Startup Salt Labs Seeks to Disrupt Savings Benefits for Hourly Workers

Salt Labs Inc. Founder and CEO Jason Lee has spent many hours speaking with low-income workers about their finances for startup ventures seeking to improve workplace benefit programs. With Salt Labs, his latest startup operating out of a New York headquarters with $18 million in seed funding raised in under a year, he believes he has found a savings program that will work for this cohort of workers.

“We have built [a savings] program that you can’t spend,” Lee says. “It’s this thing that lives in our app that’s called Salt. … It naturally accumulates because you can’t spend it.”

Jason Lee

Salt Labs’ invention is a benefits system that lets employees earn a virtual reward, or Salt, for every hour they work. The employees can see their Salt accumulate through an app on their phone; it does not require them to do any work and does not draw down from their pay. As Lee says, workers cannot spend Salt at first, but when they build up enough rewards, they can tap the savings to pay for things like a trip, a large purchase or even an investment in an individual retirement account, via options Salt makes available to employers.

Lee says that, rather than taking money out of an employee’s compensation or providing an employer match that they “cannot see,” Salt Labs charges the employer for every Salt that is mined. Meanwhile, the employee sees the Salt grow and can set their own personal goals or targets.

“What we tell the employer is, ‘If you wanted your employees to save money, and you paid them 10 cents more an hour or whatever, that money will disappear,’” he says. “That’s for the simple reason that the 10 cents of your pay looks like the rest of your paycheck. We’ve built technology that actually separates those cash flows.”

401(k) Disruptor

When setting up the firm, Lee delved into the 401(k) industry, talking to leading experts and looking into recent retirement reform legislation intended to expand access and growth of deferred compensation retirement savings. He does not believe those efforts will move the needle for hourly workers in restaurants, hospitality, manufacturing, retail or other jobs that may offer a 401(k), but not robust enough salaries for workers to defer it for long-term savings.

“One of the observations that I’ve made with lower-income earners is that every single financial plan, savings program, retirement account—everything that we have today requires the saver to take something out of their paycheck and to put it in the future,” he says. “Here’s the problem: For a low-income worker, they don’t have enough salary. To get that person to try to reduce an already scarce resource is virtually impossible.”

Lee believes that is why there is a savings crisis in the U.S., and why generational wealth is not being passed down. He notes that, with many hourly workers, when they leave a job, they will automatically cash out of any savings program they have been using.

Stay to Play

By earning Salt, Lee makes the case that employees will not only be motivated to build the reward, similar to building points in a game, but to stay at the company to keep earning.

Salt is live with several employers now, Lee says, with plans to add more this year. His team, made up of 10 employees, shares statistics from early samples including: 71% of Salt users have higher tenure as compared to non-Salt users; 58% of users said they would apply for a job that offers Salt; and 90% of workers would pick up an extra shift if they could earn Salt.

Lee says the design of Salt Labs, along with his first firm, DailyPay, came in large part from spending time with hourly workers at places like check cashing stores, payday lenders, gas stations and big box retailer parking lots.

DailyPay is a software firm that provides on-demand pay for workers as they earn it. The firm started in Lee’s basement and grew to 1,000 employees with 5 million users; it is used by companies, including McDonald’s, Kroger, Target, Duracell and Calhoun Management, which operates Wendy’s.

Lee left DailyPay in mid-2022, though he continues to advise companies on immediate worker pay. In January, the firm announced a further $175 million funding round that valued the company at $1.75 billion on a pre-money basis.

Venture capital firm Fin Capital, which was an investor in DailyPay, also led the seed funding round for Salt Labs and was joined by Anthem Venture Partners.

“We know what low-income people want,” he says. “They do want to save; they do want to be financially healthy. The problem is none of the technology and none of the tools are built for them.”