Merrill Matthews, Ph.D., resident scholar with the Institute for Policy Innovation, calls it a "very good trend."
Pointing to recent studies from Harvard and Ernst & Young as proof, he says, "One of the things coming out of the pandemic is workers are demanding more flexibility."
"When you're talking about lower income people, people who are just sort of making it day-to-day on their earnings, this becomes a reasonable alternative for them to be able to do that and not pay quite as much," Mathews continues. "We've had a couple of decades now, if not more, of Washington, especially Democrats, attacking the payday lending industry, which would charge sometimes between $20 and $40 for a loan of say $100 or $200. It was very expensive to do it, but it was a way that lower-income people could get cash that they needed instantly. So the payday lending associations were attacked for doing this, and they needed an alternative. And this looks like a much more affordable alternative that a lot of people who are tech friendly can use."
According to CBS News, dozens of employers — including fast-food chains Arby's, Wendy's, Jimmy John's, and Taco Bell as well as retailers Big Lots, Dollar Tree, and Kroger— are now giving employees the option to withdraw money from their paychecks moments after finishing their shift by using smartphone apps like Branch or DailyPay.
"This seems to me like a more modern approach to meet a need with less cost, but it does come with a downside of people can overextend themselves simply by taking too much money out because they're not paying attention to it," Matthews continues.
He adds that surveys show one of the challenges for Gen Zers or millennials is they tend not to track that money, "so, you could easily get overextended on this."
