The majority of Americans live paycheck to paycheck, and getting paid every two weeks can lead to problems when unexpected bills show up. But help is now on the way.
Some companies are giving workers early access to their earned wages rather than have them wait for their paycheck every two weeks.
One reason for the shift: Venmo, PayPal, Apple Pay and other technologies have made access to money feel instantaneous.
"The way Millennials are interacting with tech and money, the expectation of immediacy will ultimately change the way we get paid," said Doug Politi, president of compliance solutions at ADP at an event earlier this month.
The support for these kinds of pay programs has been overwhelmingly positive, according to Glassdoor Senior Economist Daniel Zhao.
Giving employees more control of their finances could eliminate their need to use payday lenders, which charge high interest rates, to deal with unexpected expenses. That's why instant pay models could be positive for workers, Zhao added.
The healthier the American consumer, the healthier the economy: Discretionary spending accounts for some two-thirds of US GDP growth.
The United States' biggest employer, Walmart, has already changed how it is paying its workers. Since the end of 2017, Walmart employees can get instant access to their wages via an app called Even that doubles as a financial planner. The app also helps people to budget and allows them to automatically save from their paychecks.
Companies have different models for who pays for the instant transfers. Walmart, for example, allows employees early access to two paychecks per quarter for free via Even. Workers can get constant access to the instant pay function for $6 a month.
Although instant pay is merely an option for workers and hasn't totally replaced the traditional payday, some 400,000 Walmart employers are using the app, said David Hoke, Walmart's senior director of associate health and well-being.
One issue the company wanted to tackle was the bumpy pay cycles in lower-salary retail or seasonal jobs, Hoke said.
Although Walmart is the company with the biggest footprint, it isn't the only one dabbling in pay innovation.
Restaurant chain Noodles & Company, which employs just under 10,000 people, also gives its workforce the option to use Even. Offering instant compensation for its workers allows the company "to differentiate ourselves given the low unemployment rate and the high turnover in the restaurant business," said Amy Cohen, director of total rewards at Noodles & Company.
"I absolutely think this is the future of payroll," she added.
Ride-sharing companies Uber and Lyft allow their drivers to draw down on earned wages before payday as well.
At this point, instant payments are not ubiquitous in the US labor market. Only some companies offer the option at this point. But a change seems underway to turn the world of payments on its head.
More than instant gratification
Having immediate access to wages, possibly at a small fee, allows employees to smooth out their otherwise bumpy cashflow. But the assumption that this holds particularly true for lower-income earners is false. People across the payscale live paycheck to paycheck.
But just giving workers immediate access to their money isn't enough to breed better behavior when it comes to personal finances and the health of American consumer.
"I actually think this shift to getting paid every day would be bad," said Even co-founder and CEO Jon Schlossberg.
But access to cash alone doesn't force people to rethink the financial habits that would otherwise send them to payday lenders, Schlossberg said.
"The thing that is predatory about payday loans isn't the high interest rate," he told CNN Business, though the high-interest rates are part of why payday lending is predatory, "it's that you have to pay it back when you get paid. You become trapped in this cycle. On-demand pay has the same risk."
When workers draw down on their earned salary early, that money comes out of their regular paycheck.
Constant access to earned wages could eliminate the need to make any financial plans at all, because any expense could be paid with an instant salary drawdown. But Even's app wants people to get better at living within their means rather than getting trapped in just another vicious cycle. The app allows employees to put savings aside right away, for example. At Walmart, some 81,000 workers have taken the savings feature up.
Even's intention to help Americans become more financially fit is noble. But Schlossberg is also being realistic about the new pay models representing a new way to make money for payment processing companies.
"I think that on-demand pay will be a commodity within the next 12 months. All the payment processing companies are building it now because there is so much demand," he said.