If you get a $1500 paycheck every 15 days, as opposed to a $3000 paycheck every 30 days, then you earn 15 days of interest on $1500 that you would not otherwise earn. At Ally bank, that could be 1.85% in savings accounts. This two-paycheck cycle would repeat 12 times a year, so for half the year you earn interest you would not otherwise earn, totaling to roughly (compounding negligible) 1500*.0185/2= $14.
If you assumed you could get 9% in the stock market, the time value would be $68.
.. per year. Or $1.16/mo or under .04%. Although that's not literally nothing, it's awfully close. Oh, and that's before income tax.
> If you assumed you could get 9% in the stock market, the time value would be $68.
Although that assumption may be a bit of a stretch, something a typical consumer might be far more likely to encounter (and need not apply income tax adjustments to) is consumer loan payments.
A 20% revolving balance paid 15 days early results in $12.50 monthly, which can pay for a streaming subscription.
That $68 earning is either going to the employee or the employer. If law forces it to go to the employees then the employers could try to hire people for $68 less salary.
If you get a $1500 paycheck every 15 days, as opposed to a $3000 paycheck every 30 days, then you earn 15 days of interest on $1500 that you would not otherwise earn. At Ally bank, that could be 1.85% in savings accounts. This two-paycheck cycle would repeat 12 times a year, so for half the year you earn interest you would not otherwise earn, totaling to roughly (compounding negligible) 1500*.0185/2= $14.
If you assumed you could get 9% in the stock market, the time value would be $68.