Platforms Reshape Labor Economy Paydays and Job Mobility

Narrator 0:06

This is Wage to Wallet, a podcast by PYMNTS. In collaboration with Ingo Money and WorkWhile. We break down how America's hourly workforce powers the real economy, from paycheck to GDP. In this episode, PYMNTS CEO Karen Webster sits down with Ingo Payments CEO Drew Edwards and WorkWhile COO Simon Khalaf to discuss the Wage to Wallet Index Making Ends Meet, Side Work Patterns in the Labor Economy.

Karen Webster 0:39

Hey Simon, hey Drew, thanks for joining me today on another one of our podcasts to break down the latest wage-to-wallet report, which is all about the labor economy, job mobility, timing of pay, and the contribution to the economy and GDP that all that represents. Those thank thanks so much for taking the time.

Simon Khalaf 1:01

Thanks for having us.

Karen Webster 1:03

All right. Well, let's put to let me put together a little context here. The data suggest, and I I love this report because I think it is so insightful. It covers so many areas of the workforce that others really overlook. But the data suggest and really concludes that we're not operating in a single labor market. There's the labor economy, and then there is the non-labor economy. Both feel that their job security is okay, but the financial confidence for those two different workforces couldn't be more different. Financial confidence is rising for the non-labor economy workers, yet labor economy workers really remain financially constrained. So it suggests that employment alone, having a job isn't the full story. Stability of income, mobility, and obviously liquidity for the worker and their households is really more the dividing lines than just having a job. So, Simon, I want to start with you. Do you see based on your platform that labor economy workers are changing jobs more, or do they just wish they could?

Simon Khalaf 2:24

Great question, uh Karen. I would say if there's any headline we're getting from our platform, is that our workers uh are working a little bit more, not changing jobs. So I'd say they've traded wage growth with more working hours. So if I look at kind of like last year, uh for the vast majority of the time, wage growth was higher than inflation. But in January, wage growth dipped below inflation. And the trend recovered a little bit in February, but it's but we're still collecting the data, data. So what happened was our workers decided to work more. As in life, I made less per hour, right? In an aggregate basis, it doesn't matter that much, but on an individual basis, given kind of the the upcoming uh expenses, whether it's taxes or lack of a tax return, they decided to work more. So that is something that we we believe is a healthy indicator because they didn't decide to dip into debt. They just decided to simply work more.

Karen Webster 3:32

So job mobility is redefined. It's not taking leaving this job to go to another one, it's actually adding more shifts or more opportunities to the household income. And that's really job mobility, as you as you see it on your platform. Um there is access to work, right? So you're seeing that there is there is supply for the demand.

Simon Khalaf 3:57

Absolutely, right. I mean, I always say, you know, you look at our allure index, which is the continuation rate, is very high. So our continuation rate is is, I think in February averaged over 90 98%, and January was around 97%. So I would say, and of course there's circumstances that people do not want to work, but I'd say whoever wants to work, we have found them the corresponding job. So right right now we we have 40% of our workers, so it's 1.2 million roughly, uh uh, they're actually deciding to work what I would say more than full time. So they they're taking on effectively working on the platform like 36 plus hours and then and then more in order to make up for any salary depletion. So but yes, the the uh the the there's no question that I mean with a platform and not a company in terms of who they're working for. So I think they're they're finding that job mobility is uh and the elasticity as in when I want to work more, it is available. And when I want to work less, I'm not penalized.

Karen Webster 5:12

Yeah.

Simon Khalaf 5:13

It's still early to tell that this is a trend, but that's kind of like the early indicators of what's going on.

Karen Webster 5:19

Well, I mean, you're you're providing options, right? So all you can do is provide the options, and then it's up to the individual to take advantage of those options. Um, I want to I want to kick it to you. So if if unemployment isn't an issue, if having a job is really not the defining characteristic of worker um job security, but their financial confidence really is, what does that tell you about the need? What's broken for that workforce?

Drew Edwards 5:53

Ooh, broken. See, I was sitting here listening to Simon's answer to that question, and I'm thinking to myself, it's always been like that. Like everybody I know uh from the early days of this company when we were serving Hispanic immigrants and physical branches to family members I have. Um unfortunately, hourly workers a lot of times struggle to make ends meet and work more than one job. I think what's magical about Uber and that whole economy, and then what Simon is doing for everybody else beyond those digital platforms is he can see what's going on and then he can create product around what's going on, right? So I I I'm not answering your question yet, but I just could not respond to it's unfortunate, but I think these people work extra hours all the time, more than a full-time job, more than one job to make ends meet, especially if they're a single mom raising kids or whatever the scenario happens to be. And it's beautiful that that now there's a platform where they can go and scale up their hours or scale up their jobs, right? To me, this the stress you're talking about, the confidence that this consumer has and its impact, I think your question on what does that mean to how they think about work, this is a pure uh speculation for me being in and around this, I guess, my whole career, but I believe it leans folks to entrepreneurial gig-like work, um work where they're in control of how often they work and how much they work, because in that world, because I employ over a hundred of hourly employees, uh, if they we set their hours, we control when they work, we control how many hours they get, we control what they get paid. That's a scary place to be if you're a worker, right? And once they venture out into side gigs or full-time gigging, you know, full-time transactional work on a platform like Simon's, they get more control. They get more certainty, they get the ability to manage when they work, how much they work, where they work. And that's not been the case for a factory worker traditionally, for a field worker, right? They're they're a um, I don't want to use the bad word there, but they're captive to that employer. And the platform that Simon's built is taking what I think has always been the world of the labor economy and and giving it possibilities. And that's what I'm saying.

Karen Webster 8:48

So the the the ag the aggregators, I mean the the platforms that that provide lots of optionality for a worker that may need more work this week and less work the following week, have that, you know, have that ability. But but but still there is this there is this ability to get paid when those shifts are over that creates the financial confidence that I think the labor economy lacks, at least, at least from from our data's perspective. I mean, it isn't as if they're not employed or they don't have the ability to get work. It's it's how they're paid which creates the stress.

Simon Khalaf 9:28

It it is so rewarding to hear Drew, I'd say, long experience and our data, kind of like I would say to me, with analytics showing showing us exactly what do Drew is suggesting. As an it's always been like that. Right. Uh now we're seeing it, and the good news is that with AI, we can do something about it. So I'll just I'll just give you a couple of examples. Uh the first one is as you go into these companies, they're wired to avoid overtime. They're wired. I mean, they have, I'd say, rules engines, not compliance engines, rules engines to avoid overtime. Great.

Karen Webster 10:08

And and and and some of that climate is because of regulations, labor laws.

Simon Khalaf 10:14

And cost. Yes. But you look at our platform, there's no such thing as overtime. If you want to work more, it's your discretion. You will make more. We would make more. So you do the alignment. The second one, you're absolutely right, Karen, is same day pay. It's huge. Let me give you some stats. We did we we conduct surveys without workers and say, hey, if you're short of cash, what do you do? Right. It used to be the number one, which is around like 40 to 50 percent, is go get a loan from either Chime or Cash App, right? Uh or payday loans, which are the the best one is 65% APR, and then the worst one is 400 to a thousand percent APR. Right now, the vast majority is take more shifts. Number two is take a loan. So not only are we giving them the opportunity to avoid that, but the same day pay. Look, we all have emergency expenses. We all have, right? You don't need an AI engine or a lose engine to tell you what is expected and what's not expected. Rent is expected, but you need four uh, you know, there's a storm and you need snow tires, right? That's an unexpected expense, right? Right now, I think we're providing the flexibility uh and the opportunity not to turn that unexpected event into a 65% APR short-term loan that you're eventually going to default on. I think that gives a lot more stability than just finding a job, right? It is immediately right, okay. I'll work. We've had so many people during the storm in Newark, all right. I was there, that came in and worked because their main job they couldn't get to. They came and worked and they got paid Saturday night. Yeah, yeah. Bank was not open.

Karen Webster 12:05

Simon, do you do you see the workers on your platform doing the same jobs for different companies? Or do they do different jobs for different companies? So are they driving and working in a warehouse and and supporting an event, or are they just going from a warehouse job to another warehouse job to another warehouse job?

Simon Khalaf 12:28

So uh that's changing uh fast as we enter more uh more verticals. So there's a lot of fungibility. Example, like, and we we we've announced our new product coach, which actually looks for these soft skills that you didn't know you have. And you'd be surprised how many bartenders we have discovered among drivers. So uh uh so uh it is hopefully not while they're driving. Right. So but I would I would say that that uh the uh uh recurrence rate is very high, as in if somebody takes a job, both parties want them to return, except if that job is no longer there. Uh but I haven't seen any statistically significant data like uh uh pointing to more fluidity and fungibility, except when the job they were called on to do the first day did not materialize. Now, driving specifically, and then in the state of California, right, because of Prop 22, which we comply with, right, is makes it hard to actually take a driver, which is an independent contractor, and give them what I would say jobs that required a W-2, uh, right. So we do not do that because that then we will be uh in in violation of Prop 22. But I'd say uh within the the compliance and the laws, we definitely do that.

Karen Webster 14:05

True. You mentioned side hustles and and you know it's it's broader than just gig work, which I think we associate with the Uber drivers and the delivery drivers, but this is really about um different things that people are doing using platforms to generate extra extra income, platforms where you can resell stuff that you've got in your garage or your closet, shift work like what Simon is offering through work while um we know that different people use different platforms for different reasons. I need to pay the bills, this is extra money for discretionary purposes, maybe I'm saving it. Um, how does that affect Drew from your perspective? Um, the different use cases and the different types of side hustles, how does that affect how money in and money out looks on your platform?

Drew Edwards 14:55

That's an excellent question. And honestly, I uh we've never sliced and diced the data around our consumers based on the type of work they're doing. So whatever I'm gonna answer here is is is probably more anecdotal. But what we know is that um the the segment of the consumers where speed matters and where um good funds, so certainty of funds matters. So let's say you've you've had an unexpected expense, like I think one of y'all mentioned, right? My car broke down and now I literally can't do my job, or um I have to fix it today, and that's a thousand dollars, and these workers don't tend to have a lot in savings, right? These are the triggers that we see affecting whether or not they're willing to pay for speed or or wait on their funds, affecting whether or not they go looking for that payday loan. So I would I would offer, if you add on to what you're saying, Simon, when they're sitting there with that unexpected expense and they're evaluating, do I go, do I go find a loan or can I do more work tonight or tomorrow and solve this problem? Inherent in that is when will I get paid, right? Am I gonna get the money in time to solve this problem, right? And so I I feel like we've, you and I have talked about this. We've been seeing an upswing in this economy we're in right now, where workers are leaning into more hours based on what Simon's saying, but also a higher percentage of them are paying for different payment types or speed or types where they know it's going to give them real funds that can't be clawed back. We all know a check is not only slow, but it bounces, right? I mean, it gets taken away. So it's the worst of all instruments. And so modern payment rails are getting a lot of traction right now in this segment, I believe, because it's certain, it's instant, and sometimes it comes at a cost and sometimes it's free, but depending on their situation, the data says, and our experience is they're not stupid for paying for that. They're managing a cash flow situation, not unlike we do in business.

Karen Webster 17:20

Right. So Simon, a question for you Do you observe on the platform when when workers are looking for work and they actually need the work? Like I need to pay that bill, or if you're living in Boston, you've probably gone through a set of snow tires already because we've had so much snow, need to get new tires for my car. Do they do they go wherever the job is, or do they go wherever the job is going to pay them the most?

Simon Khalaf 17:46

Yeah. So we've seen a lot of uh folks are that are looking at the the aggregate pay versus uh the per hourly rate. So they're trying to make the most amount of money versus negotiating an hourly rate, which is a very interesting change. So uh the we have a volatility index, right? You look at it, it is very interesting that uh if you want to sit and arbitrage this, you'll make a lot of money. Give you an example. So let's say I'm just throwing numbers like in North Carolina, I say the hourly rate is 22 bucks, right? That rate could be uh $20 or even $28 for eight hours later. So if you build a histogram, right, and and you're smart, you you book your time when the hourly rate is 28, and you sit on the sideline or only book 12 hours worth of work when the rate is 20 bucks. So we're starting to see our workers kind of like outsmart us, and they sit on the sidelines until the rate materializes. And guess what? We're building a tool, hopefully we'll announce soon that will do this for them. Right. And at the same time, look, I mean, our market has become on the demand side very diversified. And it's not that like hiring managers are gonna sit and arbitrage, they have a need, they're gonna do it. Uh and and they will post whatever rate they feel comfortable paying. There's enough to supply to meet it. But but the short answer to your question is that they're smart, they they know about rate and I'd say volatility. And I was actually surprised how volatile rates are. I mean, to me, employment, you negotiate your wage once a year here. Honestly, if you trade for the lack of a better word, labor on a 24-hour basis, I mean, it's published, you can go workwell.ai/slash rise, makeshift and do daily, and you will see that it's plus or minus, you know, 5%. And that could make or kill an economy. If you book everything at the negative 5%, right, you basically agreed on an annual 5% salary decrease. If you wick it at 5%, you've actually secured yourself a 5% salary increase paid daily. So this is happening a lot.

Karen Webster 20:20

But you have to align the demand on the part of the of the of the of the employer. Like I really need this to the availability of someone who's willing to work that shift or or is in a geography that's acceptable to um that that particular job. So so it's a it's a mat it's a matching problem, right? So you have to make sure that the matches are in the employer's interest as well as the workers' interest.

Drew Edwards 20:49

I think every time we talk about a platform and and a marketplace, I think most people in our industry think about the power of two-sided marketplaces and the leverage you get and everything else. But but I'm a capitalist, right? I believe in the free market economy. And what you're describing uh has the opportunity to actually find market wage rates based on true supply and demand, right? So this whole debate around how much should I be paying, what should minimum wage be, etc., can go out the window in our future if there's actual supply side and demand side freedom to choose and let the market decide what a fair price is. Yep.

Simon Khalaf 21:41

Yeah, we publish it. I mean, it is it's available. Like every every hiring manager can go on Rise and do mix shift or non-makeshift and buy state, and they see what is being traded. Like honestly, our product, the the the enterprise, we're building those tools to tell them what they need to pay in order. order to get like like our propensity algorithm can tell them when they're gonna open jobs, right? And say, look, if you book them today, you're gonna save X. Right. And and great question, Karen. Like you're talking about supply-demand imbalance in which somebody holds out. If everybody's smart, right, then no market actually trades. If buyers and sellers agree on on basically waiting for each other, you got a stalemate. But that's not how the world works, right? I mean if you've got an event for Taylor Swift and you need you need bartenders, you know what? You're gonna hire bartenders. You're not gonna sit and arbitrage labor. Right. And at the same time, right, I mean warehouse warehouse are are heavily impacted by what gets distributed and also by e-commerce demand, which is highly unpredictable. Even even with the most prediction engines, right, some something memes on TikTok, right? And like your warehouse demand is huge. So I I we have not hit at all the boundary of what I call a free market economy.

Karen Webster 23:05

At all how how does this look like though on a local level where you know you're you're not just trading a worker that has capacity with an employer that wants to hire you're taking that worker from one potential job opportunity away from another job potential job opportunity because these are people who have to show up for work. How do you look at the um the impact on the local economy when you've got um laborers labor labor economy workers who are going to places that pay them the most people you bus people so people are willing to travel long distances to go.

Simon Khalaf 23:56

Correct we yes so what uh we've introduced a product called I mean it's a bad name called a long-term assignment uh uh in order to specifically uh uh do something like that so give you an example inventory management it happens like it is scheduled like Walmart like hires a few companies to come and do uh uh inventory management that you're not gonna go to the local market and supply these people it's tap that right I mean even in think about it in the worst economy unemployment is 90% in the best economy unemployment is 98% so let's say you have a city that has a hundred workers and you need 200 you're not gonna find it even if the economy is bad. So we do that all the time we call it long-term assignment and we put people on a bus and we put them in motels or hotels right and we we basically we create a surge in that market and they will come back Friday night and you know based on our agreement with a company we do that for events management we do that for inventory management and also without warehouse spikes that's really I mean that's really that's really interesting.

Karen Webster 25:03

Drew does any of this show up in your in your data or how you think about..

Drew Edwards 25:09

I'm just sitting there thinking that's how immigrants got to Atlanta so that that's but I'm trying not to get political here but that's the very dynamic that drives that's the very dynamic that drives um influxes of labor specific you know the Olympics is being built or this is going on and it outstrips the supply it it doesn't show up in my data carin or at least we don't we don't look at that but it it makes total sense.

Simon Khalaf 25:40

I have a daughter who's a nurse and she can make a whole lot more money being a traveling nurse which just makes no sense to me right that that a hospital is going to pay such a premium and put people in a hotel but there's a supply-demand mismatch and that's a that's a specialty market right um imagine now when you apply that to the labor economy and all of the different situations that go there it's just gets back to that free market and um kudos to you Simon for busing's a bad word here in the South but but putting people uh getting giving people the ability to go where the work is yeah that's very you're providing transportation called a free ride yes yeah it's the power of a free market never fails right I agree I mean the base again I go back to Adam Smith right that it is through labor that all wealth has been uh established it is not through gold nor silver right it is hard work of people right and you give them the opportunity they rise to that opportunity I mean I'm actually proud of our workers like honestly it is refreshing to see that look I thought honestly that they are poor money managers they're not right they're actually great money managers because it matters right because if they miss a payment like no one is gonna bail them out like if my daughter misses her her cell phone payment I bail her out there's no one to bail them out so they're very good money managers so and they and they work hard and honestly you know you open up opportunity for them they jump out yeah well I I I think I mean to to wrap up the conversation which is which has been really these are always so interesting um the way we started was to talk about this idea of of job security and the the job security for the labor economy really being about this this job um financial security with respect to their job prospects not so much whether they'll lose their job but but whether they feel financially confident with the jobs that they have when you think about the possibilities of creating um products that actually meet the needs of the labor economy worker that provide not just the financial you know same-day pay but things that provide more ability to manage their money to manage their work environment to manage their schedules um to to really be that that labor economy worker that has that feels control of their financial and job situation what would that be if the two of you were designing something what would that look like well Simon you probably already have I mean in fact well it's unfair the guy is sitting right there I've got a visual I feel it was a softball question I didn't really mean it to be yeah well well I mean it's not that hard right I mean if you actually I always go back to to to movies are made by culture you look at Jerry Maguire it's all about show me the money right I mean if you've got an agent that's looking after you booking you right that's what AI is great at. It's predicting the job market and telling you right it's it's I hate to use the word agentic, right? It but but it is someone that is taking care of you and then also monitoring your expenses and and at the same time saying look you're welcome to take a loan. That's how much it's gonna cost you but you're also welcome to take these extra shifts and then that will give you a 30% discount technically on everything you're buying right I will make that calendar for you right and then it is up to you if you want to buy it or not. That's kind of what we what we technically have but having package with a name and a Jerry Maguire kind of show me the money attitude that is going to come very soon I should say in in in in Q2. We did launch our first uh uh uh first agent called coach which basically built continuously builds the resume for you nonstop right the second one so this one is basically to to make sure you're marketable and once you're marketable and you're earning money we want to make sure you're spending it wisely so that 360 is something that beautifully because of algorithms and uh reinforced learning and our prediction models has become doable versus you know you're gonna pay a Morgan Stanley money advisor with 300k in order to manage somebody's money who makes 58k a year. I think an agent cost me like seven tokens.

Karen Webster 30:36

Well I I mean you you make a good point I I you know I think back to how before AI and before these kinds of innovations how hard it is to actually sit down and put together a spreadsheet to manage the you know the family budget.

Simon Khalaf 30:51

Well the federal government hasn't been able to do it and look at how much how much they spend how many people they have working to try to do that.

Karen Webster 31:00

But um exactly but but but Drew your your your thoughts I know you have many.

Drew Edwards 31:05

I just got this vision of you know the old movies of lines down at the shipyards with workers trying to get on a boat for the day or on the ship for the day and that was their their whole day and they were totally captive to whether or not they could convince the person that the they were the right one for the job and the pay was whatever the pay was and think about they've probably got bills they got to pay and they actually have to go pay those bills with cash right and so they've got to go get some paycheck and get their hands on the actual cash the paycheck's not going to come for weeks. It's just it's just such a dark age when you think about how it used to be and I hear you talk about how this is so from from me we live in in this place we call you know empowering money mobility which all of us that are lucky enough to have multiple accounts and extra cash flow and lots of things we do with it. We move money in and out and around all the time and honestly we're used to doing it for free and we're used to it being fast right but it's not that way for a marginal financial person, right? Whatever Chase and B of A offer to one guy is not the same thing they offer to the next guy because they have their own AI agents determining whether they should trust you with that float or whether they should advance you the money and all and so the combination of this this beautiful free market uh for this vital part of our economy the these transactional workers with modern money mobility and modern credit options because you have visibility into what you can see um the marketplace that you're building or that we could do together if I have a small part in it is it we only work most people for the money. We only work for paying our bills and buying food and putting presents under the tree for our children and all of the things that go in between right so the financial side of this marketplace is equally as important right and the things you can do with the visibility and with the with the upward mobility that a market that a free market economy like that creates it's unlimited. So and think about Karen all of the businesses that have been built and sold to the credit bureaus and their efforts just to see these workers that don't necessarily because a lot of them to get their money from shift to shift either they were cash based or they would go cash a check putting them in the cash economy and they're invisible and so you know this thing you're building uh Simon is is is bringing them into the light which is where the better options are when people can compete for their economics.

Karen Webster 34:09

I think Simon Simon's point was was really well made and I know Drew you've made a similar point too in conversations we've had it it these are these are people who understand how to manage money they just need better tools and they need they need better tools and they need opportunities to to work um because they want to and you know platforms like like Workwell make that so much easier but but think about the platform economy and how that has created so many opportunities for people you know in a digital and a physical world to really um earn income and to do it in a way that eliminates the frictions that were that always existed you know if you had to go to the classified to look to see what job openings there there were or you had to go door to door and knock on you know the fast food place to say are you looking for summer help. I mean I remember those days where it was not easy to find work even if you wanted it to and so now the ability to provide access to opportunities to provide same-day pay to provide environments for money management that is equivalent to what those with lots of money have available to them is is certainly exciting. You both always have great great conversations together and I thank you for this one I hope to talk to you both again soon thank you.

Simon Khalaf 35:34

Thank you appreciate it.

Drew Edwards 35:35

Bye now.

Narrator 35:41

That's it for this episode of the PYMNTS Podcast the thinking behind the doing conversations with the leaders transforming payments commerce and the digital economy be sure to follow us on Spotify and Apple Podcasts. You can also catch every episode at PYMNTS.com/ podcasts. Thanks for listening.