Facilitating early withdrawal of earned wages can transform household finances for blue collar workers
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measurement & evaluation -
program deployment
Low wage workers are often hit with unexpected expenses that drain finances before their next payday. This leads them to forgo essentials, rely on high-interest loans, and generally experience real psychological stress. By providing access to earned wages in advance of payday we found profound gains in financial security, reduced utilization of high-interest loans, and improved workplace retention.
The average monthly wage for formally employed Indian garment workers is INR 14,000. While salaries across the manufacturing sector vary, similar financial pressures are experienced by millions of Indian blue collar workers. Evaluating approaches to ease these financial pressures have the potential to reduce debt, stabilize expenses, and crucially, reduce pressure felt by low-wage earners. Our study focused on 834 women garment workers in Karnataka, India.
We wanted to ensure our study was well-grounded in the lived experience of our target population. Accordingly, we conducted extensive design research, combining interviews, focus group discussions, and observations. We also assessed commercially available EWA solutions to assess the possibility of piloting an existing technology solution. However, we soon discovered that despite the proliferation of app-based EWA tools, the very real barriers kept low-wage women workers from utilizing them effectively. As a result, we developed a simple, Android-based application for tablets installed within the workplace. This tool allowed workers to withdraw their earned wages via a direct transfer to their bank account in just a few taps.
In order to uncover causal relationships between our EWA intervention and a range of worker and business metrics, we conducted a randomized controlled trial the following design:
- 408 women workers in the treatment group
- 426 women workers in the control group
- Baseline, mid-line, and end-line surveys to assess the state of household finances
- Analysis of worker-level administrative data, including tenure, daily attendance, wages, and output.
- Analysis of EWA tool utilization, including per-worker transaction frequency and size.
Workers who had access to earned wages before payday demonstrated large gains in wellbeing:
- 33% reduction in informal borrowing
- 8% gain in worker productivity
EWA tools have proliferated within the past 5 years, largely driven by both the appeal of improved liquidity for workers and market potential for financial services to earn substantial profits from micro-fees per transaction. In the absence of our study the precise impacts on workers and business has been difficult to quantify. Our findings enable the development of a business case showing precisely how, and how access to earned wages can actually improve worker well being and workforce productivity.In focusing on the lowest wage earners, who are often ignored as less valuable by commercial solutions, our findings suggest a strong case for employers to subsidize earned wage access tools.
