Washington, D.C. – The Center for Responsible Lending (CRL) and National Consumer Law Center (NCLC) today expressed support for the Protecting Wages of Essential Workers Act of 2022 (Protecting Wages Act). The bill will ensure that working Americans who hold consumer debt are not hit with excessive wage seizures that leave them unable to afford necessities. The legislation also prohibits debt collectors from using threats of jail to coerce payment of a debt.
The Protecting Wages Act, introduced late last week by Rep. Alma Adams (D-NC), is designed to better protect families coping with the combination of historic inflation, high gas prices and record rent increases from falling into poverty due to wage seizure.
The legislation would protect $1,000 or 75 percent, whichever is greater, of disposable earnings per week from seizure, instead of the current $217.50, which is tied to a stagnant federal minimum wage. The bill also would expand protections for employees subject to multiple garnishment orders by ensuring that they can’t be fired if there is more than one order in place. The protected wages would be adjusted annually based on the Consumer Price Index to account for inflation.
“Systematic racism continues to play a role in perpetuating cycles of poverty in communities of color,” said Lucia Mattox, director of western states outreach and senior policy associate at CRL. “People of color are more likely to be contacted by debt collectors and to be impacted by lawsuits resulting in wage garnishment. Until we modernize federal law to improve protections for consumers, the racial wealth gap will continue to deepen, and Americans will continue struggling to pay for necessities like food, rent and childcare.”
“Debt collectors should not be allowed to push working people into poverty or grab the funds people need for necessities to support their families,” said Michael Best, staff attorney at the National Consumer Law Center. “Debt collectors also can’t be allowed to take us back to the days of debtors’ prisons.”
In addition to protecting consumers, the Protecting Wages Act would support employers and small businesses by alleviating the burden of administering wage garnishment orders and by ensuring that more of the wages that employers pay actually reach the front-line workers that businesses are trying to attract and retain.
- According to ADP, about 7% of U.S. employees have at least one wage garnishment order.
- Research by the Urban Institute has shown that 26% of Americans have debt in collection; 22% in white communities and 35% in communities of color.
- National Consumer Law Center (NCLC), No Fresh Start 2021: Will States Let Debt Collectors Push Families Into Poverty as Pandemic Protections Expire? (50-state summary of state protections against seizures of wages and other assets)
- National Consumer Law Center (CRL), Unfair Debts With No Way Out: Consumers Share Their Experiences With Rental Debt Collectors (Oct. 7, 2022)
- Center for Responsible Lending, Protect Against Abusive Debt Collection: Working Families Need Wage Protection and a Chance to Save (March 2022)
- CRL/NCLC Protecting Wages Act Fact Sheet (October 2022)