Responsible EWA Usage Boosts Retention – The Walmart Case

While high employee turnover poses significant challenges for businesses, a solution has emerged in the form of Earned Wage Access (EWA). This employee benefit and financial wellness solution is also a zero-cost solution to improving retention. A case study of Walmart, USA-based retail giant, shows how it works.

In 2017, Walmart (with a workforce of 1.5 million) became one of the first companies to introduce EWA, allowing workers to access a portion of their already-earned wages before payday. A year later, Walmart conducted an analysis of EWA usage among 269,000 new employees hired over a seven-month period. There were two noteworthy results. Firstly, the app was popular. Employees embraced the EWA offering, considering it second only to the company’s 401(k) retirement program. The offering also had a notable effect on retention – but not the results which were expected.

Walmart’s analysis found that of the employees who regularly used the app to cash out only, around 50% quit their job within the first six months of employment. In other words, employees who regularly cashed out were a coin flip away from leaving the company. This was not the retention improvement Walmart was expecting – initial data seemed to indicate access to EWA was actually not a solution to employee turnover.

However, a closer examination of the data uncovered greater nuance, because a second group of Walmart employees presented drastically different results. This group also cashed out regularly, but combined this with frequent use of the EWA app’s savings and budgeting features. Significantly, only 30% these employees left within the same six month period. This data means 70% of employees who cashed out and upskilled themselves via the EWA platform stayed at the company longer than employees who did not.

What causes this difference in retention? Financial analysts have argued that employees do not actually want access to their money on a daily basis – most just want financial stability and the peace of mind this creates. The numbers speak for themselves: a study by global financial services firm Ernst & Young reported that 20% of employee turnover rates can be explained by the financial stress employees are under. Workers in desperate need of cash will switch to whichever job offers them the highest salary. In light of this, it is no surprise that another global financial services company, KMPG, found that implementing EWA leads to a 20% reduction in employee turnover.

This revelation is a win-win for both companies and employees. Most EWA platforms can be seamlessly integrated at no cost to employers. Moreover, platforms like Paymenow offer several free add-ons, such as a savings feature and budget tool similar to those used by Walmart. The Paymenow app also includes free, gamified financial education for all users. This content is incentivised via a tiering system which rewards users with lower fees for each tier they reach. Users are hence far more likely to engage with the content. As per the Walmart case study, users are hence also more likely to upskill themselves and decrease their financial stress. This means they are more likely to remain in their current job.