“We think it’s the right thing to do, and we’re happy to stand up for it,” Walmart COO Judith McKenna said in an interview.
But Walmart’s new digital initiative also highlights, albeit subconsciously, the financial difficulties of Walmart’s low-wage workforce. Even as the economy strengthens, many workers in the retail and service industries are not earning enough to make ends meet.
“Their paychecks are too small,” said Paul Sonn, general counsel for the National Employment Law Project, a workers’ rights group.
The app, which is called Even, also helps workers manage their finances by showing exactly how much they can safely spend before their next paycheck. Walmart pays fees on behalf of workers to the tech company that manages the app.
The Even app has been used by other employers, but never on such a large scale as Walmart uses it. McKenna said employees who are less stressed about their financial stability “feel more confident and more settled at work.”
The minimum starting wage at Walmart is $ 9 an hour, which is $ 1.75 more than the federal minimum wage but lower than the starting wage at retailers like Costco, which pays $ 13 an hour, and Target, who recently increased their entry-level salary to $ 11 an hour.
The average hourly wage for a full-time Walmart employee is $ 13.85, while the average hourly wage at Costco is around $ 24.50.
Every Walmart employee can use Even’s financial planning tool and get eight payments, called instapays, for free per year. For most workers, instapays will be deducted from their next paycheck. Workers can pay extra if they want more than eight instapays.
Alexis Adderley, who works nights at a Walmart distribution center in Fort Pierce, Fla., Has started using the Even app as part of a pilot program.
At first, she was wary, she said, that the app was yet another in a long line of financial products like payday advances and “overdraft protection” that end up pushing workers to low. came back deeper into a hole.
But Adderley, the mother of four boys aged 8, 7, 4 and 2, said she was pleasantly surprised.
The app, which connects to her bank account, calculates how much she pays for accommodation, food, and phone bills, and tracks when she makes large monthly payments. With this data, Even provides Adderley with a real-time estimate of how much she can spend on a given day.
She earns $ 19.25 an hour, more than the average Walmart employee, and works 30 hours a week. But money is still tight, especially since she was forced to leave her home after Hurricane Irma. Earlier this week, the app warned Adderley, 30, that she only had enough money to safely spend $ 9.08 before her next paycheck.
“I would like to save more,” she said.
Walmart executives said they heard about Even after reading a New York Times article about the company a few years ago. The retailer is also working with another tech company, PayActiv, which facilitates some of the payments.
These partnerships reflect Walmart’s broader efforts to make inroads into Silicon Valley, where the old-fashioned retailer is looking to acquire talent and ideas to bolster its digital clout in its battle with Amazon.
Walmart pays Even a small fee to allow workers to withdraw their wages before payday. Workers can only withdraw a portion of the wages they’ve already earned during the two-week payroll cycle – so technically, Even says, these aren’t loans.
“You made this money,” said Safwan Shah, founder of PayActiv. “Who decides you should get paid every two weeks?” “
Labor groups say the best investment Walmart could make is not in a new app, but in raising wages.
“All of these solutions to help people make a living paycheck to paycheque put the burden on the worker, not the employer,” said Carrie Gleason, who works on issues affecting retail and other low-wage workers at the Center for Popular Democracy, a rights group. .
Walmart and fintech companies say cash flow problems aren’t just a problem for the poor, but affect a large segment of Americans.