Want a Higher Paying Job? Quit Now. — Comp + Coffee: Ep. 38

If you’ve been daydreaming about ditching your job for a higher-paying role, now might be the time to turn your dream into a reality.

According to some new studies from staffing firm Robert Half, there’s been a spike of employees checking their current salaries against the market value — and they’re not particularly happy with what they’ve found.

On today’s episode, we’re chatting about the findings outlined in a recent Forbes article and what this trend of accessing on-demand wages could mean for the compensation industry.

And if you like what you hear, rate and review us on iTunes, SoundCloud, or wherever you listen.

 

For a full transcription of the episode, see below.

 

[music]
[00:00:19]

Shawn: And we’re live. Hey, Bill.

Bill: And why are we whispering?

Shawn: Because during the time off, I was taking some classes, and apparently this is how you sound more professional and dignified. So I’m going to do my best NPR voice from now on. How are you doing today, Bill?

Kaite: I can’t commit to that. I just I can’t do that.

Shawn: Why not, Katie?

Kaite: Because I am never quiet.

Bill: I think that if everyone talks like me, we’ll put them to sleep and that could cause car accidents.

Shawn: If everybody talks like NPR, they’ll respect us more, Bill.

Bill: Keep telling yourself that.

Shawn: All right. All right.

Kaite: We have listeners in Australia so I feel like we’re well respected.

Bill: What does that mean?

Kaite: We have a global presence.

Shawn: We have a listener in Australia as far as we can tell. What up, Drew. All right.

Bill: And we’re live.

Kaite: Bill was in Tahiti for quite a long time.

Shawn: Bill was in Tahiti? How was it, Bill?

Bill: Tahitian.

Kaite: And I had a lot of errands to run.

Shawn: Katie was running errands?

Kaite: So many errands. Oh, you were here. You were holding the fort.

Shawn: Where was I? I was doing work.

Kaite: He’s sitting here alone like twiddling his fingers.

Shawn: I was not alone. I was chatting with David Goggins.

Kaite: That was a good episode.

Shawn: It was a fantastic episode. If you guys haven’t heard it, go back and listen. Not complimenting myself. I’m complimenting myself.

Kaite: I would normally plug here that you should register for ComCon but we’re sold out.

Shawn: Sold out. David Goggins, keynote in there. So now we’re back, a couple of things to cover today. There’s been comp in the news, if you will, and two interesting but slightly separate topics. So let’s dive in. One of the ones that first caught my eye and I’m interested in your guys take on this, there was an article in “Forbes” recently, we’ll put a link in the notes, but it was around…I think the title was, “If you’re looking for a job, now is the time.” And it was around a bunch of data that had recently come out from Robert Half.

And so I’ll just go with the first couple of things here and then we’ll dive in. It said a couple recent studies from Robert Half based on surveys of 2,800 U.S. employees. One said that 73% of workers are researching their current jobs online to check out their market value. Probably not a huge surprise there. But it is up from 54% 2 years ago. And 46% of U.S. workers that were surveyed in this believe that they are underpaid. They were not necessarily drawing a connection to those two, it just had happens to be the case. And on top of that, 43% of employees surveyed plan to look for a new job in the next 12 months. The highest reason that they cite is better pay. So, let’s dive in.

Bill: Okay. Where do you want to dive in first, Shawn?

Shawn: Well, there’s a couple of trends that I would pull from this, right? It doesn’t shock me that people going online and try to figure out what they should make.

Bill: That happens whenever the economy is going well.

Shawn: I think that’s a key indicator of it.

Bill: People feel good and feel like they should be doing better and companies are doing better.

Shawn: Yeah. And I think one of the things we can dive into is the underpinning of that, which is that the 3% raise every year.

Bill: Which they do cite in here somewhere.

Shawn: They do cite in this later. Yep. But I think it also, to me, shows that we’re probably not communicating with managers and certainly employees on a level that they understand why they’re paid what they’re paid, and what they might be able to do to increase it. If that’s the case, if they’re like, “Hey, I’m underpaid and I’m going to go look for a new job.” So I see that. And the other thing I see is, maybe talk about some modernizing of our comp philosophies a little bit. What do you see, William?

Bill: I see a bunch of things. I was going to jump to into the other pool regarding the, you know, 47%, 46%.

Kaite: Forty-six percent.

Bill: I think they’re…

Shawn: Forty-six percent that believe they’re underpaid?

Bill: That believe they’re underpaid and just, you know, put my little stake in the ground as for those of you that deal with surveys a lot and salary structures a lot, you know, a lot of companies target the median, which if everyone believed they were equal in a job, half of the people would be paid below the median and half would be paid above the median.

Shawn: Sure.

Bill: So 46% of people thinking they’re underpaid is not shocking. It’s not good but, you know, it’s sort of you kind of expect people to think that. And…

Kaite: It just sounds like a shocking stat if you don’t understand the industry.

Bill: Right. And then, you know, I would say that the other 54% probably don’t think they’re…

Shawn: Overpaid.

Bill…way overpaid. They think they’re paid fairly and that’s just general human nature.

Shawn: Sure.

Bill: You know, and I think that’s another opportunity for good communications when you’re…you know, what people think they should be paid and what they are paid are sometimes different. And it’s, you know, the classic bosses’ view of what you do and what you do well, what you do poorly, versus your view of what you do well and whether or not there is anything you do poorly. You know, that’s…

Shawn: It sounds like you’re analyzing me, Bill. No, I think that’s right. I think that’s…to me that would speak to…look, these questions almost always come to a manager first. So…

Bill: If anyone.

Shawn: True, right, there’s a lot that’s probably passive or quiet out there. If they believe they’re underpaid and they go and research it and they want to bring that and have that conversation. They’re going to go to their manager first. They’re not going to go to compensation or HR or whatever, most likely. So that’s your opportunity to equip that manager to explain why they’re paid what they’re paid, and say, “Look,” maybe for example, “this is the job you’re in, here’s the range for that. Yep, you’re at the lower end of that range. You want to know why? Well, you don’t have experience. You don’t have the certifications. You don’t have the education, whatever. These are all things that you can upgrade, and that’ll push you up to the higher end of this. Or if you get promoted, then that’ll push you into a different range.” There’s all these kind of talks, but I bet most managers, when they’re confronted with that issue are saying, “You should probably go talk to HR.”

Bill: Right. That’s easier.

Shawn: How can I pass the buck on this as quickly as possible?”

Bill: Right. And I think that the manager should be more proactive on this issue. Because I think you described a good scenario of an employee, you know, sitting around thinking, “Things are going well. I wonder what I’m worth in the market.” You go out and look and when you see a discrepancy, which, again, individual employees are not the best market prices and so they tend to pick jobs that are perhaps more higher level…well, you know, they tend to underestimate the importance of all the words, each of the words in the job description. And so…

Kaite: Or they’re not even looking if they’re just looking at those crowdsource data sites, you could be looking at, you know, account manager at like a high growth tech company that…you know what I mean? Like something that’s totally different than the job you’re in where the market is naturally just higher.

Bill: And they are looking with an eye towards a bigger number. That’s what they want to find. And so they’re sort of not doing the greatest job, not their fault, but not doing the greatest job of finding a good match for their job or for the pay market that they’re in. And to the extent that the dollar value of that job is higher than what they’re getting paid, the higher it is, the more upset the employee gets. And the more upset the employee is, back to psychoanalyzing, Shawn, or psychoanalyzing Shawn.

Shawn: Is there a comma in there, Bill?

Bill: Exactly.

Kaite: I was gonna say, the importance of the comma.

Bill: I’m not the punctuation king. So the bigger the gap, the more upset the employee is. The more upset the employee is, the more likely he or she is to go outside to resolve the problem than going inside. So if the next step after, you know, Bill, the employee says, “I’m underpaid,” is to go looking for jobs, I’ve now set a process in motion of going out and looking for jobs, which, in reality, a lot of employees are hesitant to do, which is why retention rates are relatively high among most employees at most companies. So once I start though, then I start seeing what’s going on in the outside world. And then you have the grass is greener effect of, “Oh, that company has a better culture and they’re cool and they have, you know, cold-brewed coffee in their office,” or whatever it is.

Kaite: Sounds familiar.

Bill: Exactly.

Kaite: The cool culture and the cold-brewed coffee.

Bill: Yes. And they have a great guy like Bill Coleman. But they…

Kaite: And an okay guy like Shawn LaVana.

Shawn: Now we’re stretching it.

Bill: And a wallflower Katie.

Kaite: That’s how I describe myself usually.

Bill: But, you know, once that process starts, then the person is mentally not necessarily committed, but they’re mentally in the mood…

Kaite: You’ve, like, opened that door. Yeah.

Bill: …of switching jobs. So by the time they come and talk to their manager or HR, they now have more momentum.

Shawn: They have half of a foot out the door.

Bill: Exactly. And so now as an employer, as a manager or HR, you’re in defense mode. Whereas if you explain how the process works and explain the differences between different jobs, educate the employee a little about like how we the company market prices, then that person may look with a more careful eye or more cynical eye when they’re looking at whatever websites they’re using to find comparable jobs.

Kaite: What if the information they find is accurate? I feel like we’ve maybe we’ve talked about this before. You have to decide for yourself of whether going back…I always reference it but the Patty McCord example of can we afford to lose that person and can we…?

Shawn: I’ll tack on another one that I was just wondering about, the Netflix example as well, Patty McCord, which is they would often say before the California Fair Pay Act, the only way that they would get market data is they would encourage employees to go out and get offers. And so that always was interesting to me, Bill, because the point that you raised, like psychologically, you’re probably halfway out either way. And maybe that’s a way for them to kind of just…

Bill: To let them go. Self-select people that aren’t committed.

Shawn: Maybe, yeah. And they get that data back. But I would think those data points still have that same problem, which is that it is…to the point that you made, Bill, it’s not the employees’ fault that the data that they have available to them isn’t the same as what HR typically has for them. HR is going to have HR source data from a whole bunch of companies, thousands probably, that’s going to better triangulate that employee, their responsibilities, and the pay market for the job. When an employee goes out to a site or gets an offer, it’s typically one data point, maybe a couple. Sorry, I’m tying two things together here. But it’s interesting to me that psychologically companies would let people go do that. To your point though, Katie, if it is accurate…

Bill: Wait, the Netflix example, that’s a tricky one because if you’re Netflix or, you know, tossing in our usual, you know, cast of characters from the Bay Area, you know, Facebook, Google, if I’m HR there, I’m perfectly happy to let my employees go out and troll the market because I am a high payer and I can afford to have a policy or philosophy (no inside information here). I, as one of those employers, can counteroffer.

Shawn: You can set the market.

Bill: And the employees know that and the managers know that and HR knows that. So it’s easy to be confident enough to say, “Go see what you can do in the marketplace.” If you’re, you know, a regular run of the mill company and you have good employees, I would hesitate at doing that because if you get somebody that you really want to keep, you don’t want that person out in the marketplace. And your top competitor could pay top dollar. Back to sort of a variation of Patty McCord thing, it’s like can you afford to not overpay like the top salesperson from your direct competitor?

Shawn: Sure. And in California, specifically now, or in Massachusetts where we’re recording this, can you pay them? Can you overpay them but also pay everybody else under that that is in the same role? Which used to be okay. Like there’s all the stories of that happening, especially in the Silicon Valley. And can you get away with that now would be the best way to ask it?

Bill: Yes. And I think there are ways but…

Shawn: A lot of gray.

Bill: Yeah, this is isn’t the gray legal locket of podcast.

Shawn: No, we are not lawyers. But I think, Katie, to your point is if you do find out that you…One of the things we see a lot is an annual take on the market. So we update our surveys annually, here’s where it is. We’ll give you an annual raise whatever, right? I think one of the ways to think about that is has the market shifted faster than you’ve been keeping up? Are there new skills emerging? Are the new certifications that are arising that you need to take into account that you have not before? Because you know the example we always cite, a software engineer is not a software engineer. It’s just evolving and changing too fast. A marketer is not a marketer. There’s a bunch of these examples that you can cite because of the skills certifications, just the way the market evolves that you need to stay on top of it probably more than annually. It’s probably going to creep up faster than that in a lot of roles.

Bill: And I think you need to make sure that when you’re talking about an individual job or an individual person, is that job or that specific employee part of the broad, everybody gets 3% once a year group or are they in hot skills, hot jobs, superstar performer?

Shawn: They’re getting promoted a lot, right. So maybe they haven’t gotten a 3% raise because they’re getting promoted every year or they’re getting one of the…if you go back to the Mark Szypko podcast that we did where he said, “Well, even if you only have a certain budget, don’t give everybody 3%, reward your top performers better.”

Bill: And keep that in mind, you know, and be comfortable reacting when you’re top performer come back. What can you do to keep that person on board if that’s in the best interest of the organization? And to the previous point of you have to pay all of your comparable people comparably, you don’t have to do that, I believe, anywhere yet with performance. So if you, you know, can provide performance-based compensation to that top performer who, by definition, a top performer is…

Shawn: Outperforms.

Bill: …a top performer. So they would get top pay.

Kaite: Thanks for that breakdown, Bill.

Bill: Yeah, thanks.

Shawn: We keep you around for those valuable insights.

Kaite: That was a tough one for me so I’m glad you’re here.

Bill: I could spell it for you, T-O-P.

Shawn: I think that’s interesting that one of the…if you continue to read this article, one of the things that it says is top-rated employees this year have gotten raises averaging 4.6% as opposed to I think our salary budget survey found 3% or 3.1%.

Kaite: I think it was 3.1%.

Bill: 3.1%.

Kaite: Don’t quote me, but that sounds right.

Bill: Overall.

Shawn: Overall. Not for top performer, sorry, right. Right, good clarification. But, to me, that gap is not that big.

Bill: Correct. Although, again, it’s the averages.

Kaite: But is the perception to those people that it’s that big?

Shawn: They probably don’t know.

Kaite: Fair, fair.

Bill: But I think we’re veering into, you know, podcast 43 now, but the top performers are promoted more frequently and promotions are “coming” more frequently than they were back in the “Mad Men” days.

Kaite: Oh, for sure. Yeah.

Bill: And so promotion increases aren’t included in regular salary increases and so…

Shawn: So how do you capture the percent that are moving into a new role as opposed to just getting 3%? But I would assume that this says that same thing. So if you’re a top-rated employee, you’re staying in the job, 4.6% is what you’re getting versus the average of about 3%, 3.1%.

Bill: You know, who are the top performers? How big is that pool? And it might…

Shawn: Who’s getting promoted out of that pool?

Bill: Well, and I imagine that the top performers are like the top 25% of the company or something.

Shawn: Yeah, bell curve distribution probably, right?

Bill: But, you know, the ones that should be getting off-the-charts increases is the top 5% or the top 10% at most. So, again, you’re diluting. If you have a big pool that you’re calling top performers, it will bring the average down.

Shawn: Yeah, you need to identify your Bill Colemans of the world, top 5%.

Bill: Alphabetically.

Shawn: Make sure you’re taking good care of them. When you get to your Shawn LaVanas of the world, you like, “Eh, 3%, it’s probably fine.” That’s what we’re saying here.

Bill: It’s sort of rich. But yes, your point is correct.

Shawn: I’m glad we get all this on tape, Bill. I’m glad we get this all on tape.

Bill: It’s going to look great in the lawsuit.

Shawn: You said it, not me.

Kaite: I’m just actually using “Comp + Coffee” to build a case.

Shawn: It’s taken me this long and I finally got him to admit it. I’m out. Yeah, I do think one of the interesting trends here though, and this goes outside of the article, that we’re not seeing is, at least in the U.S. but I think this probably goes for a lot worldwide, we are at a point of record profits. And there’s a whole bunch of different reasons that that’s happened. And I know we’ve had this talk before, Bill, that that doesn’t often translate to workers because companies would be worried about the long-term…when you give somebody a raise, it’s permanent, you’re always going to have to pay them that and then probably more as opposed to if you do incentives or some kind of, you know, reward for a good year, that can go away next year. But is that the only reason why you think we haven’t seen that translate to worker increases yet? Or is it that we were talking about like a lot of people getting promoted that’s not being captured in these kind of surveys, or something else?

Bill: My guess is that there’s going to be a lot of talk about this as a political issue in the upcoming debates. And you hear rumblings of it from the sort of further left of the Democrats talking about, you know, the gap between CEO pay and average worker pay and the profits. And the people who share in the profits are the top of the organization moving faster than…income is moving much faster than the people at the middle or the bottom.

Shawn: Right, who typically don’t have like any job security either, but does not make the argument for the pay. But I think you heard that same thing from the other side, actually in the 2016 election. Right?

Bill: Did we?

Shawn: Maybe not in that same way, but that’s one of the reasons why Trump is credited with winning was tapping into that, you feel like the economy no longer represents you.

Bill: The average worker.

Shawn: Yeah, exactly. So I think there’s a similar trend there for that. So you see both sides tackling this in different ways.

Bill: Right. And, you know, and there are different debates for, you know, the pros and cons, but your point, which I have not forgotten, is correct.

Shawn: Which one?

Bill: There was only one of them.

Shawn: It doesn’t trickle down to the regular employees because companies are worried about what about next…

Bill: Right, right, they don’t want to set a precedent and I think the way you said it, I would clarify a little bit, it’s, you know, employers don’t want to give big raises because once you give a raise, you can’t take it back. The can’t is not a legal constraint, it’s just a practical one is that companies are hugely, hugely hesitant to lower somebody’s salary once they’ve raised it. You don’t want to go back, which is why you want to use spot bonuses or incentives or other things. And that also ties into why companies don’t like to pay the same bonus amount every year because if it’s predictable, it feels like an entitlement and then you have a bad year and you cut your bonuses in half or, you know, drop them to zero, people freak out because they’ve already spent all the money, mentally spent it.

Shawn: Yeah, it’s probably one of those ways that ties…the performance bonuses or company performance or worker performance bonuses is one of those ways that probably ties them in more to the results of the company as well, right?

Bill: Yes, you want people tied and you want them to understand but you want them to feel that it is variable pay.

Shawn: Right. All right, so one of the other things, while we’re talking about pay, that came up this week was another article, which…this is an interesting strategy. So I’ll just read the first paragraph of it. “As U.S. wages stagnate, unemployment remains low. About 12% of companies, including Walmart and McDonald’s, are offering a new perk to attract workers, on-demand access to earn wages. So in other words, they’re not paying them…well, they’re still are, but workers don’t have to wait for their paycheck every week, every two weeks, every month. Whatever they’ve earned, whatever they’ve basically accrued, they can tap into and withdraw. One of the reasons they’re saying they’re doing this is because…what is this percent…78% of American workers live paycheck to paycheck. And so they’re saying that this gives them earlier access to that money.

I want to talk about two things here. One, and by the way, in order to make this happen, workers that use this service, this benefit have to pay a transaction fee. And it’s not as bad as like payday loan but it’s not great. So let me ask, like, I want to tap into two things here, which is does this type of benefit just exacerbate the problem overall? And, again, I’ll revisit what we were just talking about, which is wage stagnation. Should there be a better way to solve that’s help the week to week stuff? And B, this is one of those interesting areas where this is a benefit that falls into compensation. But we see a lot of companies investing more into benefits. If one of the reasons this is happening is wage stagnation, well, why are we putting more money into benefits? Does that make sense?

Bill: Why aren’t we putting money into wages?

Shawn: Yeah, right. That’s a better way to say it. That’s why you’re here, Bill.

Bill: Okay.

Shawn: I mumble through something, you come up with an elegant way to say it.

Bill: I don’t know that I can answer any of these questions.

Kaite: [inauidble 00:24:59] carry on.

Shawn: Seventy-five percent fewer words.

Bill: I don’t know that I can answer any of these questions. I just want to jump back because, you know, I’m looking at the article now myself and you skipped one word which I just think is important. The word is controversial.

Shawn: I did skip that.

Bill: I know, and you skipped it on purpose, I’m guessing. But just for the audience, because I’m sure somebody out there going, “That seems, you know, like it would be controversial,” and it is.

Shawn: I was just trying not to play into the hype of the article here.

Kaite: You’re trying to have an unbiased view?

Bill: Well, the article has a spin.

Shawn: Bill is going to take that right down.

Bill: But it’s funny because the headline of the article says that companies are doing this to entice workers, to entice new employees. Effectively, you get access to your money faster, you know, faster after you’ve completed whatever the work cycle is, guessing it’s primarily weekly, but I don’t know that.

Kaite: I just like, how does it logistically work? How do you even…you know, is the payroll person constantly just doing payroll? I don’t know, you know?

Bill: I don’t know. I mean, I’ve seen some of these things before where you basically get a debit card the money gets deposited on your card.

Shawn: That would my guess as to what it is. I’m looking it up now.

Kaite: Like an FSA or HSA type of thing.

Bill: Yeah. Or, you know, just, you know, like a prepaid card. It’s like a gift card.

Shawn: Like an FSA, like you get the benefits card whatever you use. Yeah, probably that.

Bill: But, you know, I think some of these companies may be paying the transaction fees, which I’m not sure why…

Kaite: It said that Walmart was paying a portion of it.

Bill: But I’m not sure why they, you know…at some point, like a Walmart is big enough, they could actually, I presume, do it themselves. But the idea is it takes people who don’t have bank accounts or, you know, have to wait for checks to clear, it takes them longer to get a paycheck cycled through. But most payroll companies do direct deposit into bank accounts. So that, you know, typically, white collar workers are getting their money and you’re getting access to it relatively quickly.

Kaite: Instantly, yeah.

Bill: But that’s a combination of payroll directly into a bank account. And if you don’t have a bank account or you have a bank account that has fees, you don’t want that. You don’t want to wait. You don’t want to bring your check in to get it cashed and then, you know, you have to wait a certain period of time or you go to check-cashing businesses which charge huge percentages. And often they will only take, you know, government-issued checks or corporate checks from certain employers. I’m not really sure that works. But I also sort of question, this is a little bit of the mathematician in me, it’s like, all this is like a phase shift if you’re…sorry for getting all dorky on everyone.

But if you get paid once a week and you normally get your check on Friday but don’t get access to your money until Tuesday, then effectively, you get access to your money every Tuesday. So after you start a new job, you get…once you start the job, if you can make it to the first Tuesday, then you’re getting paid every week. You know, presuming you work approximately the same number of hours, you get approximately the same amount of money every Tuesday. And so I’m not sure what you gain from moving that access to money forward after the first time.

Kaite: Isn’t it that you can access the money instantaneously after you work? So if I am living paycheck to paycheck, then I can, after my…let’s say, have an eight-hour shift every single day, then every night, I can…

Bill: You get today’s pay.

Kaite: Yeah.

Bill: Is that what this is?

Kaite: I thought so.

Shawn: Yeah, you can get it that frequently, I guess. It said, I think, people take…I’ll go back to the stat that it said in there. But I think it’s to…in a lot of states, you have payday loans, which this is competing against for a lower fee and easier access so that you’re not taking out money and waiting until you’re paid. It’s whatever you’ve earned that you’re getting paid and you can be paid daily if you want.

Kaite: So I guess the point of the transaction fee is probably to avoid what I just said that they’re doing it every day, right, depending on how high the fee is?

Shawn: It does say some of them charge “per wage pull.” So, yep. But others do a flat monthly fee.

Kaite: Interesting.

Shawn: And it said on average users take out $66 once a week. It’s lacking context. But it did say that one of the examples they have in here, it’s designed to work with those being paid via direct deposit or to a prepaid card. So it sounds like they’re in between you and your payroll, maybe.

Bill: I don’t really know.

Kaite: Well, if it’s designed to be direct deposit, then that kind of debunks what you were just saying a second ago then, right?

Bill: I mean, it’s speeding up the clearing of the deposit, but like deposits don’t take very long…

Shawn: No, those are quite…

Bill: …to clear.

Kaite: Yeah, it’s not like you’re having to go like through all the hoops that you were just talking about to get your check.

Bill: Right. So I’m still confused as to where the gain is…

Shawn: For the worker?

Bill: …for the worker.

Shawn: I agree with that, it’s a good question. My only thing would be just more real time. But they lose out on fees and stuff in between, which that’s the trend sadly, right?

Bill: I mean, I would think that the movement toward a $15 minimum wage would be more valuable or more useful than getting access to a lower wage faster. Not that it’s one or the other.

Shawn: That was my opposite of eloquent question at the top, which is if wage stagnation is the problem and we’re seeing people have to take out, for example, payday loans or live paycheck to paycheck as a result, like that’s a lot. If we believe that percentage, and I guess I do, like a lot of people, three-quarters of Americans live paycheck to paycheck, is the problem then not the frequency of pay because that’s just…no matter how frequently you do it, it’s just gonna get worse and habits. Is the problem then not you should figure out a way to pay a little bit better?

Bill: Right. Well, it sounds like an addiction model.

Shawn: Yeah, yeah, I think that’s right. That’s right. You’re in that trap where you’re always having to make debt payments and then you’re always having to make…you’re right. Like, on top of your normal payments when you take out a payday loan, like so on top of like you have to pay the mortgage, you have to pay your car, Bill, you have to pay your insurance, whatever, all your normal kind of stuff, then you also have the debt service, right?

Bill: Right. And I think there’s some confusion, at least in my mind, about like what does it mean to live paycheck to paycheck because I think if 78% said that…

Kaite: Seventy-eighty or 73%?

Shawn: Seventy-eight percent of Americans.

Bill: Seventy-eight percent of Americans. I think a lot of…some decent-sized subset of that group, it’s not that they need this service, it’s that the sum of their weekly or monthly expenses pretty much equals their paycheck and it’s the rent, it’s the car payment, it’s insurance, it’s food. And those people aren’t necessarily looking for this kind of couple of day acceleration in getting access to their money.

Shawn: Probably accurate.

Bill: And that’s why you’re looking at, you know, Walmart and McDonald’s and those kinds of companies being named here because they have a huge population of minimum wage or close to minimum wage employees for whom it’s like the day you get access to your cash makes a difference.

Shawn: Sure. Right. That’s probably right. And I think one of the ways that if companies are going to do this and not tackle the larger issue, if you will, is if they do cover those fees for them. I was just looking at one of the websites and it said the fees can be covered by the employer, by the employee, or somewhere in between. So that would at least help. You get more real-time access to what you’ve earned and you’re not paying the fees for it.

Bill: Right. And, I mean, in my mind, it sounds like back in the turn of the previous century days, you know, you work a day at the general store and as you leave, like, Old Man Potter is like, “I owe you $7.15. Here you go.”

Shawn: For those that can’t see this, Bill is doing his best impression and doling out the cash.

Kaite: I think he opened the register too.

Bill: Yeah, exactly. Yeah. Although that may have been before registers. Opened up the cash box. I mean, I worked at a store when I was in college and, you know, got paid cash as I walked out the door, which all got recorded.

Shawn: Sure it did. And then since then, you had, “Well, I’ll write you a check,” and then since then, you’ve had, “Well, we’ll have somebody handle payroll for us because this is a pain.” Right? And stuff’s gotten built-in between…

Bill: Right, all these processes get built-in.

Shawn: …the employer and employee that takes longer and costs more. Right? So yeah, that’s an interesting take on it. Maybe this is a natural regression, if you will, that’s going to get some of that out of the way, maybe not. Maybe this is just adding another layer that’s not needed. But with the current setup that we have, maybe this is a better bet, depending on how it’s structured.

Bill: It could be. But I think, you know, I do fear that they…I don’t know that I’m going to get to the right spin on this, but I feel like it’s addressing the wrong problem.

Shawn: I agree.

Bill: I don’t know that that means that these people are doing something bad, but I think like there’s a different issue.

Kaite: Their effort is better spent elsewhere.

Shawn: It’s a Band-Aid on a bigger issue. Potentially, at best, it is a Band-Aid on a bigger issue. Yeah, I think that’s right.

Bill: Right, and I think there’s something troubling if it’s true that people are changing jobs for this accelerated access to their daily, weekly pay.

Kaite: I wonder if they are. I wonder if they actually truly are.

Bill: Right. I mean, this is not…

Shawn: Well, companies might believe that that’s a competitive advantage. So say you have, I’m going to use two real companies but totally false scenarios here, Home Depot and Lowes right across the street from each other. They both have associates that they pay minimum wage to. One crosses the street to work for the other because the pay is the same but they have this perk, and they’re like, “Well, I wouldn’t mind having my money earlier.” Could it be a recruiting benefit that way? Maybe.

Kaite: Maybe.

Shawn: At that end of the market, maybe. But the bigger issue needs to probably be worked on, which is that we’ve had a wage stagnation for far too long. But that is a huge, huge issue, to your point, that will get tackled, no doubt, in the 2020 election from both sides.

Bill: Right. And unfortunately, tackled doesn’t mean solved.

Shawn: No, it almost certainly doesn’t.

Bill: Yes, it will get discussed to death, but…

Shawn: Then what?

Bill: Exactly. And it may be up to the private sector to address it, which is sort of the momentum started.

Shawn: Yeah, and you see that happening, Amazon paying the $15 minimum wage and a whole bunch of other companies doing the same.

Bill: Right. And then individual states following suit.

Shawn: That’s right. Yeah, individual states raising it up to that as well. All right. Well, it was good to have everybody back in the studio again.

Kaite: Thanks for having us.

Shawn: All right. We’ll be back soon…

Kaite: We will.

Shawn: …with other podcasts.

Bill: Excellent.

Kaite: Cool. That’s a good promise. All right. We might record again at some point.

Bill: Try not to be too verbose here, Shawn.

Shawn: Boy, it’s just shots all around today. Shots all around today. Shots fired, Bill. All right, thank you for joining in this time. We’ll have more coming soon.

[00:38:04]
[music]