain people, so it’s all good.”
You and the entire team at Payactiv have been not only great partners from a business perspective, but tremendous innovators around this space. My vision is to transform the employee experience. You’re a key enabler of that.