Employers may start offering payday loans to employees
Usually, companies of all sizes – big and small – are concerned about absenteeism. But what about presenteeism? Presenteeism can be just as dangerous because a worker is bringing their own problems to the workforce, whether it’s their illness, their mental health issues or their personal issues at home. And this could hurt the overall productivity in the business.
According to a 2014 report from Bensinger, DuPont & Associates, 47 percent of workers say the problems in their personal lives sometimes affect their own work performance. Some of these problems do include pecuniary difficulties, not having enough money to pay the rent, cover the lighting bill or giving a child money for a school trip.
They then tend to turn to stores that offer direct payday advance loans to borrow some much needed funds for a short period of time. But as the media reports suggest, consumers can enter into a downward spiral of debt and get themselves even more into trouble. Everything just snowballs at once.
When these matters arise at home, employees bring them to the office, and they think about it all the time. Employers are starting to see if they can offer some sort of assistance. One way they’re attempting to achieve this is by offering their own types of payday loans.
It has often been discussed about the benefits and drawbacks of an employer extending a payday loan – it’s a modern update of an advance on your salary or paycheck. But employers want to experiment with a wide range of ideas, anything to boost morale and increase productivity.
Over the last few years, an array of companies have helped their workers pay off student loans, consolidate or refinance existing debt and even offered low-interest lines of credit as an alternative to payday loans. All of these tools are meant to cover emergency costs, pay down other debt or to remove personal headaches that may have seeped into one’s cubicle, and perhaps compete for the best and brightest crop of workers in the labor market.
Business owners and managers concede that they can’t have their workers concentrating on financial matters and looking for part-time work because then it hurts their company.
“I can’t have an effective employee if they are stressed and thinking about waiting tables on the side to make ends meet,” Erik Dochtermann, CEO of New York creative media agency MODCo Media, which has 33 full-time workers, told the Wall Street Journal.
Americans take out approximately 12 million payday loans every single year. These loans, whether they’re $100 or $1,000, carry exorbitant interest rates and other charges and have a small window of repayment. Sometimes, borrowers can have a hard time paying the funds back.
Although many companies are apprehensive about offering such a loan, they may have no other alternative because their staffers are going to get a loan no matter what. So why not have the private firm extend such a product or a choice to those workers?
“Not offering a low-cost loan option is not going to prevent people from getting a loan. By not offering, we are going to force them to do something worse,” said Pam Dimitro, controller at JNET Communications.
Just six percent of U.S. businesses maintain this kind of practice, notes a 2015 study by the Society for Human Resource Management. But that number may grow in the next few years, especially as wages stagnate, the cost of living goes up and workers enter into a life of financial destitute.
It seems perhaps the benefits a company offers are far more important than salary.