A NEW LOOK AT EMPLOYEES AND PAY IN AMERICA:

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1 A NEW LOOK AT EMPLOYEES AND PAY IN AMERICA: Surprising discoveries about the attitudes and perceptions workers have toward pay and paycards by generation February 2016 Research Presented By: Global Cash Card and The Center for Generational Kinetics

2 AUTHOR S FIRST WORD Pay for work is a vital part of life for every single worker regardless of industry, title, education, or job description. Whether payday is circled on the calendar or an afterthought, and whether that income is carefully allocated beforehand or spent spontaneously throughout the following weeks, pay is important to everyone. When it comes to pay there is a great deal of discussion around amount, but how this pay is received is a less considered yet critically important aspect of pay. In this cross-generational study, we set out to explore potential attitudinal and logistical differences surrounding methods of pay. We wanted to understand how workers feel about their pay options and specifically how paycards might fit into their lives. Understanding the employee perspective on pay and how it is received is critical for companies and leaders today as they compete to attract and keep the best possible workforce of every generation. -Michael Purcell, Global Cash Card and Jason Dorsey, The Center for Generational Kinetics 2016 Global Cash Card and The Center for Generational Kinetics. All rights reserved. Media usage allowed. 2

3 TABLE OF CONTENTS 04 Welcome from the Authors 05 Key Findings from the Study A New Financial Reality: The Rise of Non-traditional Wage Management The New Financial Solution: The Case for Paycards Financial Perceptions: Payroll and Gender Matter 18 About the Study s Authors 19 Research Methodology 20 Copyright and Usage 2016 Global Cash Card and The Center for Generational Kinetics. All rights reserved. Media usage allowed. 3

4 WELCOME FROM THE AUTHORS February 2016 Welcome to the 2016 study on Pay, Paycards, and Generations in America! We are excited to share the surprising findings with you. This national study was designed to explore perceptions of American workers with respect to pay and paycards. The area of personal finance management, including pay, is shifting dramatically. While many people from every generation still transact personal financial business and engage with financial institutions in traditional ways, increasingly there is a trend toward more mobile and less traditional methods of handling finances. As more pay options become available, it is clear that different generations, employees, and employers want the options that best fit them. In this study we explore these trends from the angle of pay, particularly how workers across America are receiving their pay and their attitudes and perceptions around the exchange of payment for doing their job. Specifically, we wanted to gauge the perceived value and usefulness of paycards as an option to meet the changing demands of workers in an increasingly tech-driven, connected world. This is important for employers as they seek to attract and retain a talented, engaged workforce where talent continues to be paid at a premium. Global Cash Card and The Center for Generational Kinetics are pleased to partner on this groundbreaking national research and are excited to share the study findings with you. To schedule a media interview about the study and its findings, please contact Michael Purcell, Executive VP and CMO at Global Cash Card. Michael Purcell Executive VP, CMO Global Cash Card marketing@globalcashcard.com Jason Dorsey Millennial Expert Center for Generational Kinetics info@genhq.com 2016 Global Cash Card and The Center for Generational Kinetics. All rights reserved. Media usage allowed. 4

5 A NEW FINANCIAL REALITY: THE RISE OF NON-TRADITIONAL WAGE MANAGEMENT 2016 Global Cash Card and The Center for Generational Kinetics. All rights reserved. Media usage allowed. 5

6 MILLENNIALS CHOOSE UNCONVENTIONAL BANKING MORE THAN OTHER GENERATIONS For many people, having a checking account is second nature. In fact, it s such a way of life, particularly for older generations, that it s rarely given any thought. After all, how exactly would one conduct everyday transactions without a basic checking account? But in reality, tens of millions of people operate without checking accounts and this trend is becoming more commonplace with younger people for a variety of reasons. In fact, the study found that roughly 5 million Millennials in the U.S. do not have a checking account. They still work, earn wages, and presumably have bills and other financial obligations, but they are finding nontraditional ways of managing their personal finances. This presents a potential challenge for employers because even though they are in no way responsible for the private financial decisions of their employees, companies still want to be able to meet the needs of their workforce. These 5 million Millennial employees, for instance, still need a way to collect and distribute their wages. And, if this can be done in a way that s affordable and convenient for both employer and employee, everyone wins Global Cash Card and The Center for Generational Kinetics. All rights reserved. Media usage allowed. 6

7 DISTRUST IS THE DIVIDE THAT KEEPS MANY FROM TRADITIONAL BANK ACCOUNTS Why is a notable and growing group of people shying away from checking accounts? For Millennials, the main reason is a distrust of banks. In fact, 48 percent of Millennials who don t have a checking account say the reason is that they do not trust banks. The same is true for Gen X, half of whom also cited this as a reason they do not have these accounts. While other reasons for not having a checking account center around the high cost of operating this type of account or the hefty fees for making a mistake, the trust factor outpaces the others for Millennials, the largest swath of the population not using these services. But clearly these Millennial workers haven t dropped out of society. They still earn wages, need to spend them, and therefore must find alternative ways of conducting this payroll transaction. For this reason, it would appear that the employer with alternative options would look attractive to a demographic searching for non-traditional ways to manage their wages and personal finances Global Cash Card and The Center for Generational Kinetics. All rights reserved. Media usage allowed. 7

8 THE NEW FINANCIAL SOLUTION: THE CASE FOR PAYCARDS 2016 Global Cash Card and The Center for Generational Kinetics. All rights reserved. Media usage allowed. 8

9 PAYCARDS HOLD VALUE FOR MILLENNIAL WORKERS For the study we defined a paycard as a card where payment for wages is automatically loaded on payday. The card can then be used like a debit card or at an ATM or bank for cash withdrawal, or the balance can be transferred into a bank account. We found that this concept has value to workers, particularly Millennial workers. In fact, more than onethird of Millennials said that having their pay loaded onto a paycard each payday would be valuable. This means that approximately 20 million Millennial workers find the concept of a paycard valuable. When this is coupled with the fact that this demographic is also the most likely to shun traditional forms of personal financial management, such as a traditional checking account, it makes sense that a financial product like a paycard would be appealing. A paycard offers a way for these workers to manage their wages with greater freedom, independently of institutions they distrust or cannot afford. Paycards have value for people when they think about their individual lives, but what about the larger population of workers? Do paycards have value for employees in general? The study found that the value of paycards extends beyond the personal preferences of individuals. In other words, people not only see the value of paycards for themselves, but they also see it as beneficial for others. Millennials in particular see the benefit of paycards for employees across ages and industries. In fact, we discovered that close to onethird of Millennials, 32 percent, think paycards are beneficial for all employees Global Cash Card and The Center for Generational Kinetics. All rights reserved. Media usage allowed. 9

10 OFFERING PAYCARDS AS A PAYDAY OPTION IS A POPULAR IDEA People like to have options. This is not news to consumerfacing industries and marketers who have learned that 31 flavors of ice cream makes for a far more exciting consumer experience than 3. And it s also more chatterworthy. People are far more likely to tell their friends about the caramel fudge superhero flavor they had for dessert than they are to mention that scoop of vanilla. The bottom line is that customization and personalization are the name of the game. Just look at the countless coffee shop drink options, or the endless color swatches at furniture stores, or the never-ending aisles of countertops, cabinet knobs, and faucets at home improvement stores. But why should options stop with the consumer side? The study found that employees like options as well. In this case, they like to have choices about how they receive their wages. For instance, 64 percent of Millennial employees think that paycards should be offered as an option for employees who want them. And more than half of the other generations agree. Fifty-one percent of Baby Boomers and 57 percent of Gen X also think paycards should be offered as an option Global Cash Card and The Center for Generational Kinetics. All rights reserved. Media usage allowed. 10

11 OFFERING PAY OPTIONS COMMUNICATES CARE Employers are devoting a great deal of concentration and concern around employee engagement as they try to discover what it takes to attract top notch employees and retain a connected, committed workforce. Naturally part of engagement has to do with the particulars of individual jobs, whether the duties fit a worker s strengths and talents, and whether employees enjoy their work. But there is much more to employee engagement. Other vital aspects include company culture and whether employees feel appreciated, understood, and valued. Pay is also a key part of this, as employees want to receive a fair wage for their work. But what about how pay is received? Is this part of the equation for employee happiness? The research says that it is. The study found that employees, and particularly Millennials, feel that when a company responds to employee preferences about how they want to receive wages it conveys a positive message. Nearly 40 percent of Millennials feel that a company cares about employee happiness when it pays attention to how employees want to receive their pay! For companies striving to engage their employees, pay options such as paycards would be a simple addition with potentially significant ROI in terms of employee satisfaction and happiness Global Cash Card and The Center for Generational Kinetics. All rights reserved. Media usage allowed. 11

12 PAYCARD USERS ARE THE MOST EDUCATED ON PAYROLL OPTIONS Onboarding at a new job inevitably involves a great deal of paperwork, from HR profiles to signing up for various programs. It also involves training, from job specific instruction to general company history, culture, and mission. But how often does this new employee immersion involve education around payroll? The study revealed that Millennials and current paycard users are the most likely to have received this type of education. The majority of both of these groups report receiving this type of education. In fact, we found that 61 percent of Millennials and 83 percent of current paycard users received payroll education, which is significantly higher than other generations and people who receive pay in other forms. For instance, only 45 percent of Boomers say they have been educated about their payroll options. The research found that those choosing paycards are doing so with more education about their pay options than other employees Global Cash Card and The Center for Generational Kinetics. All rights reserved. Media usage allowed. 12

13 PAYCARDS CAN HELP FOSTER POSITIVE FINANCIAL HABITS Millennials and money is a hot topic; areas of concern range from school loans and debt to savings and retirement. As a general rule, Millennials appear to be gaining less financial traction than preceding generations. But what if the way a worker is paid could become a tool that helps develop positive financial habits? The study found that roughly one-third of Millennial workers more than 18 million people think that receiving their pay on a paycard would help them manage money in order to save for retirement! This would be a massive boost for this cohort in terms of developing better retirement savings habits. What about people who already use paycards? Do those that use these cards in practice think paycards help them save money for retirement? We found that 75 percent of current paycard users say yes! 2016 Global Cash Card and The Center for Generational Kinetics. All rights reserved. Media usage allowed. 13

14 FINANCIAL PERCEPTIONS: PAYROLL AND GENDER MATTER 2016 Global Cash Card and The Center for Generational Kinetics. All rights reserved. Media usage allowed. 14

15 MOVE OVER CEO: PAYROLL APPEARS TO HAVE THE POWER The payroll function is highly important to everyone who works for wages. This is true whether the task is performed by an elderly lady handing cash to the teenager who just mowed her yard, or the responsibility falls to an employee in charge of an entire department. Either way, someone must oversee payroll and this job function is important to everyone involved. But payroll staff may not feel that their position has much clout or gets the recognition of other more prominent company roles. For instance, who could doubt the importance of the face of a company, or fail to recognize the contribution of the people who publicly represent a business? But employees seem to happily gather their wages each payday without a thought about how it came into their possession. It may seem that way, but it turns out this is not the case. The national study found that Millennials aren t just thinking about pay and finances: they recognize the value of the people who make it happen. In fact, the payroll function is so important that 53 percent of Millennials think this person is more important in a company than the CEO! 2016 Global Cash Card and The Center for Generational Kinetics. All rights reserved. Media usage allowed. 15

16 THE PERSON BEHIND THOSE WELL-MANAGED WAGES IS LIKELY A WOMAN The men vs. women quandary is age old, and isn t likely to run out of steam any time soon. But it has taken some interesting twists. Where women were once thought to be the undisputed experts at tasks such as cleaning and food preparation, it turns out that pretty much everyone can do these things with equal dexterity. So where might women have the upper hand? According to the study, it would be in the area of managing money. In fact, we found that this is a fairly widespread perception that gets even stronger with age. The study found that 64 percent of Millennials think that women are better at managing money than men. This increases with Baby Boomers, 72 percent of whom think women are better than men at managing money Global Cash Card and The Center for Generational Kinetics. All rights reserved. Media usage allowed. 16

17 RESEARCH CONCLUSION The national study revealed that there is increasingly a new financial reality as younger generations embrace more nontraditional methods of managing their finances. Whether this is due to the high cost of dealing with banks or a general distrust of them, the fact remains that what once worked for everyone is no longer the desired option for a growing number of workers. We found that alternative methods of receiving wages are appealing to workers, especially younger ones who are also the most likely to avoid traditional banking. The majority of Millennial workers think that paycards should be offered as an option. And nearly 40 percent think that listening to employees about how they want to be paid means the company cares about employee happiness We also asked about some financial perceptions and found that the payroll function is very important to workers, to the point where the majority of Millennials think the person in charge of payroll is more important than the CEO. And when it comes to handling money, we discovered that across the board people think women are better at this than men. This study offers a look at how employees think and feel about pay and the possibility of paycards. This information may be useful to companies and businesses of every size and industry as they strive to meet the needs of their employees and build a productive and engaged workforce. An important aspect of these findings is payroll education: we discovered that younger workers and current paycard users are far more likely to have received payroll education than Baby Boomers. Not only are these current users being educated on their options, but they may also be gaining some additional benefits from their paycard choice. We discovered that the majority of current paycard users say that paycards help them save for retirement, and more than one-third of Millennials think this would be the case if they received their wages on a paycard Global Cash Card and The Center for Generational Kinetics. All rights reserved. Media usage allowed. 17

18 ABOUT THE STUDY S AUTHORS Global Cash Card Global Cash Card, Inc. was founded in 2002 and is headquartered in Irvine, California with sales offices throughout the United States. Global Cash Card strives to lead in the creation, development, and implementation of the industry s most advanced financial transaction processing and information technology systems, translating these advanced technologies into value for our customers through our professional solutions and services worldwide. Global Cash Card operates in Visa/MasterCard certified operation centers with a primary network operations center in San Diego, California and a secondary data center in Las Vegas, Nevada. Global Cash Card develops and owns the proprietary software that enables the products and services offered to our customers through payroll, incentive, gift, travel and per diem prepaid cards. Global Cash Card is certified as a direct processor on multiple financial networks. The Center for Generational Kinetics The Center for Generational Kinetics is the leading expert and research firm on Millennials, generational differences and the generation after Millennials, igen. The Center s team of PhD researchers, strategists and speakers help companies and organizations solve tough generational challenges driven by emerging generational trends and differences. Each year, The Center works with over 150 clients around the world, from car manufacturers and hoteliers to insurance, healthcare and technology. The Center s team is frequently quoted in the media about the effect of generational differences on everything from shopping and parenting to working and retirement. Learn more at GenHQ.com. For more information, visit GlobalCashCard.com Global Cash Card and The Center for Generational Kinetics. All rights reserved. Media usage allowed. 18

19 RESEARCH METHODOLOGY This research study was led by Global Cash Card and The Center for Generational Kinetics. The survey was administered to 1,005 U.S. adults age 18 65, who have been employed in the U.S. in the past 6 months. The sample was weighted to the current census data, and participants were screened for U.S. citizenship. The survey was conducted online from January 6, 2016 to January 13, 2016 and has a confidence interval of +/-3.1% Global Cash Card and The Center for Generational Kinetics. All rights reserved. Media usage allowed. 19

20 COPYRIGHT AND USAGE This document is copyright 2016 Global Cash Card and The Center for Generational Kinetics, LLC. All rights reserved. The information in this document can be referenced in the media, in whole or in part, as long as this document is cited as the source for the information. In no way does this document provide an endorsement of any product, service, company or individual. This document is provided as-is. Information and views expressed in this document may change without notice. The strategies and examples depicted herein are provided for illustration purposes only and are not guarantees of specific results. You bear the risk of using this document Global Cash Card and The Center for Generational Kinetics. All rights reserved. Media usage allowed. 20