The Startup
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The Startup

Businesses Need Gig Workers and Gig Workers Need Faster Pay

5 reasons you need to rethink your payment practices

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It’s remarkable how rapidly companies of all sizes adapted as remote work became the norm during the pandemic. Even as more employees begin to return to the office, workplace flexibility is here to stay. In particular, the gig economy will continue to grow, driven by remote connectivity and geographic mobility, among other factors.

In fact, 92% of people surveyed think now is the time to look for gig work, according to a December 2020 report from TechRepublic and Monster.

Gig work is attractive to individuals because it offers freedom and flexibility. For businesses, a contingent workforce means they can scale when needed, manage benefits and training costs, and derive value from the unique skill sets that gig workers have to offer.

While the major players in the gig economy — the rideshare and large delivery companies — are known to pay workers quickly, much of the contract work that’s happening is with smaller businesses or startups. For these companies to compete for talent against the DoorDashes of the world, they have to rethink their approach to attracting and retaining this workforce, starting with how they pay.

Everee recently surveyed 400 independent contractors throughout the United States to better understand the wants and needs of this newest essential workforce. Results of that survey are compiled in their 2021 Gig Worker Survey Report.

What Everee discovered was surprising, but not unexpected. Here are 5 reasons they found as to why common payment practices fail to meet the needs of contract workers, and what you can do to change that.

Payroll practices are woefully outdated

The biweekly payroll cycle has been around since the 1950s with little evolution. For contingent workers, payment for work completed can lag even further, in some cases up to 60 days.

Today, people can close a mortgage in less time than it takes to get paid for some contract projects. That’s not acceptable when 91% of gig workers prefer a pay frequency faster than the standard two-week cycle.

Many policies don’t support financial health

Employers today have a responsibility to help workers improve their financial health. That includes gig workers, who are quickly becoming an essential part of a modern business model.

Yet nearly 60% of contractors say they’re in the same or worse financial situation than this time last year. And it’s clear gig workers not only want more frequent pay, they need it.

By giving them access to their pay as soon as they’ve earned it, they’ll run into fewer cash flow problems that result in taking out devastating payday loans or other debt.

There’s no flexibility in the way companies pay

Infrequent pay cycles make it difficult for workers to cover an emergency. In fact, only 15% of contractors have enough to cover an emergency expense. They might have already earned enough to cover an unexpected car repair, but their money is stuck in limbo waiting for a slow payroll process.

You can give workers a positive experience with modern pay options that offer same-day pay or the ability to draw earnings on demand.

Payroll overhead is expensive and cumbersome

If you’ve been thinking about paying workers faster but worry that it’s impossible or that it will wreak havoc on your bookkeeping, think again. It’s 2021.

Easy-to-use mobile tools exist and can make approving hours, tracking time and running payments as easy as ordering takeout. Some modern payroll solutions will even serve as a credit facility for you, so your workers get paid daily but you keep your same cash flow cycle.

Contingent workers are treated as expendable

The scalability you gain in having a flex workforce isn’t an invitation to ramp up and cut workers off as you please or you’ll quickly lose their loyalty.

59% of independent contractors work for more than one company, and 24% work for three or more companies. Building strong working relationships, communicating openly about the availability of work and anticipated roll-offs, and gathering input on individual worker preferences can go a long way in keeping you at the top of the list for in-demand contractors, even if your workforce needs shift due to seasonal flux or other changes in business volume.

Strengthening the retention strategy for your contractor workforce can be fairly simple. Begin by reviewing the reasons your full-time employees like working for your company and determine which ones you might be able to apply to your contingent workers. Review pay plans to ensure you’re offering competitive wages and implement faster, flexible pay options.

Finally, consider ways to streamline other processes that make things easier for you and your workforce, such as onboarding, management, project tracking and more to build a more sustainable gig economy practice.

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