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by TheHill.com - 10/01/24 2:31 PM ET

(NewsNation) — An increasing number of Americans are using apps and services that allow them to access portions of their paycheck before payday, according to financial data.

Billed as Earned Wage Access, these apps provide small short-term loans to workers between paychecks so they can pay bills and meet daily needs. On payday, the user repays the money out of their wages.

There’s currently an ongoing debate within the financial industry and government about how or whether these services should be regulated.Why no children? Depends on the age of who you’re asking: Poll

Is the concept of living paycheck to paycheck becoming obsolete?

Despite multiple data sets showing most Americans live paycheck to paycheck, services such as DailyPay or EarnIn help people access the money they’ve earned immediately, without waiting for their payday.

While these apps have been around for over a decade, the COVID-19 pandemic and its aftermath boosted their popularity. Between 2018 and 2020, transaction volume tripled from $3.2 billion to $9.5 billion, according to Datos Insights.

A 2022 Consumer Financial Protection Bureau (CFPB) report indicates that at least 5% of working Americans used these services at least once, with an estimated 7 million people advancing $22 billion through apps before payday.

A report from the Government Accountability Office suggests that inflation is a key reason why many Americans are using these services.

However, there’s a caveat: some, though not all, of these services, require fees or tips.

That prompted the CFPB to propose a new rule that would classify these services as loans under the Truth in Lending Act, a 1968 law that requires lenders to disclose all loan costs and fees. If implemented, the rule would require companies to state their charges upfront and subject them to the same regulations as other creditors.Parents say back-to-school shopping becoming too expensive: Survey

What do the companies say about this?

Companies argue the government misunderstands their services, stating they are not loans since they don’t conduct credit checks, are either no-cost or low-cost and involve accessing money customers have already earned, not future earnings.

“DailyPay keeps millions of American workers out of a cycle of predatory payday loans, overdraft fees, and missed payments by enabling them to access their pay when they earn it,” DailyPay said in a statement.

There is federal legislation pending before Congress that would protect the companies from such regulation, while individual states are grappling with how to legislate the services.

In Connecticut, lawmakers passed a law limiting the fees the apps could charge, The Associated Press reported. EarnIn stopped operating in the state. Asked why, EarnIn CEO Ram Palaniappan said it was no longer “economically viable.”

ADP looked at data on more than four million people aged 20 to 29 at more than 27,000 U.S. employers from Jan. 2019 to April 2024. The analysis compared 55 U.S. metros with at least one million residents across three characteristics: annual wages, hiring rates and affordability.

Rochester, New York, finished at the bottom of the list because it had the slowest hiring rate and below-average wages. Virginia Beach, Virginia, and New Orleans were also among the worst due to low wages and hiring despite above-average affordability. Fresno, California, also finished in the bottom five, ranking low on all three metrics.

Other cities, like Cleveland and Louisville, Kentucky, stood out as affordable destinations with robust hiring but suffered from comparatively low wages. The report found Cleveland is adding new graduates to payrolls at a higher rate than 87% percent of the metros studied, but its wages are in the 35th percentile.These are the fastest growing jobs in the US

Meanwhile, several cities like Boston, San Jose and Seattle had notably higher salaries, but those were offset by the expensive cost of living and low hiring rates.

For many recent grads, simply getting a job will be a challenge as the labor market continues to cool.

“Recent college graduates today will have to search harder than they did a few years ago for jobs that align with their education,” the report said.

In that sense, an area’s hiring prospects may be the most important factor to consider. The top five cities with the best hiring rates were Raleigh, Baltimore, Miami, Atlanta and Las Vegas.

The 10 best cities for new graduates, according to ADP:

Raleigh, North Carolina
Baltimore, Maryland
Austin, Texas
Atlanta, Georgia
Charlotte, North Carolina
New York, New York
San Francisco, California
Cleveland, Ohio
Nashville, Tennessee
Indianapolis, Indiana

The 10 worst cities for new graduates, according to ADP:

Rochester, New York
Virginia Beach, Virginia
New Orleans, Louisiana
Fresno, California
Portland, Oregon
Oklahoma City, Oklahoma
Hartford, Connecticut
Memphis, Tennessee
Seattle, Washington
Salt Lake City, Utah

Story at a glance

Payroll provider ADP looked at data on more than four million people aged 20 to 29 at more than 27,000 U.S. employers from Jan. 2019 to April 2024.

The analysis compared 55 U.S. metros with at least one million residents across three characteristics: annual wages, hiring rates and affordability.

Raleigh, North Carolina came in first. Other southern cities — like Austin, Texas, Atlanta and Charlotte — also made the top five.

(NewsNation) — Recent college graduates looking for a job, decent salary and affordable living should consider moving to the South, according to a new study.

Research from payroll provider ADP ranked Raleigh, North Carolina, the top metro for new grads thanks to its best-in-the-nation hiring rate and above-average wages. Other southern cities — like Austin, Texas, Atlanta and Charlotte — also made the top five.

“Areas with the greatest balance of wages, affordability, and hiring aren’t stereotypical tech and financial centers such as San Francisco, San Jose, or Seattle. They’re places in the South with strong science and technology employment,” the report noted.

The Associated Press contributed to this report.