The Cost of Showing Up Is Changing the Price of Labor

Ask what expensive gas does to a household, and you’ll get the familiar answer. It squeezes the budget. Less to spend, more to worry about. An affordability story, and a tired one.

For the roughly 60 million hourly workers in the United States, that response is answering the wrong question. The question isn’t whether a worker can afford the gas. It’s whether the gas lets them afford to show up at all.

That’s the data nugget found in the latest Wage to Wallet Index, a joint research effort with WorkWhile. In a conversation between PYMNTS CEO Karen Webster and WorkWhile CEO Simon Khalaf, they concluded that the hourly wage on the sign outside the warehouse isn’t the wage. Gasoline, distance, the length of the commute and the timing of the paycheck decide how much of that number a worker actually keeps, and whether the job is worth taking in the first place.

These aren’t the remote knowledge workers. The workers Webster and Khalaf discussed staff warehouses and healthcare facilities, make the deliveries and work the big events. The work requires a body in a place, and 28% of the Labor Economy workforce has so little of its paycheck remaining that every shift becomes a household calculation. Does this one make economic sense to take?

When enough workers say no, the story stops being about affordability. It becomes, as Webster put it, a question of access to the labor force itself.

The Price of Showing Up

Distance is now doing more of the work in absenteeism and churn than most give it credit for, Khalaf said. Hand a worker an app with several shifts on it, and the highest hourly rate doesn’t necessarily win. The shift that nets the most after the drive does.

“They’re looking at their total take-home pay, including transportation, and looking at the total money they’re making, not the money per hour,” Khalaf said.

You can see it in the numbers. WorkWhile’s year-over-year wage growth, including changes in the mix of work, ran above 7% around June, and Khalaf attributed part of that to employers being forced to price in the incidental and transportation costs they used to ignore. The company has gone as far as adjusting bonuses to traffic patterns and gas prices inside a 30-mile radius, absorbing some of it through a lower take rate to get the market to clear.

Has it worked?

“Some, but not a lot,” Khalaf said.

The gap is stubborn.

The Money Hiding in the Labor Market

Gas gets the attention because workers see the price every time they fill the tank. Employers are staring at the wrong number, Khalaf said.

The higher costs are hiding in how hourly labor gets scheduled and paid. Khalaf said labor-market “leakage” is 60%, and payroll still settles in days while financial markets settle in a blink. Absenteeism alone carries a steep markup once you count the replacement worker, the overtime and the scramble.

“There’s so much efficiency to extract out of the labor market before we reach what I call the point of saturation,” Khalaf said.

This is where artificial intelligence earns its place in the story, and it isn’t the place everyone assumes. WorkWhile uses it to read a worker’s skills and match them to shifts, factoring in distance and travel cost, so the comparison a worker makes is about the true cost and ROI, and the worker an employer gets is one likely to actually show up.

Getting Paid Today for Work Done Today

Better matching fixes where people work. It doesn’t fix when they get paid. For someone buying gas this morning to earn wages that may not land for another week or two, timing is the whole game.

“Especially for the hourly labor, in the next three years, if there’s no same-day pay, people are not showing up to work,” Khalaf said.

Speed isn’t free. Somebody must carry the capital between the day the work happens and the day the employer funds payroll. Some earned-wage products push that cost back onto the worker. Khalaf pegged a few at the equivalent of roughly 64% APR when annualized. Solve the timing, create a new expense.

WorkWhile moves the cost instead of the worker. As employer of record, it pays workers within 24 hours, generally gets paid by customers on 30-day terms, and finances the gap itself, folding it into the economics of the marketplace rather than the paycheck.

Why Timing Matters More Than It Used To

Waiting for payday assumes a worker has a way to get to payday.

Credit for low-income borrowers is getting harder to reach as capital is pulled toward large corporate and technology investments, Khalaf said.

When the cheap ways to bridge a two-week gap disappear, the timing of the paycheck stops being a convenience and starts deciding whether someone can afford to hold the job.

Add it up. For the worker, a shift is a wage minus the drive, minus the wait, minus the cost of getting money early. For the employer, those same lines show up as attendance, turnover and the real price of keeping the operation staffed.

“You’re going to see higher income, you’re going to see more flexible work,” Khalaf said, adding that the Labor Economy is “going to see a significant amount of productivity.”

Maybe. But the through-line is simpler than the forecast. The wage was never the whole price of labor. The commute, the wait and the cost of money always were. Employers who figure that out first will likely have workers beating down their doors.

Listen to the interview for Khalaf’s thoughts on:

Why minimum wage may be losing relevance.

How on-demand benefits are spilling into traditional employment.

Why reskilling will become a bigger labor issue.