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How Workers Get Paid Is Changing: Consumer Protections Need to Catch Up

How Workers Get Paid Is Changing: Consumer Protections Need to Catch Up

Gregg Gelzinis, David Madland, and Joe Valenti discuss how changes in how workers are paid warrant important updates to consumer protections.

The way workers are paid is changing, as electronic forms of payment are increasingly replacing cash and checks. For a large swath of moderately to highly paid workers who have access to bank accounts, the technological transformation from paper checks to direct deposit has mostly brought benefits. But for low-paid workers, who tend to have less access to the mainstream financial system, the transition to electronic payments is more complicated.

Payroll cards—an electronic form of workplace compensation that is a type of prepaid debit card—can provide unbanked individuals with increased access to the financial system, as well as the benefits of safety, convenience, faster payments, and ease of use that come with it. However, the emergence of payroll cards and similar products that may be developed in the future carries risks as well. Fees associated with these products may extract wealth from the very workers who can afford it least.

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Gregg Gelzinis

Associate Director

David Madland

Senior Fellow; Senior Adviser, American Worker Project

Joe Valenti

Director, Consumer Finance