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I saw a tweet [1] that followed a thread on the concept that paydays are not really a requirement any more -- it is totally possible with our existing banking i

I saw a tweet [1] that followed a thread on the concept that paydays are not really a requirement any more -- it is totally possible with our existing banking infrastructure to pay salaries on a more continuous basis, but we've built up a huge amount of institutional momentum around the idea that running payroll is a complex and laborious process that we want to infrequently. By parallel in software engineering, branch merges/integrations used to be very expensive (in cvs/subversion/perforce) and thus were done rarely, and were more expensive and difficult because changes had more time to accumulate, but with DVCSs the problem is flipped on it's head and now we merge branches routinely without fear. We need to fix payroll so that running it on a nearly continuous basis is possible. [1] https://twitter.com/ESYudkowsky/status/1093187875166797824 https://twitter.com/ESYudkowsky/status/1093187875166797824

dawhizkid 8y ago
Right - there are startups that are doing this i.e. https://www.crunchbase.com/organization/activehours https://www.crunchbase.com/organization/activehours has raised $190m and in the top 20 finance apps in the app store. I assume these customers have less a need to take out a payday loan, but it could also be the case that expenses > pay regardless of when you receive income throughout the month.
knicholes 8y ago
If I were paying a bunch of employees, I'd like to hold onto the money for a couple weeks before paying it out if only to mooch off of the small bank interest.
numbsafari 8y ago
Because the folks that use payday loans are most likely [a] not on a salary and [b] have very inconsistent wages due to inconsistent scheduling and [c] likely don't even have a bank account.
- andrewla 8y ago
  For point c this is completely untrue; you in fact can’t get a payday loan without a bank account, and many of the most sleazy practices of payday lenders (and all of the practices banned by the rule) are related to charging fees against bank accounts. A and b are both true but don’t seem especially relevant; payments can still be made on a daily or hourly basis based on the work they are doing rather than bundled up at the end of a pay cycle.
- basementcat 8y ago
  I think you need a salary (or regular deposit of funds, such as a pension) to qualify for a payday loan.
  - numbsafari 8y ago
    From what I have seen, they typically only ask for your most recent pay stub.
njarboe 8y ago
You would have to have people's rent, mortgages, car loans, etc do the same or else people will not have enough money to pay them. The rent due at the beginning of the month right when people get a pay check is a very good idea to prevent defaults.
- hinkley 8y ago
  You’d probably have to go up the chain the other direction too. Small companies that can’t afford to take payment +60 or +90 probably won’t have the liquidity to do +30 either, so if they have to pay people daily instead of every two weeks will probably struggle.
ACow_Adonis 8y ago
Forgive me for lol'ing, but the LAST thing i'd want to see is payroll done like most software places do version control. I've tried to teach teams of analysts version control, the xkcd panel is a documentary, not a joke. https://xkcd.com/1597/ https://xkcd.com/1597/ Also, its 'totally possible' only in the sense that it really isn't: i.e. if like many tech people you ignore actual social, infrastructure, law and cultural issues and start blaming the users for why they don't use your brilliant tech product/live their lives like they're supposed to, or talk glibly about things you don't understand.
- gnu8 8y ago
  But I’m a software engineer so I can solve ANYTHING! /s Seriously though, I wonder how they seriously imagine streaming money would work. The largest payment processors in the world and all the banks still use IBM mainframes that are the fastest transaction processors in the world. Shared ledgers threaten to consume all of the world’s energy while providing worse performance. I suppose continuously streaming money would consume massive amounts of bandwidth in addition?
- andrewla 8y ago
  I don't mean that the solutions to these problems are similar to the solutions to version control problems in software, I'm just making an analogy. Version control is a tricky business and has evolved over time, and it's that evolution that I'm referring to. And I did mean "totally possible" in the sense you indicate, that is, technically possible, but far from a solved solution (after all, I'm not quitting my day job to start offering this as a service). The historical reason for a payday is that cash is hard to move, so the armored car would swing by and people would line up for money; later banks would do the same thing. Because "paydays" and "paystubs" exist, other processes and organizations latched on to them as a standard place to add more process, so "running payroll" became a more and more complicated beast, thus making it even harder to make it an incremental process. So the first barrier is now gone -- while some segments of the population are cash-heavy, modern inter-bank transfers and the rise of electronic payment systems mean that banks can easily handle the cash outlays necessary to support the demand for physical specie out of cash on hand (not to mention improvements in modeling that allow them to anticipate cash demand). But the rest of the "hanger-ons" are not even close to being able to support this; everything from landlords asking for paystubs, to how payroll taxes are handled, to the way that benefits (like health insurance or retirement plans) are calculated, to the way that non-direct-payroll services like phone bills and cable bills are calculated, and the idea of limits on services (data, etc.) that are metered on a sliding monthly window instead of a continuous rolling window mean that it would be very difficult to do effective planning, unless all services started adopting these methods. To actually allow people to do this you'd almost need to have intermediate services -- a "cell phone account" that gets funded, say, daily, and remits payments to the cell phone provider on a monthly basis. Similarly a "rent account", and so on, that would gradually allow you to get an idea of what your actual cash flow looks like, without having to deal with periodic shocks that represent lump outlays and receipts. For now it's just an interesting thought that the foundation that the concept of "payday" is build on has turned to sand, and the question is whether we can find a way to take advantage of this new flexibility. Yudkowsky's tweet addresses one possible way that this may provide a benefit, and it's interesting food for thought even though I'm not completely convinced.
martythemaniak 8y ago
It happens, it's just not popular. If you're a Caviar courier, you can get paid after each delivery. https://courierhelp.trycaviar.com/customer/en/portal/articles/2946518-instant-pay https://courierhelp.trycaviar.com/customer/en/portal/article...

dawhizkid 8y ago

Right - there are startups that are doing this i.e. https://www.crunchbase.com/organization/activehours https://www.crunchbase.com/organization/activehours has raised $190m and in the top 20 finance apps in the app store. I assume these customers have less a need to take out a payday loan, but it could also be the case that expenses > pay regardless of when you receive income throughout the month.

knicholes 8y ago

If I were paying a bunch of employees, I'd like to hold onto the money for a couple weeks before paying it out if only to mooch off of the small bank interest.

numbsafari 8y ago

Because the folks that use payday loans are most likely [a] not on a salary and [b] have very inconsistent wages due to inconsistent scheduling and [c] likely don't even have a bank account.

andrewla 8y ago
For point c this is completely untrue; you in fact can’t get a payday loan without a bank account, and many of the most sleazy practices of payday lenders (and all of the practices banned by the rule) are related to charging fees against bank accounts. A and b are both true but don’t seem especially relevant; payments can still be made on a daily or hourly basis based on the work they are doing rather than bundled up at the end of a pay cycle.
basementcat 8y ago
I think you need a salary (or regular deposit of funds, such as a pension) to qualify for a payday loan.
- numbsafari 8y ago
  From what I have seen, they typically only ask for your most recent pay stub.

njarboe 8y ago

You would have to have people's rent, mortgages, car loans, etc do the same or else people will not have enough money to pay them. The rent due at the beginning of the month right when people get a pay check is a very good idea to prevent defaults.

hinkley 8y ago
You’d probably have to go up the chain the other direction too. Small companies that can’t afford to take payment +60 or +90 probably won’t have the liquidity to do +30 either, so if they have to pay people daily instead of every two weeks will probably struggle.

ACow_Adonis 8y ago

Forgive me for lol'ing, but the LAST thing i'd want to see is payroll done like most software places do version control. I've tried to teach teams of analysts version control, the xkcd panel is a documentary, not a joke. https://xkcd.com/1597/ https://xkcd.com/1597/ Also, its 'totally possible' only in the sense that it really isn't: i.e. if like many tech people you ignore actual social, infrastructure, law and cultural issues and start blaming the users for why they don't use your brilliant tech product/live their lives like they're supposed to, or talk glibly about things you don't understand.

gnu8 8y ago
But I’m a software engineer so I can solve ANYTHING! /s Seriously though, I wonder how they seriously imagine streaming money would work. The largest payment processors in the world and all the banks still use IBM mainframes that are the fastest transaction processors in the world. Shared ledgers threaten to consume all of the world’s energy while providing worse performance. I suppose continuously streaming money would consume massive amounts of bandwidth in addition?
andrewla 8y ago
I don't mean that the solutions to these problems are similar to the solutions to version control problems in software, I'm just making an analogy. Version control is a tricky business and has evolved over time, and it's that evolution that I'm referring to. And I did mean "totally possible" in the sense you indicate, that is, technically possible, but far from a solved solution (after all, I'm not quitting my day job to start offering this as a service). The historical reason for a payday is that cash is hard to move, so the armored car would swing by and people would line up for money; later banks would do the same thing. Because "paydays" and "paystubs" exist, other processes and organizations latched on to them as a standard place to add more process, so "running payroll" became a more and more complicated beast, thus making it even harder to make it an incremental process. So the first barrier is now gone -- while some segments of the population are cash-heavy, modern inter-bank transfers and the rise of electronic payment systems mean that banks can easily handle the cash outlays necessary to support the demand for physical specie out of cash on hand (not to mention improvements in modeling that allow them to anticipate cash demand). But the rest of the "hanger-ons" are not even close to being able to support this; everything from landlords asking for paystubs, to how payroll taxes are handled, to the way that benefits (like health insurance or retirement plans) are calculated, to the way that non-direct-payroll services like phone bills and cable bills are calculated, and the idea of limits on services (data, etc.) that are metered on a sliding monthly window instead of a continuous rolling window mean that it would be very difficult to do effective planning, unless all services started adopting these methods. To actually allow people to do this you'd almost need to have intermediate services -- a "cell phone account" that gets funded, say, daily, and remits payments to the cell phone provider on a monthly basis. Similarly a "rent account", and so on, that would gradually allow you to get an idea of what your actual cash flow looks like, without having to deal with periodic shocks that represent lump outlays and receipts. For now it's just an interesting thought that the foundation that the concept of "payday" is build on has turned to sand, and the question is whether we can find a way to take advantage of this new flexibility. Yudkowsky's tweet addresses one possible way that this may provide a benefit, and it's interesting food for thought even though I'm not completely convinced.

martythemaniak 8y ago

It happens, it's just not popular. If you're a Caviar courier, you can get paid after each delivery. https://courierhelp.trycaviar.com/customer/en/portal/articles/2946518-instant-pay https://courierhelp.trycaviar.com/customer/en/portal/article...