Right now, the unemployment rate is at 3.8%. Since January 2022, the unemployment rate hasn’t gone above 4.0%. While a low unemployment rate is great news for workers, it leads to upward pressure on wages. Workplaces have to be especially creative if they want to attract and retain top talent at a reasonable price. 

In a Gallup poll, pay and benefits were cited as the most common reasons why employees wanted to leave their jobs. Among employees actively searching for a new job, 59% of workers are on the job hunt to improve their pay and benefits package. 

If you want to reach better talent, working with earned wage access providers can help. When employees can access earned wages, it gives them financial security when an emergency occurs. Businesses benefit because they can access better workers in a challenging labor market.

Lower Birth Rates Are Driving a Tight Labor Market

Thanks to demographic changes, there are fewer employees available to hire. As host Mike Vannoy said in his recent Mission to Grow podcast, “On-Demand Pay: The New Must-Have Benefit for Job Seekers,” “there’s been a fundamental change in the makeup of the workforce. In 2020, it was the first time in US history that there were more people over the working age than there were under working age.” 

Thanks to declining birth rates 20 to 40 years ago, there aren’t enough young workers available to replace all of the retired workers who are leaving the workplace. The retirement of Baby Boomers, childcare issues for parents, and low birth rates are just a few of the factors affecting the labor market and limiting the number of available employees. As a result, employers increased average salaries by 4.4% in 2023 in an effort to attract employees.

Dealing With a Tight Labor Market as a Small Business 

By providing employee benefits and letting employees access earned wages, small businesses can attract top talent. Small business owners have multiple options available for dealing with a tight labor market.

• Offer Higher Wages: When it comes to attracting applicants, most people automatically jump to this answer. However, most small businesses operate on a limited budget, and significantly increasing wages isn’t a long-term option. 
• Provide More Flexibility: Many employees want a better work-life balance. If your business model allows it, you may be able to attract additional workers through flexible scheduling or telecommuting options. 
• Work With Earned Wage Access Providers: When you let employees access earned wages, they get more financial flexibility for dealing with emergencies. Employees will pick a workplace that offers on-demand pay over a company that doesn’t if they are given a choice.
• Develop Career Opportunities: Often, employees will leave an organization that doesn’t have opportunities for advancement. You can remedy this problem by offering workers ways to advance their careers and develop their current skills without having to leave your company.
• Give Additional Benefits: Thanks to the Secure 2.0 Act, small businesses can offer 401(k) matching for low or no cost. Matching contributions, healthcare, and other benefits can help you attract workers to your company. 
• Reduce Your Dependence on Human Capital: If you can substitute machines, apps, or other tools for human labor, it may make sense to invest in these resources. With a tight labor market, you may need to find alternative ways to accomplish tasks with fewer workers.

How Earned Wage Access Providers Can Help You Attract Top Talent 

Earned wage access offers companies and employees a range of benefits. It provides employees with more financial stability and easier access to funds in an emergency. For a business owner, letting employees access earned wages has a number of advantages. Many workers like this type of pay flexibility, so they are more likely to work for a company that offers it.

Why Employees Like Getting to Access Earned Wages

From an employee perspective, getting to access earned wages has the following advantages. 

• They can avoid payday loan companies when an emergency strikes. 
• Employees are less likely to pay late fees for unpaid bills. 
• They don’t have to ask their boss for a loan. 
• Because they can get money right away, employees don’t need to take paid leave to work side hustles for extra cash. 
• Workers don’t have to wait to access the money they have already earned. 
• Knowing that they have access to their earnings whenever they need it, employees don’t have to stress out about having enough money for a necessary medication or an unexpected utility bill. 

Why Employers Like Offering Access to Earned Wages 

Working with earned wage access providers isn’t just a good opportunity for workers. Earned wage access also offers benefits to employers as well.

• Since your employees aren’t worrying about needing money for a sudden bill, they are able to focus and be more productive at work. 
• Employee absenteeism drops because employees don’t have to use paid leave to work a side hustle or go to a payday loan center. 
• Workers like being able to access earned wages, so employers will have an easier experience trying to attract top talent. 
• Because workers feel supported and appreciated, employee engagement and retention will increase. 
• After quick service restaurants (QSRs) adopted on-demand pay, employee theft dropped by 90%. 
• Most earned wage access providers only charge employees when they request early access to their earned wages. As a business owner, you may pay nothing or very little to offer on-demand pay. 
• When your on-demand pay is integrated with your payroll provider, you don’t have to do any extra work to offer employees earned wage access. 

Alternative Ways to Deal With a Tight Labor Market 

Other than offering earned wage access, there are other ways that you can attract prospective workers in a challenging labor market. Beyond improving your benefits, the following steps can help you attract and retain top talent. 

1. Build Your Brand

You have a reputation in the community you work in. Use your website, company culture, and values to show what your company cares about. Building your brand can help you attract like-minded workers to your business. 

2. Improve the Candidate’s Experience 

To increase the number of applicants interested in working for you, try to improve the candidate experience at your company. You can start by streamlining the application and interview process. Send out an email as soon as someone applies so that they know what to expect next in the process. 

3. Encourage Employee Referrals 

Reach out to your star employees and ask for referrals. Most likely, they have friends or acquaintances who have similar talents and work attitudes. In addition, having a work buddy can make your current employees more likely to keep working for your company over the long run. 

4. Hold a Job Fair 

With an open house or job fair, you can interview and interact with many applicants at the same time. In addition, this type of environment gives applicants a better understanding of your company culture and the general atmosphere they’ll be working in. 

5. Provide Competitive Compensation and Benefits 

When top candidates evaluate job offers, they always look at the compensation and benefits. By improving your pay and benefits package, you increase the odds that top workers will choose to work for you. 

Discover How On-Demand Pay Can Help Your Company Attract Workers 

While the job market remains challenging for employers, working with earned wage access providers can help. Prospective applicants want to access earned wages when they need them. By providing this benefit, you can help your company stand apart from its competition.

If you are looking for information about earned wage access, reach out to our payroll experts today and catalyze your company’s growth rate.