Should your employees be paid daily? A case study.

Author:Howell, Izzy
 
FREE EXCERPT

WHEN ROBB HOLMES' TIRE BLEW OUT, he could have been stranded for almost a week.

"Normally, I wouldn't have had the extra money," he says, referring to the fact that the majority of his paycheck is allocated towards his rent, car insurance, and other bills at the beginning of each month. However, Holmes was able to solve his dilemma thanks to everyday pay: a process where employees are paid within twenty-four hours of their most recent shift.

Chip, a local cookie delivery company, has recently adopted the everyday pay model, and as one of their bakers, Holmes was able to access the funds he needed for his tire almost right away. After confronting his defunct car, he quickly thought, "Oh, I'm getting paid from Chip tomorrow--there's eighty bucks! That's enough to get a tire change!"

Ultimately, he says, being able to access his paycheck on a daily basis saved him from having to wait six more days--until payday--to fix his car.

A BRIEF HISTORY OF BI-MONTHLY PAYCHECKS

According to Nelson Lichtenstein, a professor of history at UC Santa Barbara, worker compensation in the nineteenth century was synonymous with indentured servitude. Agricultural workers were tied to the land and were paid in the form of food and shelter while sailors were paid once every two years for their daunting work at sea.

As industrialization came about, factory laborers were compensated for their toils once a week--on Saturday afternoons--with the understanding that they could spend their paychecks on drinks at the local pub that evening and use Sunday as an opportunity to recover from their stupors.

In the 1930s, Social Security came into existence, followed in 1942 with the first payroll tax that encompassed the entirety of the working class. This time also brought the advent of primitive computers that could manage massive paycheck calculations, and checks came to be used in order to properly report income tax information to the Treasury.

In order to organize this information for the tax regime, and implement a predictable schedule for the transfer of information in regards to employee salary, employers adopted the traditional model of bi-monthly paychecks. As a result, it appears that we are still operating off of a payment model that was born of the crude technology available to us in the 1940s.

It's clear that our technology has evolved exponentially since the second World War, however for the first time in history, employee-first ideologies are beginning to come to...

To continue reading

FREE SIGN UP