7 trends eroding the two-week pay cycle
The two-week pay cycle, while common today, has been around only 80 years or so. Dr. Nelson Lichtenstein, a professor at UCSB, reported on NPR that job completion pay and weekly pay were the standard until the U.S. government instituted a payroll tax in 1942, which led employers to adopt the two-week standard to ease the management of paperwork and tax compliance.
“It doesn’t work anymore,” said Atif Siddiqi, founder and CEO of Branch, an earned wage access (EWA) provider that offers on-demand pay. “The traditional, every two-week payday has begun to change. The next evolution is on-demand pay which is based on when workers need it. I see on-demand pay as being the standard for paying hourly workers in the next three years.”
While there has been a general trend of paying people faster for work already performed, starting with gig workers, COVID-19 has created (or exposed) many issues that are fueling the shift toward on-demand pay, especially for hourly workers.