PayPal has been on a mission to address financial inclusivity for a while now. Recently, the digital payments giant looked inward.
“We surveyed 9,000 employees and found that 60% of them struggle to make ends meet at the end of the month,” PayPal CEO Dan Schulman told the audience at Fast Company Innovation Festival in New York last week. “The market is not working for that population.”
Paypal, one of the biggest success stories in recent American corporate history, has discovered that a big chunk of its employees had little disposable income (4%-6% of total income) after housing, food and transportation costs.
Schulman shared these numbers at the Fast Company event.
“If we ever hope to be a great company, the only way to do this is if we have passionate, inspired and financially secure employees,” he said.
So PayPal rolled out a program to address four things: “pay a wage that supports financial wellness” and increase basic wages, lower the cost of benefits which Shulman described as a “regressive tax,” open an opportunity for everyone to be a shareholder and owner of the company and launch financial planning and education programs.
The initiative was announced internally to employees on Oct. 29 at their global “all hands” meeting, PayPal confirmed to Karma in an email. The company plans to release more details publicly in coming weeks.
“It was the most emotional day any of us had,” Shulman said in his remarks at Fast Company, noting he believes the program will “pay for itself.”
This internal initiative is a continuation of PayPal’s commitment to financial inclusion and a range of programs it has pursued over the years.
It was among the first to join Facebook’s Libra project aimed at reaching the underbanked, before pulling out of Libra Association last month.
PayPal has long known that financial inclusivity is not just good PR, it’s good business.
“Where we extend working capital, on average, a small business’s sales go up 22%, versus the control group of 2%,” Shulman said in an interview with McKinsey in 2018.
“Think about what we do for neighborhoods and communities as a result of that use of data and information and technology. It’s tremendously powerful in driving financial health.”
Financial health of employees is not a problem unique to PayPal. According to a recent PwC study, 59% of employed adults cite financial worries as the top cause of stress.
For PayPal, they internal survey and discovery of challenges their own employees face was a wake-up call.
“We need a population that can feel financially secure because if you don’t address this, that’s how revolutions start,” he said.