Payroll, pins, and punch cards

About this episode

Patrick McKenzie discusses the challenges of public sector payroll modernization and the role of payroll providers in the economy.

In this episode of Complex Systems, Patrick McKenzie riffs on why public sector payroll modernization is even more likely to fail than the typical public software procurement project. He then goes into a wider discussion about payroll providers and their role as software, payment rails, and a sink for an enduring controversy in political economy. We want robust state capacity and hate income taxes. He breaks down the history of tax withholding as a state-deputized collection mechanism and explains how providers like ADP manage a lucrative "conveyor belt" of money to earn interest on the "float". Finally, he discusses how fintech innovations like Earned Wage Access (EWA) are providing a pro-social, daily-pay alternative to predatory payday loans. – Full transcript available here: https://www.complexsystemspodcast.com/public-payroll/ – Presenting Sponsors: Mercury , Meter , & Granola Complex Systems is presented by Mercury—radically better banking for founders. Mercury offers the best wire experience anywhere: fast, reliable, and free for domestic U.S. wires, so you can stay focused on growing your business. Apply online in minutes at mercury.com . Networking infrastructure has…

People in this episode

Host: Patrick McKenzie

Topics covered

• public sector payroll
• software procurement
• payroll providers
• political economy
• tax withholding
• fintech innovations
• Earned Wage Access

Keywords

• payroll modernization
• public software procurement
• tax withholding
• fintech
• Earned Wage Access
• ADP
• income taxes

Sponsors

Mercury, Meter, Granola

Mentioned in this episode

Organizations: ADP

More episodes of Complex Systems with Patrick McKenzie (patio11)

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• Wrong numbers and why they survive, with Aaron Brown · May 14, 2026 · 56 min
• Defendant, Censor, Politico, Spy · May 8, 2026 · 1h 5m
• How the SPLC became financial infrastructure · May 1, 2026 · 51 min
• The honey badger of payments · April 23, 2026 · 30 min
• Cash received is not revenue earned · April 16, 2026 · 33 min