CEOs, Make Sure Your Employees Aren't Struggling To Get By
by Paul Tudor Jones and Dan Schulman
Sep 23, 2020 4:05 PM ET
In 2018, PayPal anonymously surveyed a large sample of its hourly and entry-level employees to assess their financial security. The results indicated that almost two-thirds of surveyed employees reported periodically running out of money between paydays. This was disappointing and surprising, but provides a valuable lesson to other leaders: Although PayPal's internal analysis showed that it paid at or above market value for each of its employees, the wages were not always sufficient for many families.
PayPal then undertook an intensive process to determine how much its employees needed to earn to enable financial security and health. At the core was a calculation called Net Disposable Income, or NDI, which is essentially the amount left after paying taxes and necessary living expenses. The team decided that hourly and entry-level employees should have a target NDI of at least 20% to ensure they have enough discretionary earnings to do more than just cover the essentials. To drive this increase, PayPal instituted a number of changes to reduce health care costs, grant stock awards to all employees regardless of level or tenure, raise wages where appropriate and provide access to personal financial education.