For millions of hourly and shift workers, flexibility is built into when they work but rarely into when they get paid.
Labor Economy workers are hourly, gig, seasonal or shift-based workers earning no more than $25 an hour and typically less than $50,000 a year. Only 11% of them have access to on-demand pay through their employer, according to “The Schedule Shock: How Unstable Hours Turn Paychecks Into Guesswork,” the May edition of PYMNTS Intelligence’s Wage to Wallet Index, produced in collaboration with WorkWhile. The same access rate applies to workers outside the Labor Economy. The difference lies in what faster access can mean when weekly earnings are less certain.
The finding puts payroll practices under a different lens. Employers have built workforces around variable shifts, part-time hours and other forms of labor flexibility, while access to earned wages generally remains tied to conventional payroll cycles.
Labor Economy workers frequently have little financial room to absorb a mismatch between earnings and expenses. After schedule changes, 26% earned less than expected in a pay period, 20% tapped savings or emergency funds, and 20% borrowed or used credit they hadn’t planned to use.
On-demand pay gives workers another way to manage that timing. Rather than waiting for the next scheduled payday, an employee with access can receive wages already earned earlier in the payroll cycle.
The 11% adoption rate showed that the option remains unusual, but it would be useful. The report revealed that 32% of Labor Economy workers have a guaranteed minimum number of hours, and 21% receive at least one week’s notice of schedule changes. Seventeen percent receive overtime or premium pay for short-notice changes, while 10% are compensated when shifts are canceled or cut short.
Payroll Has Its Own Timing Problem
Employers have several points at which they can reduce the financial effects of variable work.
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Some interventions happen before the shift. Advance notice gives workers more visibility into upcoming hours. Guaranteed minimums provide more certainty about how much work will be available. Premium and cancellation pay address changes imposed closer to the scheduled shift.
On-demand pay sits further downstream, at payroll.
That makes its limited availability a payments issue as much as a workplace issue. The relevant transaction has already occurred, as labor has been exchanged for wages. What remains is the settlement timetable between earning those wages and having them available to spend.
The consequences when household obligations don’t follow payroll calendars can be significant. The report showed that 25% of Labor Economy workers missed or were late paying a bill following schedule changes during the 90 days before being surveyed.
For someone receiving stable pay, earlier access may provide convenience. For someone whose hours have unexpectedly changed, earlier access can provide cash to meet an expense before the next scheduled payday.
That places the 11% adoption figure in a broader discussion about payroll infrastructure. Employers have more technology available to vary when labor is scheduled and deployed. The report found that giving workers comparable flexibility over wages already earned remains less common.
For payroll providers, employers and financial institutions, the 11% figure identifies access as a largely unpenetrated part of the wage cycle. The worker may have completed the shift, but in most cases, the payroll calendar still determines when the money reaches the wallet.
At PYMNTS Intelligence, we work with businesses to uncover insights that fuel intelligent, data-driven discussions on changing customer expectations, a more connected economy and the strategic shifts necessary to achieve outcomes. With rigorous research methodologies and unwavering commitment to objective quality, we offer trusted data to grow your business. As our partner, you’ll have access to our diverse team of PhDs, researchers, data analysts, number crunchers, subject matter veterans and editorial experts.
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