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The way it actually works is that people get payed before their paycheck if they need it at zero interest. When executed correctly there is no debt the money th

The way it actually works is that people get payed before their paycheck if they need it at zero interest. When executed correctly there is no debt the money they took is just deducted from their paycheck. This is how payday advances worked for most people before the age of complex payroll systems. You used to be able to ask your boss to get payed early for the time you had already worked. Now that is really hard because "the system isn't set up like that" You can find out more by googling it. Payday loans are much more akin to debt bondage, in that they are _often_ the start of a debt cycle that is extremely difficult to break.

rootusrootus 8y ago
I wonder why we don't have pay-as-you go for income. There is no particular reason we couldn't pay people at the end of every day just as easily as every two weeks or once a month.
- SegFaultx64 8y ago
  A few companies do, including Uber. The real issue is that the American banking system is insanely slow and outdated so transferring large sums rarely is way more economical than doing small sums frequently. ACH takes 1-3 days. Push-to-debit is expensive and not universal. Cutting checks daily would be a nightmare and raises a whole other set of issues around check cashing. People are working on this from a tech perspective, but we are not there yet. In other countries this would be a lot easier to implement because the underlying banking infra is just more sophisticated and modern.
dragonwriter 8y ago
> Now that is really hard because "the system isn't set up like that" No, it's really hard because systems (technology secondarily, primarily policy and administrative controls) are set up to prevent the discretion that practice relied on because it was a giant and frequently exploited opportunity for embezzlement, favoritism, and unlawful discrimination (including quid pro quo sexual harassment) by line and middle managers. It's not just an incidentally unsupported function.
- SegFaultx64 8y ago
  Yep, absolutely. However there are ways to bring that into "the system" and regulate and monitor it just like other payroll functions. There is no reason that payday advances couldn't be done without those negative externalities if they we setup and structured correctly, rather than just your boss slipping you cash.
  - dragonwriter 8y ago
    > However there are ways to bring that into "the system" and regulate and monitor it just like other payroll functions. Sure, but it's not free to the employer (aside from making cash flow timing less predictable, regulating and monitoring are not free) and the contribution to the bottom line is dubious (it may even be negative: the employees for whom such a benefit would be most attractive may not be the employees a business most wants), so the business case for doing it rather than leaving employees to existing credit mechanisms is weak. OTOH, there seems an obvious social benefit to having either this or same-day pay (which is also not free compared to status quo alternatives) as a norm, so that's maybe a role for government rules (either mandates or incentives.)
deleted 8y ago
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rootusrootus 8y ago

I wonder why we don't have pay-as-you go for income. There is no particular reason we couldn't pay people at the end of every day just as easily as every two weeks or once a month.

SegFaultx64 8y ago
A few companies do, including Uber. The real issue is that the American banking system is insanely slow and outdated so transferring large sums rarely is way more economical than doing small sums frequently. ACH takes 1-3 days. Push-to-debit is expensive and not universal. Cutting checks daily would be a nightmare and raises a whole other set of issues around check cashing. People are working on this from a tech perspective, but we are not there yet. In other countries this would be a lot easier to implement because the underlying banking infra is just more sophisticated and modern.

dragonwriter 8y ago

> Now that is really hard because "the system isn't set up like that" No, it's really hard because systems (technology secondarily, primarily policy and administrative controls) are set up to prevent the discretion that practice relied on because it was a giant and frequently exploited opportunity for embezzlement, favoritism, and unlawful discrimination (including quid pro quo sexual harassment) by line and middle managers. It's not just an incidentally unsupported function.

SegFaultx64 8y ago
Yep, absolutely. However there are ways to bring that into "the system" and regulate and monitor it just like other payroll functions. There is no reason that payday advances couldn't be done without those negative externalities if they we setup and structured correctly, rather than just your boss slipping you cash.
- dragonwriter 8y ago
  > However there are ways to bring that into "the system" and regulate and monitor it just like other payroll functions. Sure, but it's not free to the employer (aside from making cash flow timing less predictable, regulating and monitoring are not free) and the contribution to the bottom line is dubious (it may even be negative: the employees for whom such a benefit would be most attractive may not be the employees a business most wants), so the business case for doing it rather than leaving employees to existing credit mechanisms is weak. OTOH, there seems an obvious social benefit to having either this or same-day pay (which is also not free compared to status quo alternatives) as a norm, so that's maybe a role for government rules (either mandates or incentives.)

deleted 8y ago

[deleted]