Guest Essay: AB 1177 will open banking opportunities for frontline employees & close equity gap

COVID-19 put a spotlight on a troubling reality: Black and Brown Californians work disproportionately as frontline essential workers in jobs that pay far too little and bear far too much risk. Now imagine those jobs pay even 10% less than they already do.


That’s the reality for workers who don’t have access to banks. From fast-food workers to janitors to service workers, many already underpaid Californians pay as much as 10 cents on the dollar just to cash their paychecks.

Nearly half of Black and Latino California households, about one in four Californians, are unbanked or underbanked.[1] That means they don’t have access to a checking or savings account, and just to be able to spend the money they’ve earned, they must pay high fees to check cashing joints or payday lenders. The consequences are real and stark: it’s harder to build credit, take out a loan or save for large expenses.

Predatory, discriminatory and costly services like check cashers, payday lenders, prepaid debit cards, and pawn shops make hundreds of millions of dollars in fees from the paychecks of workers each year. The fees taken off the top of their earnings are a key reason Black and Latino families face financial insecurity at rates around double those of white families.[2]

Take the case of Carmela. She knows firsthand what it’s like to lose a chunk of every paycheck before one even begins to pay the bills. She’s worked at McDonald’s for 14 years and earns $14.36 an hour while working in an environment with potential COVID-19 exposure. She needs every penny to pay rent, buy groceries and a bus pass to get to and from work, and to pay off a loan she took to help pay for her family’s medical expenses.


Scared of the fees and balance requirements, Carmela has never had her own bank account and for the past 14 years, she’s been cashing her checks at a check cashing location inside her local supermarket. She’s charged $10 for every $100, which averages around $25 a month, or $300 a year. That money adds up, and she could use that to buy food for her kids and pay rent.

There are millions of Californians just like Carmela, and that’s why last week I joined my fellow lawmakers Assemblymembers David Chiu, Wendy Carrillo, Ash Kalra and Mike Gipson and Senator Ben Hueso to introduce the California Public Banking Option Act (AB 1177), or BankCal. Partnering with existing financial institutions, BankCal will level the playing field for underserved Californians – allowing more families to keep the money they’ve earned, and put it toward putting food on the table, paying rent and building wealth.


BankCal will be the first statewide program in the nation that offers residents access to financial tools that higher wage-earners take for granted. This includes a no-fee, no-penalty bank account, debit card, automatic bill pay, direct deposit capacity, and an infrastructure for account holders to build credit.

California can’t create a stable economy, or hope to recover from the pandemic, when a quarter of Californians are paying up to 10 percent of their take home pay just to access their own money and pay bills. AB 1177 will begin to address the systemic exclusion of low-wage, Black, Brown, and immigrant working people from full participation in our economy and help them to thrive.


And it’s the right thing to do for the essential and frontline workers who’ve carried us through this pandemic and paid a dear price for doing so.


Assemblymember Miguel Santiago represents California’s 53rd Assembly District composed of the cities of Los Angeles, Huntington Park, and Vernon. He is also Chair of the Assembly Committee on Communications and Conveyance and Chair of the Assembly Select Committee on Los Angeles County Homelessness.

[1] The total number of unbanked and underbanked households in California as of 2017 is 3,689,000. This total was converted from households to adult individuals as follows: First, it was multiplied by the average number of individuals per household in California to determine total individuals; then it was multiplied by the fraction of the state population that is 18 or older. Individuals per household and age range demographics were taken from U.S. Census data https://censusreporter.org/profiles/04000US06-california/.

[2] Parker Cohen, Stephanie Landry and Santiago Sueiro, “Analyzing the landscape of saving solutions for low-income families: The savings crisis and the need for holistic solutions,” Prosperity Now, April 2019, p. 2.