Flexible Pay Can Help Solve the Substitute Shortage
Portman Wills believes money is key to solving the substitute shortage — even if districts can’t raise substitute teacher wages.
Substitute teachers want to be in the classroom, teaching and impacting lives. But finances — and more specifically, waiting anywhere from 2-4 weeks for payday — can force an uncomfortable choice. In a world where people can deliver groceries, drive for a rideshare service, or even work retail and get paid the same day, substitute teaching may take a backseat to other employment options.
Portman is a co-founder of Wagestream, which allows employers to offer flexible pay and enable employees to access earned wages immediately. In this podcast, he and Emily Trant, Wagestream’s Head of Impact and Inclusion, share some research about flexible pay and what it means for school districts who want to encourage substitutes to accept more jobs.
EMILY TRANT: One of the things we hear from people, from our employer clients who have flexible pay is they see a huge drop in absence rates in the week before payday.
PORTMAN WILLS: From the district perspective, they’re finding that it has a measurable and almost instantaneous impact on their sub pool, that it’s really attacking the core of this problem of not being able to fill teacher absences.
RYAN ESTES: Recently on this podcast, we’ve been speaking a fair bit about the teacher shortage. Today, we’re touching on just one part of that: substitute teachers. Schools all around the country have struggled to find enough substitute teachers, and that’s a trend that many say has gotten worse in the last few years. Today, we’re looking at one way that some school districts are looking to buck that trend. From Frontline Education, this is Field Trip.
Hello, everyone. I’m Ryan Estes, and today on Field Trip, we are joined by some friends from WageStream. WageStream is a company that enables employers to offer flexible pay, the ability for employees to access their earned pay immediately, rather than waiting for the normal payroll cycle. Frontline has been partnering with WageStream over the past year to allow school districts to offer this service to substitute teachers for the first time in K-12. And right now I’d like to welcome Portman Wills, one of the co- founders of WageStream, and Emily Trant, the Head of Impact and Inclusion. Portman and Emily, thanks for coming on the pod.
PORTMAN: Thank you.
RYAN: Let’s begin by looking at the challenge that schools are facing getting substitutes to take jobs. Portman, you’ve found that the gig economy is having a tremendous impact on employers. What impact do you think this could be having on schools?
PORTMAN: Yeah, it’s a great question. And unfortunately, it’s not a really rosy answer. The reality is that substitutes, they want to be in the classroom. They want to be educating and inspiring the next generation but they also — it’s a job, and the reality is that the gigification of the labor market, right? The fact that people can go drive for Uber in an afternoon and pick up some wages there. They can deliver groceries, and all these gig platforms, they are competitive with substitute teaching.
I would say substituting is the original gig job, you know, I grew up with a mother who was a substitute teacher. She’d get the phone call at 6 AM: “Hey, can you come in and sub for Spanish?” or whatever. And you know, it’s very gig based. As all these gig platforms have exploded in the last five years, an untalked about side effect is that they compete with substitutes. And so I think a lot of districts are struggling to fill those subs now, and the alternatives that those teachers have to do a gig job is part of the reason it’s so hard to fill.
RYAN: Let’s look at this issue from an employee perspective. What situations might substitute teachers and other workers with unsteady incomes find themselves in?
PORTMAN: One of the great things about these gig platforms, from the employee’s perspective, is that very often you take a gig job and you get paid right away. It’s no secret that the cost of living is rising, interest rates are biting everybody. It’s also no secret that substitutes are not investment bankers or management consultants in terms of income, right? They do it for the passion, not for the money.
All of this conspires to, if you do a gig job, you can do the job and then you can get paid right away. You can pay your bills right away. You can pay down debts right away. Before Frontline and Wagestream partnered, if you took a sub job, you would often wait for five, six, seven weeks before you got paid. And so those bills are mounting, those debts are mounting. And so that’s why this alternative of going and picking up a shift that’s going to pay immediately is so compelling versus heading into the classroom, even though, and I can’t stress this enough, everybody that we talked to, that’s what they want to do. They want to be in the classroom, but the realities of life and costs are forcing them elsewhere.
RYAN: I know that lower income workers often lack access to financial services to credit, things like that. Talk to me about this idea that I’ve heard you use of financial inclusion, and what is the thinking behind that concept?
EMILY: Sure. Financial inclusion roughly means that you have access to financial products that are useful, affordable, and suitable for your needs. And at its very basic level, that can be a bank account. So we often talk about people being banked or unbanked. And then the other word you’ll hear a lot is underbanked, where you might have a bank account, but you can’t use other features of that bank account, or their price too high for you. So they don’t work for your lifestyle. They don’t work for your needs. And so we see, nationally, around a quarter of all Americans are financially excluded. They either are unbanked or underbanked. And that’s much higher for individuals from ethnic minority backgrounds.
But when we look into our particular population of volatile workers, so gig workers, substitute teachers, anybody working that kind of work pattern, you start to layer up a few different challenges. One is that the income fluctuations in of themselves mean that you need access to credit products to smooth out payments. So, if you’re earning different amounts on different paychecks overall, you might be earning enough, but there’s a timing point where you sometimes don’t have the money you need to make the payments that you have to make to live your life. And then that gets exacerbated by an access to credit point where we see in this group, that variable income is actually a predictor of being financially excluded.
I think the number is around 72 percent of Americans have access to a credit card, but in our base, that sits closer to 40 percent. So, you’ve got people who don’t have access to those products that you and I take for granted to pay for things and settle up on payday, and exacerbated by the fact that their work pattern means they actually need them more than you or I need them because their income is lumpy and they need an income smoothing tool. So that’s something that’s really important and it’s a really key part of the offering around flexible pay, which is that ability just to smooth payments and pull income from different pay periods to get it when you need it.
RYAN: I know that Wagestream recently became the first U. S.-licensed provider of flexible pay. Congratulations, by the way. I know that you are about to release a new report called “Unlocking the Pay Cycle.” In your research for that, what kinds of things did you find?
EMILY: So that piece of research on unlocking the pay cycle was exploring what happens when you give people a flexible pay cycle. So, what is the impact on their lives, their financial wellbeing, their spending, their overall behaviors? Because there’s a lot of assumption that when you give people access to their money, they’ll behave in a way that’s counterproductive. There’s a lot of assumption that people will make poor choices if you unlock the pay cycle. And actually, what we found is the opposite is true. That people are doing things that maybe you and I take for granted, like just paying their bills on time, turning on autopay for bills because they’re confident that the money is going to be there, they can move it from their earned shifts as soon as they need it to pay a bill, or using that money to pay for essentials like buying their groceries.
We also saw this huge theme around financial inclusion, where in the US, about one in four people are unbanked or underbanked, so kind of lack access to useful products. What’s maybe less apparent is that you’re five times as likely to be unbanked or underbanked if you’re from a black or Hispanic background. So it’s a really important problem here. And we saw that for a substantial portion of people, this became the only product they were using. They didn’t use any other financial products. And for the first time in their working or financial lives, they had choice as to how to manage their money and make payments.
People talk about spending less money because they’re more aware of that connection between work and pay, having that visibility and that choice. And they talk about not paying late payment fees, not paying overdraft costs, saving money on bill payment methods, buying things when they’re on sale, all these things that kind of really add up to material saving.
And one of the surprise findings is that the significant majority of people who use flexible pay, so over 70 percent, have savings. There’s this idea that it’s for this entirely distressed base of people who can’t manage their money, whereas the reality just doesn’t connect with that assumption.
RYAN: You’ve been in this world for about five years now, and I’m sure you’ve talked with a lot of people who have used your service, who have used flexible pay. Are there specific stories that come to mind that really made you go, “Huh!” Either in school districts or in other industries that you could share?
PORTMAN: The thing that I think is most relevant to schools is how there has been an explosion in flexible pay in non-education jobs, in fast food restaurants, in – I’m struggling to not name any businesses because I know this is going to go out on the air – but a hamburger place or a bullseye where you might go shopping. There’s a lot of businesses out there that now offer flexible pay by default to all their staff, to tens of millions of people in the U.S. That’s a new innovation, right? That was not the case five years ago. And so it makes it even harder for the education sector to attract the best talent because their alternatives are not just gig work that pays instantly, but really everything out there is paying flexibly and in real time.
And so what we’re most excited about is leveling the playing field and making it so that that math of, “Oh, I could do this job or that job, this one’s gonna pay me tomorrow. This one’s gonna pay me next month” – just take that out of the equation and just say, “What would I rather do with my time? And we’re pretty confident that people will pick the classroom over and over and over again.
I think that’s the most surprising thing, how much these small, what seemed like small things, right? How frequency of pay, “Do I get paid and know immediately or on a big delay?” force people’s hands into making choices about how to spend their day that you wouldn’t otherwise think of.
EMILY: One of the things that surprised me the most is how often people say that they use flexible pay to get to work. In this new research, 10 percent of people, the first time they ever used flexible pay, the reason was putting gas in their car, right? That was huge in terms of, “I had to get to work, I had to get somewhere.”
And one of the things we hear from people from our employer clients who have flexible pay is they see a huge drop in absence rates in the week before payday, whereas previously, people run out of money and not be able to get to work. Actually, now that they can get to work, you’re empowering people to earn more. So it’s not just about that choice of what job would I rather do, it’s actually, “I’d rather work. I’d rather be out there earning. And how can I enable myself to do that?”
RYAN: You’ve been working with school districts for six or eight months at this point as we’re recording this. What have you seen or heard from school districts who are offering flexible pay to their substitute teachers? What impact has it had on their ability to add to their substitute pool? What have you heard as far as how substitutes are receiving it?
PORTMAN: Yeah, I think it goes without saying that subs love it, right? Who wouldn’t like getting paid in real time? But from the district perspective, they’re finding that it has a measurable and almost instantaneous impact on their sub pool, that from the moment it’s announced before people are even using it, it’s having an impact on fulfillment rates in the Frontline Absence Management system, and that once the subs start using it and seeing how easy it is, that it’s really attacking the core of this problem of not being able to fill teacher absences.
And the most interesting thing is that the number one piece of feedback we’ve gotten, and it’s early, it’s only, like you said, been six to eight months, is, “Okay, why is this only available to subs? Why can’t the rest of my staff in the district get this? Heck, why doesn’t this exist for the head office as well?”
Because it seems, and what’s so interesting about that is, this is a journey that Emily and I went on, that everybody who encounters flexible pay goes on, is you first think of it as, ‘Wow, there’s a real benefit to people who need this.” And then you start to flip and say, “Wait a second, why do any of us wait so long after we’ve done the hard work, put in the hard hours, to get paid?”
And you sort of have this mindset shift where you realize, “Wait, the whole cycle is weird.” The status quo is very bizarre. Ancient Romans were paid in a bag of salt at the end of each day. Where did we get to this every other Friday situation, or not to mention monthly in some districts? So those have been the early feedbacks from the first 6 to 8 months in the wild.
RYAN: And just to confirm, it’s not bags of salt that Wagestream is paying substitutes and other gig workers.
PORTMAN: Thank you. Very important point. Yes, it is not bags of salt.
Ryan: Portman Wills and Emily Trant, I want to thank both of you for joining me today, and I want to encourage everybody to read the report they’re releasing called “Unlocking the Pay Cycle.” We’ll be sure to link to that in the show notes. Portman and Emily, thank you both for joining me today.
PORTMAN: Thanks so much, Ryan.
EMILY: Thanks for having us.
RYAN: It’s been nearly a year since Frontline proudly embarked on our innovative partnership with Wagestream, pioneering the introduction of financial flexibility to substitute teachers at more than 4,000 K-12 districts. And now, we are delighted to announce that this flexible pay benefit is now accessible to all district employees, further extending the reach of financial well-being within the K-12 community.
Field Trip is a podcast from Frontline Education. For Frontline Education, I’m Ryan Estis. Thanks for listening and have a great day.
Ryan is a Customer Marketing Manager for the global award-winning Content Team at Frontline Education. He spends his time writing, podcasting, and talking to leaders in K-12 education.