Income Verification Doesn’t Need to Be This Expensive

Income verification has quietly become one of the most expensive administrative functions in government benefits because agencies have defaulted to a single commercial product and then used it far beyond the circumstances that justify its price. Equifax’s product, The Work Number (TWN), provides near–real-time payroll data derived from employer feeds. That timeliness matters in some cases. It does not matter in most of them. Yet TWN has become the first, and often needlessly repeated, stop for income verification across federal and state programs.

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The De Facto Monopoly

The Work Number’s dominance is not the result of a formal government grant or statutory preference, but of a data-network monopoly built over time. Equifax secured early and enduring access to employer payroll feeds through embedded integrations and multi-year agreements with large employers and payroll processors, creating a database that competitors struggle to replicate. That scale produces powerful network effects. Broader employer coverage makes the product more useful to agencies and lenders, which in turn reinforces employers’ incentives to participate.

Once agencies integrate the system into eligibility workflows, train staff, and codify its use in policy, switching becomes operationally costly even if alternatives exist. This dynamic has been reinforced by federal shared-service adoption, including public announcements by the U.S. General Services Administration describing a partnership with Equifax’s Work Number to provide automated income and employment verification to agencies. The result is market dominance driven by control of critical inputs, scale, and administrative lock-in.

Reuters has reported on antitrust litigation challenging whether Equifax’s exclusive payroll data arrangements improperly entrenched The Work Number as the dominant income verification platform. Whatever the ultimate legal resolution, the dispute illustrates how control of payroll data inputs and institutional adoption have combined to leave agencies with few practical alternatives.

Equifax’s market position amplifies downstream cost effects. The Work Number’s coverage is the product of long-standing employer integrations and network effects that make substitution difficult. Agencies that build eligibility workflows around TWN incur switching costs that further entrench its use. None of this requires bad faith on the part of agencies or the vendor. It is the predictable result of relying on a proprietary data source without a disciplined strategy for when its use is warranted.

Systematic Overuse of Real-Time Payroll Data

Public contracts show that state and federal agencies routinely pay enormous prices per successful lookup, prices that vary by volume but commonly fall in the range of roughly $6 to $16 per transaction, with contractual escalators over time. Those charges are not one-time costs. They recur at application, at recertification, during quality control reviews, and again during fraud investigations. A single beneficiary can trigger multiple paid verifications in a year, even when income is stable and the eligibility outcome is not plausibly in doubt.

At scale, the math is stark. Programs that conduct tens of millions of income checks annually are committing to recurring expenditures in the hundreds of millions of dollars. These are not analytics projects or system builds. They are fees paid for repeated access to the same underlying payroll records.

This pricing would be defensible if real-time income were required for most eligibility decisions. It is not. Many benefit programs are structured around annual or semiannual determinations. Many households have stable W-2 income, fixed retirement income, or earnings far below or above program thresholds. In these cases, last year’s income, or even quarterly wage data, is sufficient to determine eligibility with high confidence. Paying real-time prices for these verifications does not improve accuracy in any meaningful way.

The timeliness advantage of TWN is real, but it is narrow. It matters most for populations with volatile earnings and for decisions that turn on current income crossing a threshold. Gig workers, seasonal employees, and individuals with recent job changes fall into this category. They are a minority of cases. Yet agencies have structured their processes as if every applicant and every recertification requires real-time payroll confirmation. They are not embedding risk management into the system.

The result is systematic overuse. Agencies are paying premium prices for timeliness even when timeliness is irrelevant to the decision being made. This is not a failure of program staff to understand income dynamics. It is a failure of governance. There is no government-wide standard that defines when real-time income verification is required and when it is not. In the absence of that guidance, the safest operational choice is to run every case through the most comprehensive tool available, regardless of cost.

The Case for a Rational Income Verification Strategy

This default has crowded out cheaper public alternatives. One alternative that is not available due to legal restrictions based on privacy is the government’s own income data, IRS tax data. Agencies are legally prohibited from using IRS tax data for eligibility purposes absent specific statutory authorization. As a result, even though tax data is authoritative and well suited for baseline eligibility, annual redeterminations, and discrepancy detection, agencies are structurally pushed toward commercial payroll products as the only lawful option.

Available alternatives include state unemployment insurance (UI) wage records and self-attestation. Though quarterly, state unemployment insurance (UI) wage records are already collected for public purposes and can support many income verification needs at minimal marginal cost. Because the data is standardized, routinely reported by employers, and already housed within public systems, its use avoids the per-transaction fees associated with commercial payroll products. While UI wage data is not sufficient for real-time income determination, it is well suited for baseline eligibility checks, periodic redeterminations, and discrepancy detection, particularly for identifying sustained earnings patterns or material changes over time. Used appropriately, UI wage records can significantly reduce reliance on more expensive real-time verification tools without compromising program

Self-attestation, coupled with post-payment review, is appropriate in a risk-based income verification framework because it aligns verification intensity with the likelihood and consequence of error. In low-risk cases, such as households with stable income histories, income well below eligibility thresholds, or limited opportunity for gain. In these cases, benefits can be issued based on applicant attestation under penalty of perjury without immediate third-party verification. Verification is deferred, not eliminated. Agencies retain the ability to conduct targeted post-payment reviews using data matching, audits, and investigations triggered by risk indicators such as discrepancies with wage or tax data, anomalous income changes, or program-wide patterns. Clear notice, credible enforcement, and recoupment authority preserve deterrence, while selective back-end validation allows agencies to concentrate resources where verification is most likely to affect outcomes. For low-risk cases, this approach reduces administrative cost and burden without weakening program integrity. None of these sources eliminate the need for payroll-level data, but together they can sharply limit the number of cases in which such data is actually necessary.

A tiered income verification strategy would yield substantial savings. With standard increases over time, the already enormous costs to access TWN are set to soar. In three years, Washington State will be paying $19 per verification. Large federal and state benefit programs routinely conduct tens of millions of income checks annually across applications, recertifications, quality control, and fraud reviews, driving aggregate costs well into the hundreds of millions of dollars.

If even half of those verifications were shifted to lower-cost alternatives, real-time payroll verification could be reserved for the smaller subset of cases where income volatility makes it determinative. Under conservative assumptions, reducing paid payroll lookups by 40–60 percent would yield annual savings on the order of tens to low hundreds of millions of dollars per agency, without weakening eligibility accuracy or program integrity.

A rational income verification strategy would treat real-time payroll data as a last-mile tool, not a universal solution. Baseline determinations and routine recertifications would rely on authoritative but lagged public data. Real-time payroll checks would be reserved for cases where income volatility is high and the eligibility decision hinges on current earnings. Such a model preserves program integrity while dramatically reducing unnecessary transaction costs.

Without a shift to risk-based verification, government will continue to treat every case as time-sensitive and pay accordingly. The Work Number is expensive not because real-time payroll data lacks value, but because timeliness has been made the default rather than the exception.

Endnotes

1. Washington State Department of Enterprise Services, Employment and Income Verification Services (Equifax/The Work Number) Master Contract, pricing schedules showing per-transaction rates and multi-year escalators.

2. U.S. General Services Administration, public descriptions of its partnership with Equifax’s The Work Number to provide automated employment and income verification services to federal agencies.

3. AnnaMaria Andriotis and John McCrank, “Equifax Faces Antitrust Lawsuit Over Employment Data Unit,” Reuters, reporting on class action allegations that Equifax’s dominance in income and employment verification is driven by exclusive payroll-provider agreements and control of critical data inputs.

4. Internal Revenue Code § 6103 and Internal Revenue Service, Publication 1075: Tax Information Security Guidelines for Federal, State, and Local Agencies.

5. Internal Revenue Service, Publication 1075: Tax Information Security Guidelines for Federal, State, and Local Agencies, detailing safeguard requirements and restrictions on the use of federal tax information.