Gig Workers And The $178B Pay Advance Potential

Unlike the typical worker in the 9 to 5 cycle, gig workers often find themselves living paycheck to paycheck, because they must complete a work assignment before they can collect their earnings. The uncertainty over when (or if) a paycheck will arrive can leave many gig workers with a sense of financial anxiety over their ability to pay their bills or buy essentials like gas that could impact whether they can take on additional gigs.

While the practice of pay advances has been employed among certain skilled professions, used to retain workers in the architectural, engineering and legal professions, a growing share of non-skilled gig professions are increasingly becoming interested in using them as well.

Gig workers are now beginning to get their wages before, not after, a job is completed. In fact, 43.8 percent of U.S. gig workers received pay advances for their services, referring to full or partial payments delivered before a job is officially completed. All told, employers paid $236 billion pay advances to gig workers, a sign that early is increasingly becoming the gig economy’s new fast.

To better understand how pay advances could impact gig workers’ lives, PYMNTS recently surveyed over 2,200 gig workers to better understand if they currently have access to pay advances, if they want access and how this service could impact the broader gig economy. The results are outlined in more than 370 data points in the new Pay Advances: The Gig Economy’s New Normal, a PYMNTS and Mastercard collaboration.

Based on PYMNTS’ research, the availability of pay advances could be a significant game-changer for the gig economy. With access to pay advances, workers would no longer have to stretch their dollars between gigs to make ends meet. In fact, if pay advances were more widely used, it could potentially contribute another $178 billion to the market.

Providing gig workers with pay advances could also provide a competitive advantage for employers and hiring platforms. For starters, offering pay advances could significantly influence gig workers’ loyalty. Many gig workers (51.8 percent) who use platforms that do not offer pay advances said they would consider switching to services that do offer them. What’s more, gig workers are willing to pay fees for early access to their wages. Currently, workers pay approximately $2.35 billion in annual fees for pay advances and expanding access to unlock an additional $1.8 billion in annual fee payments.

Additional findings in the report:

At 56.8 percent, workers in skilled professions are much more likely to receive pay advances (compared to 36.6 percent of workers in unskilled segments).

The largest share of gig workers (41.9 percent) live paycheck-to-paycheck with money saved for emergencies.

Not all paycheck-to-paycheck workers are alike. Among workers in the paycheck-to-paycheck group, 29.6 percent do not have savings for emergencies, but do not struggle to pay bills.

Another 16.3 percent who live paycheck-to-paycheck have no savings built up and struggle to pay bills.

If pay advances became available, 41.5 percent of workers living paycheck-to-paycheck said they would use the funds to pay their personal bills.

Download the report to see how pay advances could become a gig economy game-changer.

About the report

Pay Advances: The Gig Economy’s New Normal, a PYMNTS and Mastercard collaboration, is a quarterly publication that examines the state of ad hoc workers’ payment trends. This edition focuses on pay advances — full or partial payments received before a job is completed — including how gig workers currently use them and their potential for future adoption.