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Comment by cashonthetable | Hacker News Reader

Reading this article I just realized how much money large companies like Amazon must make off the interest from the money they've held until payday.

If they pay their workers every two weeks, then they've got a massive pile of cash sitting there waiting (on average) a week before being paid out. Now, a week's worth of interest isn't much to you or me, maybe, but multiplied by the number of workers they are paying it suddenly becomes quite a bit.

Why is it that if I work on a Monday, but you don't pay me until two weeks later, why do you get to hold the interest?

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Let’s say you make $240k annually

If you assume that your employer is holding 1 week of salary on average, then they’re holding $4,600 for your money at any given time.

Let’s assume an annual interest rate of 3%, which aligns with the IRS rate on overpayments.

So your employer gives you an additional $138 per year because of your money that they’re holding in escrow.

But actually it would be less: they would only need to pay you interest on the amount of your cheque that hits your bank account. The IRS isn’t asking for interest on the amount they withhold for tax.

Why not just ask for a $300/year raise instead? You’ll get more money in the end.

Bickering over the mere interest seems to set the sights really low. If you have leverage enough to demand the interest, or any leverage, why not simply demand higher pay? It seems to me that any reasonable increase in pay would be much larger than any puny interest which a week’s wages can accrue over a week.

And if we're talking what we can do to best increase the wages paid to workers, it seems to me that we should first and foremost look at wage theft (wages owed to the employee but not paid), which I have heard is more than all other forms of theft, combined.

As far as I'm aware European companies usually pay monthly so the pile of cash is even bigger there.

It's not like they have heaps of cash, they'd do work for their clients or supply their customers, issuing the bill for hours worked/items delivered at the end of the month, and the bill might have a term like "payable within 30 days". So the companies would have to have some cash to pay their employees in the month where they're waiting for their customers' money.

In fact IIRC this was the big worry during the 2008 crash, if the banks were worried companies would grind to a halt and not pay their suppliers, why should the bank give out loans to said suppliers...

> Why is it that if I work on a Monday, but you don't pay me until two weeks later, why do you get to hold the interest

Because you signed the contract accepting that.

Because it’s your employers money first.

How many people do you know who could have negotiated anyrhing about their employment contract... Let alone asked for interest payments on there accursed daily wages? Are they even informed enough to be aware that said interest income even exists?

The previous commenter raised a valid point: Most paycheck earners lack negotiating leverage, and employers exploit information asymmetry to extract as much value from workers as they can.

Your reply seems unnecessarily dismissive and argumentative. If you disagree, you should try to address their comment more specifically.

Underrated comment. It’s not your money until the company pays you; you don’t get to count the interest on money that isn’t yet yours. If you are allowed to count like that, then why just count the two weeks? Why not claim the interest of an entire year’s salary as “yours”?

Your last sentence about an entire year's salary suggests that you may not understand the original commenter's point. I'll try to explain it.

In the United States, employers generally issue paychecks for work performed in the preceding period of 1-2 weeks. So most employees are advancing their labor to their employers, on the promise that they will be eventually paid for that work, at the end of that pay period.

The conceptual alternative has nothing to do with annual salary... It would look more like employers issuing daily paychecks, at the end of each workday. Or, employers would keep the pay period system, but pay employees an additional amount to compensate for the loan of their daily labor for the time until the next payday.

Do you get it, now?

You’re avoiding the first and main part of my point, though. It’s not your money until they pay you – therefore, you can’t count the interest as yours until then. If you want to be paid daily – sure, why not? Why not by the hour, or by the minute, even? But most people don’t want to be paid daily, and the “loss” of the miniscule interest is more than worth the hassle it would be for all involved to be paid so frequently in so small amounts. And if it’s not your money yet, it’s not your interest, either.

I question the notion that most employees do not want to be paid daily. If I am being paid via direct deposit, there is no inconvenience for me to be paid daily.

And certainly cash workers, aka day laborers, demand to be paid daily.

Won’t all the fees associated with transfer and withdrawal eat a substantial amount of your salary the more often you are paid?

There are no fees with direct deposit, at least from the employee's standpoint. In fact, receiving funds via direct deposit is something that usually causes the bank to waive account fees in the US.

Your first part was just semantic games, it wasnt any kind of meaningful argument... "It's not your money yet..." versus "Loaning your employer your labor until payday".

Looks like some other folks have already poked holes in that, anyway... I was honestly concerned that you were just ignorant, based on your original comment.

The notion of “my money” versus “the employer’s money” is more than mere semantics.

(You did explain why the notion of getting a year’s worth of interest was based on faulty assumptions, which is why I abandoned it. But that was never my main point.)

I don't understand why you keep claiming that someone else holding your money makes it theirs. Can you expand on this?

I don’t understand why you talk as if money which you haven’t yet been paid is somehow yours before you get it.

Once you have worked for a day, your employer owes you money. It is not an uncommon or foreign concept to charge interest on a debt that one is owed.

That said, it would be unusual to apply that to wages. And many debts have grade periods during which interest is waived.

> Once you have worked for a day, your employer owes you money.

I see what you mean, but do they really? If I leave work one day (say, in the middle of the week) and don’t come back, does my employer owe me pay until the day I left? Some people have that situation, but for most people, the situation is more complicated; they can’t just leave without giving advance notice, etc. Included in this complexity is the fact that the employer does not owe the employee anything until the pay is actually due, as specified in the contract.

> I see what you mean, but do they really?

Yes, they really do. E.g. if the company was dissolving went into bankruptcy proceedings the employees would have a claim.

> If I leave work one day (say, in the middle of the week) and don’t come back, does my employer owe me pay until the day I left?

In my jurisdiction we have at-will employment and it works both ways - either party can terminate the arrangement at any time. In practice, employees usually give notice so as not to poison relationships.

On what basis would an employer not owe an employee for work performed?

> the employer does not owe the employee anything until the pay is actually due, as specified in the contract.

You have confused owing a debt and a payment schedule for the debt. When you take a mortgage on a house you owe the bank money (probably a lot of money). The fact that a payment schedule exists doesn't change the the status of the status of the debt nor does it prevent the bank from paying interest.

Second, you are assuming there is contract - in my experience most workers are not operating under a contract.

Of course, I'm speaking for my jurisdiction (in the US).

This must be weighed against the ease with which a company such as Amazon can borrow money - they will be working with a very low interest rate in any case.

> Why is it that if I work on a Monday, but you don't pay me until two weeks later, why do you get to hold the interest?

Because that is the agreement you entered into when it accepted employment.

So what you're saying is that if workers got thoroughly organized, and raised their awareness of this issue, then paycheck-earners could simply negotiate to demand a chunk of that interest income, or even instant payment of wages worked on a daily basis?

That actually sounds like a really good idea. I'm glad that American workers' awareness of how little negotiating power they have is rising.

Yes. Although it may be impractical for employers who offer benefits since it’s not a simple hours worked*payrate calculation, and salaried exempt employees work varying amount of hours each day, but get the same amount periodically.

Biweekly payments seem like a reasonable compromise to me given the logistics of payroll, and more frequent payments would seem like a poor use of negotiating power and time.

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