Earned Wage Access — also known as earned wage advance or on-demand pay — has steadily grown. As recently as 2020, nearly 55.8 million individuals were using some EWA solutions, as there are both employer provided and direct to consumer options. As EWA solutions have grown in popularity, there has been a steady stream of questions as some employers remain skeptical about the utility and benefit of EWA products. While there are certainly questions that need further investigation, it does appear that EWA solutions are here to stay.
What is earned wage access?
Short term liquidity (or the ability to have sufficient cash on hand) has long been a hallmark of financial health. Unexpected financial shocks are nearly as certain as death and taxes, and sufficient cash on hand can help weather the inevitable. Yet for millions of workers it is elusive and, at times, expensive to gain access to sufficient liquidity. Payday loans, with interest rates as high as 600% in some states, have long been a scourge on workers’ ability to sustainably address short term cash needs.
