How Getting Paid Daily Can Change Your Spending Habits
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What is the main topic discussed in this episode?
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here's your money briefing for wednesday february 16th i'm jr whalen for the wall street journal if like most people in the u.s you get paid every two weeks you probably schedule everything from bill payments to food shopping around payday but what if you got paid more frequently how would that change the way you think about your money
Should I order takeout today or kind of suck it up and cook at home? Or, you know, it's a friend's birthday. What type of gift do I give that person? Or a colleague invited me out for drinks after work. Do I say no or do I go home? Do I buy inexpensive pair of sneakers or cheap pair of sneakers?
On today's show, we'll be talking about a recent study looking at the spending habits of people who get paid more often than every other week. What lessons about money can we all learn from the results? We'll hear from one of the study's co-authors after the break.
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What question is this episode asking about daily pay and spending?
For many workers, payday comes every two weeks. But what if you were paid your salary in smaller increments, like on a daily basis? Would it change the way you view and manage your money? Would you spend differently? Well, researchers at the University of Pennsylvania set out to study the effects of more frequent pay on people's personal finances. Wendy De La Rosa is an assistant professor at the Wharton School there and co-author of the study. And she joins me now. Wendy, thank you so much for being with us.
JR, thanks for having me. It's a pleasure.
So, Wendy, what was behind the need to study this topic? Has the idea of paying workers more frequently, has that become a trend?
JR, this is such a good question because I get it all the time. In short, the motivation for this research came from my family. I had cousins who were part of the gig economy and were really ecstatic about the fact that they were able to get paid every day, sometimes up to five times a day. And that got my gears turning, thinking about, well, how does it impact their spending behavior? And the more that I started to research this, the more that I realized that there's been this boom in payroll technology where you have startups like DailyPay and PayActive that have really sort of infused themselves within Fortune 500 companies into so that hourly workers can now get paid on a daily basis if they wanted to.
And even payroll providers like ADP, our largest payroll provider, now allows all of their clients to pay their employees on a daily basis. It's really being pushed by these advances because it costs us less to send money around.
Now, you mentioned gig workers, but who else is in the mix here? Who else is getting paid more frequently? And has technology helped to push this trend forward?
We've always had daily laborers. So this is not a new trend. We've always had people in the service industry who get a significant portion of their paycheck on a daily basis, whether it's tips, etc. But really, we're talking about this increase for hourly workers.
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