[qnsi]

I worked at a company that was working on this. I left because of ethical reasons.

>Workers living from pay check to pay check have traditionally been vulnerable to exploitation

And the proposed solution doesn't fix that. Most of those people don't have a problem with unexpected expense once a year. They don't budget and are short on cash every month. So now imagine Bob needs money halfway through the month. He takes out 50% of his pay. He uses is for immediate needs and than has to live at 50% of his pay for the next 1.5 month.

How is his situation any better?

Also I can 100% guarantee you, most people working in this space are working on loans for those users. They don't plan to stay as just company benefit. But even if you will 100% never do that I just don't the see advertised benefit for the workers.

This is just something that sound nice when you don't think too much about it. That explains why the companies are eager to implement this benefit at their companies. At the end the workers will struggle just as much and the struggle will stay hidden from the eyes of the employers, because of the financial problems stigma.

[fcaballe]

Hey qnsi!

I am leading BizDev at Payflow, I joined due to ethical reasons & social impact. Happen to be that I am southamerican and pretty familiar with people living paycheck to paycheck.

The reason why they are better off is because we are the only alternative that is free for them: Credit cards, loans, etc are not zero-rate. Far from that a loanshark can charge up to 3000% for a short term loan in LATAM.

We are bringing employers into the game, to actually do something and pay so that their employees get the zero-rate that is so popular for high income workers through their cards or banks.

What reduces your purchasing power is financial expenses, not accessing your money earlier.

We won't solve every money problem, but at least we are solving some and reducing low income workers exposure to predatory finance.

Hope you appreciate my answer, it was 100% sincere. Fede :)

[curryst]

That doesn't really address the underlying issue that OP pointed out.

People that have infrequent issues where they need to juggle money around could use this. They could also simply save money, since the implication here is that they have enough money but not at the right time. This is a nice option for them to have, though. I would also expect people in this category to have access to non-exploitative methods of financing. If they don't have savings, they probably at least have assets for use as collateral in a loan to get the interest rate down.

For others, they have frequent issues where they have to juggle money around. Their problem is cash flow, not the timing. They're going to continue to fall behind on their bills. They get a $500 paycheck, and have $450 in bills. They need $250 to fix their car, so they take it out. When their paycheck comes, they get $250 and can't pay the other $200 in bills. The late fees on their $200 bill they can't pay are going to stack up to eat the $50/month they could have saved. They're still paying financial expenses, they're just in late fees instead of interest.

[leetcrew]

there's a third situation. suppose I spend roughly the same amount of money every month as I earn. on paper, this means that I should be treading water, at least. but my wages actually hit my bank account a week after the end of each pay period. in the worst case scenario, I won't see my first paycheck until about three weeks after my first day of work. at the very least, this cuts into my savings, but could leave me permanently in the hole as late fees stack up, even though my income matches my spending! a different version of this problem can occur in any month where paydays and bill due dates fall in the wrong sequence.

credit-worthy people can easily fix this issue with credit cards, which fix the paid-in-arrears issue, and also smooth out spiky intra-month cashflow. but I can see this product being very useful for people who can't get credit cards or don't feel responsible enough to use one.

[gotostatement]

>And the proposed solution doesn't fix that. Most of those people don't have a problem with unexpected expense once a year. They don't budget and are short on cash every month. So now imagine Bob needs money halfway through the month. He takes out 50% of his pay. He uses is for immediate needs and than has to live at 50% of his pay for the next 1.5 month.

This is extremely paternalistic and shows how little you automatically think of someone who isn't paid a lot of money. You think that people who don't have money, their problem must be budgeting ("stop eating all that avocado toast!!"), so you need to slowly ration out their money "for their own good." Complete ideological BS.

[zo1]

We all need to be treated like children that need help and guidance to some extent at various points in our lives. This is part of being within a broader community and I'm happy to accept it.

[gotostatement]

right, and you're a great example - you need to be treated like a child and guided to learn to respect and not stereotype adults who are given less money than you by our economic system. thats what you mean, right?

[arcturus17]

I hope you’re joking.

[zo1]

Helping and guiding people in your community when they need it is no joke.

[potamic]

I have a cynical view of how this product is going to turn out. Instant, easy access to wages is going to form habits in users to live on a day-to-day basis instead of budgeting for a month. With no headroom they will be that much more desperate in an emergency and that's the time to attack them with loans. The end game is always loans. That's the only way to make money in finance.

[sneak]

Well, unless we abolish individual p2p moneylending, SOMEONE is going to loan them money.

Providing more competitive and safe and professional options can only help, it can't make an already-bad situation worse.

The only situation worse than having to take a payday loan is not being able to shop for a decent vendor who isn't trying to screw you.

[colejohnson66]

> And the proposed solution doesn't fix that. Most of those people don't have a problem with unexpected expense once a year. They don't budget and are short on cash every month. So now imagine Bob needs money halfway through the month. He takes out 50% of his pay. He uses is for immediate needs and than has to live at 50% of his pay for the next 1.5 month.

I think the idea is that it helps people avoids predatory payday loans. If Bob needed 50% of his pay for an emergency, he could go to a payday loan and end up spending a whole paycheck or more just paying it back over time.

The solution is government regulation and societal safety nets, not this, but if one’s government doesn’t fix the problem, there’s not much you can do besides this.

[UncleMeat]

I don't buy this criticism. Suppose we were instead paid our salary annually as a lump sum at the end of the year and we were fighting for biweekly pay days. The same argument could be made! What if people misuse the money! The delay helps them budget!

The two week (or so) delay between hours worked and money being deposited in your bank account is a free loan from you to your employer. That's wrong. People should be free to access their earned income as soon as they earn it.

I do agree that this sort of product can easily become a payday loan system with terrible rates, but streaming your wages as you make them sounds like a pure good.

[seahawks78]

We need universal basic income (UBI)! Period. I believe that in a country like US every working adult (18 - 64) should get a minimum of 5k a month for paying basic expenses. Furthermore, Payflow should be integrated with the government UBI program so that anyone can withdraw money against it similar to what is being done now. This will go a long way in solving the Payday problems/worker exploitation issues as mentioned above.

[gruez]

>I believe that in a country like US every working adult (18 - 64) should get a minimum of 5k a month for paying basic expenses

$5000? The median pre-tax income in the US is only $2854/month. https://www.ssa.gov/oact/cola/central.html

[scarby2]

> $5000? The median pre-tax income in the US is only $2854/month. https://www.ssa.gov/oact/cola/central.html

Op is probably in NY or SF where that doesn't even make you middle class and people who make double that still don't feel rich. $2854 a month would be absolute poverty wages in many parts of the country.

Conversely my company has announced it's not going back to the office ever. I'm tempted to go back to Tennessee where I can live live a king on my California middle class income.

[throwawayboise]

LOL yeah that "living wage" just keeps going up and up the more we're talking about it.

I don't even take home 5K/month and I'm a professional software dev. Granted the reason is I am maxing out every pre-tax savings plan I can (retirement, HSA, etc.) but the notion that a 22 year old couple should be getting 120k/yr for doing nothing is absurd.

[hpkuarg]

Yeah, $5k a month for "basic expenses" is beyond ridiculous.

[seahawks78]

I don't think it is especially if you are living in one of metro regions/tech hubs i.e. SF Bay area, Seattle, NYC etc.

[ceh123]

Grad student stipend checking in. $21k/year in a large metro area (although not quite on the level of SF/NYC expensive). Median household income in my city is ~$100k/year.

Yes this is "enough" but no, it is not enough (especially after having worked and lived for a few years in a medium/low cost of living city).

That being said, $5k/month for "basic expenses" is definitely ridiculous. NYC/SF COL is like 30% more expensive than where I'm living, not a full 2.8x more expensive for basic expenses.

Edit: Also worth noting that in this context the $5k/month is spendable, so in SF for example this translates to about $82k/year pre-tax income, which according to the 2019 census is well above the median individual income of ~$52k.

[imtringued]

Those are places that force poor people out because not everyone can live there. What kind of logic makes you believe that every single individual should obtain the right to live there for free? There is a reason why those places are expensive, because a huge amount of people wants to live there.

[pb7]

Most people don't.

[gruez]

The number itself as it pertains to cost of living isn't ridiculous, but the implied policy proposal of "let's give everyone $5000 so people in high CoL areas can cover their basic expenses!" is ridiculous. The #1 cause of high CoL in those areas is because it's a desirable place to live and there are more people who want to live there than there are housing units, so people bid up the price. Giving everyone $5000 wouldn't make it suddenly affordable, because everyone would just increase their bids by $5000, causing the situation to be the same.

[seahawks78]

No I didn't mean blanket 5k to everyone. It could very well be dependent on the place you live. 1k - 5k might be an acceptable range. If you live in NYC you get more, rural Alabama may be not so much. But you get the idea.

Assuming that not everyone can be successful in life (in spite of having boatloads of IQ + work ethic) UBI might be one of the few ways left to reduce generational in-equality. Don't get me wrong - I am no fan of socialism/communism and I understand the problems that come with a collectivist mindset. But I am also practical. I certainly don't want to live in a dystopia where a select few "masters of the universe" type rule over vast swathe of humanity.

[scarby2]

You have to be very careful with ubi (which I'm a huge fan of btw.), it could cause hyperinflation, probably would at $5k a month, because we have a pretty severe housing shortage there's going to be a whole bunch of people with an extra $5k that they could spend on housing so average rent may rise significantly.

Instead of jumping to straight UBI we need to build an abundance of housing that is of good quality, affordable to build, is operated by the state and is available to everyone regardless of income on a cost plus model. Also given that rent is most people's single biggest expense we could take the pressure off the poor. This plan however is politically untenable as affordable housing is something that anyone who owes money on their home does not want

[sigstoat]

> Instead of jumping to straight UBI we need to build an abundance of housing that is of good quality, affordable to build, is operated by the state

since you're willing to take incremental steps, perhaps we could have the state stop preventing cheap housing from existing, first.

it's not even legal to rent out decent, clean, individual rooms in many places.

[imtringued]

Well, I am in favor a negative income tax funded by taxes on regressive behavior.