Photo: Andrew Magill
I receive a monthly paycheck. No I’m not bragging, quite the opposite, I am complaining. This sounds great to those who are unemployed, but why do I have to wait an entire month before being payed? The work that I do on March 1st I will not actually receive any compensation for until April 1st, 31 days later. To put it another way, 0.1% of my life later. Now does it seem like a bigger deal? I would much rather have the instant gratification of immediately receiving the wages of my hard day’s work.
Before big corporations came about I imagine everyone got paid at the end of the day. Today we sign agreements to give the company the right to only pay us once a week, bi-weekly, or even monthly regardless of whether you are paid by the hour or on salary. And of course there is no interest paid even though they are holding what is rightfully your money. My solution I call continuous direct deposit.
In the workplace money is never physically handed to the employee by their boss, it is all done by either check or direct deposit. Direct deposit allows for the transferring of funds from one bank account to another without dealing with cash or checks. Continuous direct deposit would transfer money from the employer’s bank account to the employee’s at infinitesimally short time periods — time periods that would make my monthly paycheck look like an eternity. Anyone with a salaried position can determine how much money they make any given minute, second, or even millisecond. This can be boiled down into an equation to be used to continuously deposit your paycheck into your account.
In theory you should be able to head to your bank’s website, repetitiously hit refresh, and watch you balance slowly tick up. Altering the equation could ensure that money is only deposited weekdays or during work hours.
My employer has almost entirely salaried positions and nearly everyone is signed up for direct deposit – I know because the pile of checks handed out once a month is very small. The company is in stable financial condition such that it does not need Net 30 terms to pay each employee – there is a large enough store of cash such that even if no income was generated that month it would still be able to pay the employees. Thus, my company should strive to pay the employees as quickly as possible for the work they have already completed.
There are some hurdles that would have to be overcome to make continuous direct deposit a reality. The first is figuring out what to do about the tax withholdings, IRA contributions, health care deductions, etc. that automatically come out of each paycheck. This obstacle can be conquered: simply do the same continuous direct deposit into each of the accounts. If it is not possible, the bank could still do it on a monthly basis for certain accounts and continuous for others. Pay stubs are another issue – will continuous deposits result in infinite pay stubs being created? No, I do not even think you would have to indicate that the money was being continuously deposited and can still create the pay stubs on a monthly basis.
The final and ultimate hurdle is ability of the banking system to support transfers on the order of seconds if not milliseconds. Unfortunately there is no indication that this will be attainable in the near future. The idea of continuously compounding interest around nearly forever, technology has made it possible in the last couple decades, yet it costs banks more money so they will not offer it. Banks will not benefit from continuous direct deposit so they are not likely to offer it any time soon. The only possibility for making this dream a reality is that more and more people demand it, especially huge companies that hold large sums of money.