Business

Opinion: Black Workers Depend on Same-Day Pay. Why is Gov’t Trying to Restrict It?

It’s no secret that too many Americans are living paycheck to paycheck. What appears to be a secret is that an industry that is casting lifelines to those in need is being blocked by state and federal regulators. The industry in question is Earned Wage Access (EWA). EWA is an innovative fintech solution that empowers workers and helps them pay bills on time by accessing wages they’ve already earned. A 2021 study found that EWA services often prevent consumers from missing bill payments and slipping further into debt.

Published

4 weeks ago

September 10, 2024

Oakland Post

Jay King is CEO of the California Black Chamber of Commerce.

Jay King, Special to California Black Media Partners

The industry in question is Earned Wage Access (EWA). EWA is an innovative fintech solution that empowers workers and helps them pay bills on time by accessing wages they’ve already earned. A 2021 study found that EWA services often prevent consumers from missing bill payments and slipping further into debt.

Despite the many benefits and the fact that businesses all across the country, including Paychex, now offer EWA to employees, the Consumer Financial Protection Bureau (CFPB) recently issued guidance that could effectively wipe out this tool and, in the process, let struggling families, already in jeopardy, drown even deeper in debt.

The numbers tell the story. According to a recent study, 66% of Americans report living paycheck to paycheck, while 40% report being unable to afford a $400 emergency expense. They face hardship paying bills, covering financial emergencies, and otherwise making ends meet. These aren’t just workers with minimum-wage jobs either; half of those U.S. consumers facing hardship earn more than $100,000 per year.

This dynamic is especially pernicious in the Black community. According to recent figures, Black Californians currently have the lowest household income of any major racial or ethnic group in the state. Research also indicates that nearly a third of Black families are late paying their debts and 42% use credit cards just for basic living expenses while half do so to send their kids to college.

EWA is ready to support these individuals, yet the CFPB seems to think these services are just loans masquerading as something new. Not only is this wrong, but the agency’s interpretive guidance reverses their previous guidance and contradicts the established language and interpretation of the Truth in Lending Act (TILA).

This change could have a devastating impact on the very people it purports to protect. By categorizing EWA as loans, the CFPB would impose unnecessary regulations that stifle innovation and could drive consumers back toward high-cost payday lenders.

As I mentioned, the numbers tell the story, and EWA has an impressive track record. A recent study from Citizens Bank found that seven in 10 middle-market companies currently offer EWAs to employees, with more planning to do so in years to come. As it happens, few states better illustrate the value, and excellent ROI, of EWAs than California. Californians employed by Walgreens, Home Depot, FedEx Office and other businesses have accessed more than $1.67 billion in wages through EWA. Equally promising, more than half of consumers who tap into EWA can now afford a $400 emergency.

EWA services have always proven to serve the greater good, particularly in supporting underserved communities like the Black community, which is disproportionately affected by financial instability. The CFPB should take advantage of this opportunity to make sure they continue to do so, rather than creating obstacles that could undermine their effectiveness.

I urge the CFPB to rethink this misguided guidance. The agency must prioritize fairness and innovation to protect both consumers and the businesses that employ them.

About the Author

Jay King is CEO of the California Black Chamber of Commerce.

Oakland Post

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Google’s New Deal with California Lawmakers and Publishers Will Fund Newsrooms, Explore AI

Gov. Gavin Newsom, California lawmakers and some newspaper publishers last week finalized a $172 million deal with tech giant Google to support local news outlets and artificial intelligence innovation. This deal, the first of its kind in the nation, aims to invest in local journalism statewide over the next five years. However, the initiative is different from a bill proposed by two legislators, news publishers and media employee unions requiring tech giants Google and Meta to split a percentage of ad revenue generated from news stories with publishers and media outlets.

Published

6 days ago

October 1, 2024

Oakland Post

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By Bo Tefu, California Black Media

This deal, the first of its kind in the nation, aims to invest in local journalism statewide over the next five years. However, the initiative is different from a bill proposed by two legislators, news publishers and media employee unions requiring tech giants Google and Meta to split a percentage of ad revenue generated from news stories with publishers and media outlets. Under this new deal, Google will commit $55 million over five years into a new fund administered by the University of California, Berkeley to distribute to local newsrooms. In this partnership, the State is expected to provide $70 over five years toward this initiative. Google also has to pay a lump sum of $10 million annually toward existing grant programs that fund local newsrooms.

The State Legislature and the governor will have to approve the state funds each year. Google has agreed to invest an additional $12.5 million each year in an artificial intelligence program. However, labor advocates are concerned about the threat of job losses as a result of AI being used in newsrooms.

Julie Makinen, board chairperson of the California News Publishers Association, acknowledged that the deal is a sign of progress.

“This is a first step toward what we hope will become a comprehensive program to sustain local news in the long term, and we will push to see it grow in future years,” said Makinen.

However, the deal is “not what we had hoped for when set out, but it is a start and it will begin to provide some help to newsrooms across the state,” she said.

Regina Brown Wilson, Executive Director of California Black Media, said the deal is a commendable first step that beats the alternative: litigation, legislation or Google walking from the deal altogether or getting nothing.

“This kind of public-private partnership is unprecedented. California is leading the way by investing in protecting the press and sustaining quality journalism in our state,” said Brown Wilson. “This fund will help news outlets adapt to a changing landscape and provide some relief. This is especially true for ethnic and community media journalists who have strong connections to their communities.”

Although the state partnered with media outlets and publishers to secure the multi-year deal, unions advocating for media workers argued that the news companies and lawmakers were settling for too little.

Sen. Mike McGuire (D-Healdsburg) proposed a bill earlier this year that aimed to hold tech companies accountable for money they made off news articles. But big tech companies pushed back on bills that tried to force them to share profits with media companies.

McGuire continues to back efforts that require tech companies to pay media outlets to help save jobs in the news industry. He argued that this new deal, “lacks sufficient funding for newspapers and local media, and doesn’t fully address the inequities facing the industry.”