Strategy ADP

Paycards: Generational Trends Shaping the Future of Worker Pay

Sponsored by ADP

Younger workers want new payment options. Although Millennials and Gen Z are the youngest members of the workforce they are now the largest and most influential segment of works.

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When it comes to recruiting and retaining the next generation of top talent, organizations have had to rethink their basic assumptions about what matters most to employees. A brand new national study from ADP, focused on generational views of work perceptions and preferences produced all sorts of interesting results. This was especially true when it came to Generation Z and Millennial workers and their attitudes about employment, self-esteem and pay. 

The 2017 ADP-sponsored study, “Paycards: generational trends shaping the future of worker pay,” focused on issues related to money and pay in general—and specifically about the use of paycards. The responses, however, revealed far deeper insights about how Millennial and Gen Z workers feel about employment, compensation and what it means to be rewarded, challenged and motivated at work. 

Here are six of the most interesting findings from the ADP report.

Next gen workers take their jobs personally

Contrary to stereotypes, next generation workers embrace work as part of their identity and self-worth. According to the national study, 79 percent of all U.S. workers associate having a paying job with higher self-esteem. But this is even greater for Millennials, 85 percent of whom believe having a paying job is important or very important to their self-esteem. 

“Check, please”

You might think that next gen workers would embrace digital forms of payment above all others. And you’d be wrong. Compared to older generations, Gen Z receives the bulk of their pay via paper check. The national study discovered that 79 percent of Gen Z has received their wages via paper check in the past year, compared to only 28 percent of Boomers. Moreover, 59 percent of Boomers have not received a paper check in over 5 years.

The problem with paper checks is that they’re costing younger generations far more money than older generations to convert to cash. One in five Millennials and 43 percent of Gen Z have spent more than $5 to cash a paper check, compared to only 9 percent of Boomers who have spent that much.

A cash-less generation

Speaking of cash, younger generations carry less of it with them than older generations. Only 23 percent of Gen Z feels comfortable carrying $100 in cash, compared with 41 percent of Boomers. This is further evidence for the increasing value of alternatives to cash, particularly for younger generations.

No bank account, no problem

According to the survey, younger generations aren’t going digital when it comes to payment because they aren’t opening bank accounts. Not needing a bank account was one of the main benefits next generation workers cited for preferring paycards, with 47 percent of Millennial and Gen Z respondents indicating a paycard preference for that reason.

Plastic preferred

Preloaded payment cards are much more popular with younger generations than their older counterparts. The national study discovered that 47 percent of Millennials and 66 percent of Gen Z have used a pre-loaded payment card of some kind in the last 12 months.

When participants were asked about their overall view of paycards for employment compensation, the same generational trend appeared. According to the study, 63 percent of Gen Z and 50 percent of Millennials responded that they would absolutely use a paycard or think paycards are a good option for certain circumstances.

Freedom of choice matters

Having options about how wages are received is sometimes as important to workers as the job itself. Almost half of Gen Z (47 percent) and nearly a third of Millennials (31 percent) would turn down a job if they were unable to choose their method of pay. The fastest growing generations in the workforce have declared their preference for payment options, sending a strong message to employers and hiring managers.

Download the complete study from ADP to learn more about the future of pay.