It’s great that you’re finding a way to pay people quicker that’s less bad than payday loans!
What stops employers from paying wages more often right now? When I worked in the US, some places would pay you every two weeks. With instant bank transfers, couldn’t that frequency go down to weekly or daily, without the need for a middleman?
I've worked with many day labourers who get paid daily, their money is gone before they get home. I also worked a job where I got paid weekly instead of bi-weekly or monthly, it was almost impossible to save money. I don't know why, but I find it much easier managing money being paid every two weeks than in durations shorter than that.
While this isn't much of a company relationship thing: If you're getting paid every 2 weeks, sometimes you'll get paid the first/third week of the month and sometimes the second/fourth, which can be a pain if you're trying to keep a consistent amount in a checking account while also having bill pay and auto-transfers to savings/investment accounts.
Or, tl;dr, it makes it easier to automate money without leaving a large buffer of cash in a checking account.
I wonder why we don't have pay-as-you go for income. There is no particular reason we couldn't pay people at the end of every day just as easily as every two weeks or once a month.
Interesting, I didn't know payday lending was a thing in Spain.
Delaying salary payments serves two purposes: first, to benefit the employer by keeping your money in their account longer; and second, at least culturally, to force you into a budget cycle "for your own good." People accept these things culturally but there's no reason they should have to.
When I moved to Germany from the US I was a little shocked to discover that I would be paid at the end of the month and not every two weeks. They took the cyclical paternalism one step further, and of course also forced me to give my employer an interest-free credit line. It would be fun to have the leverage to challenge that, but I did not.
What do you think the ideal payment frequency would be?
For wage labor it seems like you should get paid daily at least, but then why not hourly? Might it even be motivational to see your net pay (after deductions of course) dropping into your account every hour, and you get a notification in some app?
For a salaried position I think I'd be quite happy getting paid by the week, especially if my actual salary were set on a weekly basis so I always got the same amount.
Upfront, I normally am not for legislation. However one thing that's been on my mind lately has been the lag between work and getting paid for that work. Even for regular employees. The days of being paid 1x / 2x per month, IMO, stem from when we had to cut a corporate check to pay someone. A check sometimes meant two signatures required. This was massive overhead and thus we wanted to batch them and do them as infrequently as possible.
Today payments are easily automated and extremely inexpensive.
I see little reason one couldnt be paid at the end of a work day or even more continuously such as per calendar day or what have you (ie there are ~22 work days per month, but ~30 calendar days) ... I could see a good pro labour legislation being to get paid daily for companies with automatic deposit or over size X.
Things like payday loans wouldnt make as much sense if you've already been paid 14/15ths of your pay up to that point and you're going to get the last 1/15th within 24 hours.
A lot of it would depend upon how payroll is handled. There are plenty of employers where the hours worked are written on paper, then transcribed to a common document format and sent to payroll, then transcribed into the payroll software. Since so much of the process is manual, it is likely to be batched and performed weekly. Even when it is done daily, the daily is unlikely to include weekends (which is shifted to end of day Monday). In other words, they would have to completely alter their process to actually pay daily. That alone would likely make the process more expensive. Doing more bank transfers would add more expenses. The software used to handle payroll is a middleman for all intents and purposes, and that is unlikely to go away.
For what it's worth, I have seen that process used in both the private and public sector as well as with organizations that employ thousands of people.
I don't buy this criticism. Suppose we were instead paid our salary annually as a lump sum at the end of the year and we were fighting for biweekly pay days. The same argument could be made! What if people misuse the money! The delay helps them budget!
The two week (or so) delay between hours worked and money being deposited in your bank account is a free loan from you to your employer. That's wrong. People should be free to access their earned income as soon as they earn it.
I do agree that this sort of product can easily become a payday loan system with terrible rates, but streaming your wages as you make them sounds like a pure good.
I think getting paid every two weeks (eg every other Friday) is more common. This makes it easier for everyone to plan. Also how you get the payroll situation where every few years, people get an additional pay period [0].
I think this will actually increase payday lending. If you have weekly-to-monthly pay periods, you get a paycheck approximately when rent is due so you can pay your rent. If you got paid daily after every shift, there’s nothing stopping you from blowing that money and failing to save up for rent, so you have to borrow your rent money at the end of the month.
I can imagine something a lot simpler: ask employees the cadence at which they want to be paid out (daily, weekly, bimonthly, monthly) as allowed by law and pay them that way.
Yes, more bank transactions will cost the business more. That might be something the employee will have to pay for, or it might be something that governments require businesses to eat the cost on.
While it's an interesting proposition, I don't really understand the problem you're solving here. Could you perhaps elaborate? If anything, I prefer getting paid monthly — I pay my expenses monthly and do it all in one go, it's very convenient. Getting paid small lumps every day I'd have to put a lot more time into budgeting imo.
Back in the dark ages before direct deposit, it was much better to get a paycheck biweekly (every other week) than bimonthly (15th and last day of the month).
The concept of "continuous work" or employment is really that of an ongoing payment structure. The concept of weekly, bi-weekly, or monthly settlement is an artifact of the time when payments weren't automatic. Send an invoice, wait for post, open envelope, send a check, wait for post, open envelope, send to bank, wait for post, open envelope, send to other bank, wait for post, open envelope, is why we have such concepts as Net 30 terms.
Ongoing business relationships where you are paid flat x per y unit of time (monthly service charges, salaries, etc) can be easily modernized to minimize the amount and the duration of being out of settlement sync. It's not a matter of getting your paycheck a few days sooner, it's that for the vast majority of the time you are working, your employer has some amount of money that belongs to you, simply because settlement was a manual, human process until recently. We can settle every minute now because we have machines.
This is sort of like saying that APIs are not useful because you can just wait to the end of the week to get your email in a big batch. Your personal income or your business revenue is much more important than email.
Across the entire economy this is a massive amount of interest that goes to employers instead of employees, customers instead of vendors. It's not really theirs.
Additionally, interval-based settlement doesn't fix the other bug in the system I mentioned: annual manual algorithm-based adjustment.
Any time you have a human manually calculating an algorithm every x months, it seems to me it would benefit everyone in society to have machines do that every x milliseconds instead.
What stops employers from paying wages more often right now? When I worked in the US, some places would pay you every two weeks. With instant bank transfers, couldn’t that frequency go down to weekly or daily, without the need for a middleman?
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