Walmart will allow its employees to withdraw money before payday and manage their budgets via a new app, the company said Wednesday.
The retailer said Wednesday that it teamed up with financial technology startup Even and PayActiv to provide the app to 1.4 million Walmart workers.
The Even app automatically plans ahead for bills, savings goals and will show workers how much they can safely spend. It will also allow workers to access cash before a scheduled payday up to eight times a year for free. The money is withdrawn against wages earned from hours that have already been worked.
Walmart said it will cover the costs for Even for both full and part-time workers at Walmart, Sam's Club and its e-commerce sites. Users will have to pay a fee if they want to get paid earlier more than eight times a year.
Walmart said the initiative will help its workers avoid predatory payday loans and better manage their finances, the New York Times reported. The app shows employees how much they spend on necessities like food and rent and provides an estimate of how much they can spend per day while staying within their budget.
Critics and labor groups said the service is another sign that Walmart doesn't pay its workers enough.
"Living paycheck to paycheck is too common at Walmart and that is the problem that Walmart should be trying to solve," said the Organization United for Respect at Walmart.
Wal-Mart Stores Inc. pays new workers $9 an hour. That's above the $7.25 per hour federal minimum wage, but below some of what its rivals pay. Target Corp., for example, has a minimum hourly wage of $11 and plans to grow it to $15 by the end of 2020.
The Associated Press contributed to this report.
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