Workers Are Repeatedly Tapping Earned Wages. That Red Flag Calls for Action.

Plus, the FTC's rule banning noncompetes gets struck down, but the fight to reform or restrict them isn't going away. And BlackRock's ETHA hits the $1B mark in net inflows.

Number of the Week: $1 billion (explanation below)

Workers Are Repeatedly Tapping Earned Wages. That Red Flag Calls for Action.

Outside the often-tone-deaf echo chambers of Wall Street and Silicon Valley and New York’s tech scenes, there are real-world problems being confronted daily by people who don’t give a damn about the stock market, artificial intelligence or the latest crypto obsession. They’re too busy worrying about how to pay rent, buy food and gas, and manage healthcare costs while working hourly wage jobs that barely cover their monthly financial obligations, never mind an emergency.

For many of these workers, the only constant in their lives beyond making every penny count is the never-ending struggle to make it to payday. Hence the surging appeal of earned wage access (EWA), also known as on-demand pay, which gives hourly and low-wage wage workers early access to pay—either accrued or estimated to earn—when they need it instead of having to wait until their normal pay periods.

EWA providers like DailyPay, Clair, Payactiv, EarnIn, Dave and others offer no-fee, low-fee and subscription products through employer-partnered, embedded or direct-to-consumer models that are intended to give workers living paycheck-to-paycheck more flexibility over when they get paid.

With employer-partnered or embedded products, employers offer workers access to pay that they’ve already earned, often with no or low fees; their regular paycheck is then reduced by the amount of early pay received. With direct-to-consumer products, consumers arrange for direct deposit accounts with EWA providers and then pay for earned wage access via monthly subscription or with transaction fees or voluntary tipping; the consumer’s direct deposit account is then debited for the advanced pay on payday.

An estimated 10 million workers used earned wage products to access over $31.9 billion in pay through employer-partnered and direct-to-consumer transactions, according to the Consumer Financial Protection Bureau’s (CFPB) most recent data.