In January 2024, Connecticut made legislative changes that effectively shut down the ability of many workers to obtain instant transfers of their own earned wages between pay periods. However, my new study with colleagues finds that the Connecticut General Assembly should reverse this and pass SB 1396 this session. Doing so would give Connecticut workers faster access to their earned wages and help them make ends meet.

Prior to 2024, Connecticut residents were able to instantly access their earned wages through an electronic transfer via Earned Wage Access (EWA).  EWA is a service that allows workers to access the income they have already earned but not yet received. To be clear, this is not a loan or a salary advance but providing someone the portion of a paycheck they have already earned, prior to payday.

In order to get instant access, workers had to pay a $3.49 instant transfer fee (much like Venmo).  On January 1, 2024, Connecticut eliminated the instant transfer fee option, which, by removing the mechanism that allowed EWA service providers to cover their costs, effectively eliminated EWA in Connecticut.

As a researcher and Associate Professor of Public Policy at the University of Connecticut, much of my work —centered around using economic data to understand society’s problems— is ultimately about understanding how policy changes impact families. Colleagues and I wanted to know how this seemingly small, innocuous even, policy might affect people’s lives (the study was commissioned by DailyPay, an EWA provider, but conducted independently of them). To determine the effect of the instant transfer elimination, we surveyed 508 Connecticut-based EWA users and asked them a series of questions about their lives and finances, and if, and to what extent, they noticed any impact of the January 2024 EWA changes.

Kerri Raissian PhD

Of our 508 respondents, 65% were female, the majority were non-white, and 77% reported living with children in their homes. Although most of our sample indicated that they had been employed during the last seven days before our survey, 61% also reported an annual household income of less than $75,000. Most of our survey respondents reported not having access to savings, a budgeting plan, or the ability to cover unexpected expenses. In other words, these EWA users are Connecticut workers who live paycheck to paycheck.

Importantly, when EWA users access their earned wages, it was for urgent, time sensitive needs: the main reasons were food and groceries (91%), transportation including gas (66%), rent or mortgage (55%), and utility bills (60%) (see Figure 1 below, modified from the report). 

It seems appropriate that a user would need their wages immediately rather than in a few days’ time.  Given this, the instant transfer is an integral part to allowing EWA to provide financial relief to their family. 

In addition to asking users how they relied on EWA, we asked them about their financial circumstances in the past 12 months. Many of them had fallen behind on bills (65%), overdrew their bank accounts (28%), paid bills late (25%), paid credit cards late (25%), among other negative financial outcomes (see Figure 2 below, replicated from the report).

I see several financial hardships pressing on Connecticut’s families: higher cost of living, higher cost of credit, economic uncertainty, to name a few.  Those in our survey reported accessing their wages to purchase food and groceries, cover transportation costs, and pay for rent, mortgages, or utilities. Soon, the school year will end, making it harder for families to access social services and school meals to keep their children properly cared for and nourished. Without the services provided throughout the school year, reinstating the EWA instant transfer option could be especially welcome to Connecticut’s families this summer.

To be sure, the legislature’s 2024 decision to cut EWA in Connecticut was almost certainly designed to protect workers from predatory practices and tools that could take advantage of their financial limitations and needs. Even if it was well-meaning, however, it has had unintended consequences for employees and their families. Since the EWA change, too many Connecticut users say they have fallen behind on bills, overdrafted accounts, paid bills late, taken out a money order, or taken out a payday loan. Others have even had to go without meeting basic needs.

There are no perfect options for Connecticut’s residents whose salaries are too low and who face a cost of living that is too high. But by removing EWA, the state has seemingly moved them closer to things we’d all like to avoid: going into debt, relying upon the kindness of friends and family, or going without something they need for themselves and their children. Moreover, the $3.49 transfer fee is roughly equivalent to an ATM fee; it is likely less expensive and more transparent than cumulative credit card debt, overdraft fees, or loan interest; and it provides dignity to Connecticut’s families.

Finally, the users in our study said they thought the EWA tool was useful and fair. Our study shows that eliminating it is no solution for working families.

That is why the Connecticut legislature’s Banking Committee is seeking to revive EWA this year. I commend them for unanimously voting it out of the Banking Committee. I urge the Connecticut General Assembly to pass SB 1396 and allow Earned Wage Access to meet Connecticut workers’ real-world needs.

Kerri M. Raissian an Associate Professor of Public Policy at the University of Connecticut and the Co-Leader of the Connecticut Scholars Strategy Network.

This Scholar Reflection is based on a study that was paid for and commissioned by Daily Pay, an Earned Wage Access provider. The survey and research were conducted independently. All conclusions and errors are those of the author.