From an early age, we citizens of the United States are taught to believe — above all else — that if we only work to our full potential and stay away from drugs, we will be duly rewarded with a satisfying career and enough material comforts to induce envy in our friends and neighbors. We are bombarded with tales of unlikely success stories, and our media ensures that we are well aware of the public figures that best represent our country’s favorite narrative — yes, any one of us could be the next Steve Jobs, Stephenie Meyer, or Oprah Winfrey.
Our culture, which prides itself on its unfailing optimism, chooses to ignore the real narratives that are being lived out in this country. These stories vary greatly, based on any number of economic and geographic factors, but there is a sure commonality — the endings are always far bleaker than the one we’ve been promised. One such story looks like this:
A person works diligently and loyally for many years, is unexpectedly laid off due to the trickle-down effect of incompetence and greed, loses health insurance (if lucky enough to have had it in the first place), racks up credit card and medical bills during unemployment, and then finds it impossible to reenter the job market because these financial hardships have rendered him or her “suspicious” as an employee.
In 1996, the Society for Human Research Management found that 19% of employers were reviewing credit reports as part of the job screening process. In January of this year, the SHRM released survey results indicating that 60% of employers now use credit checks to judge prospective employees. 47% of these employers look at the credit reports of only some applicants, and 13% use them to determine all applicants’ eligibility. The credit reports are ostensibly used to prevent theft and to guarantee financial and overall responsibility.
Although the good folks at TransUnion and Experian assert that such credit checks are vital to bringing peace of mind to business owners and the public alike, those of us without a vested interest in the sales of credit reports can probably see that the process of weeding out job applicants based on their financial history is morally and logically unsound. There are three main reasons why this practice should be banned or at least limited in the 47 states that still allow it.
1. It doesn’t make sense.
Even Eric Rosenberg, TransUnion’s director of state government relations, was forced to admit to Oregon legislators in 2009 that, “At this point, we don’t have any research to show any statistical correlation between what’s in somebody’s credit report and their job performance or their likelihood to commit fraud.”
Although it’s possible that people with financial troubles might steal from their workplace out of desperation, it is much more likely that they will hold onto their jobs for dear life and not do anything to jeopardize their employment. Isn’t this type of toothless employee a business owner’s dream? Moreover, isn’t there a long list of white collar criminals (Bernie Madoff, Joseph Cassano, etc.) whose credit reports once surely illustrated the height of financial prowess?
2. It’s discriminatory.
Hiring on the basis of a credit report could be just another way of hiring on the basis of race. A 2007 Freddie Mac study found that 43% of African Americans, 34% of Hispanics and 27% of whites had low or “bad” credit scores. One of the reasons for this might be that African Americans and Hispanics are often the victims of payday lenders and predatory loans. A 2004 Missouri Department of Insurance study found that “race/ethnicity proved to be among the strongest and most robust single correlate of credit scores, in many instances having a significantly greater impact than education, marital status, income and housing values.”
In any case, hiring people based on their financial background is definitely discriminatory against the economically underprivileged. Historian Tony Judt writes in April 2009’s New York Review of Books, “Economic disadvantage for the overwhelming majority translates into ill health, missed educational opportunity, and — increasingly — the familiar symptoms of depression: alcoholism, obesity, gambling and other criminality. The unemployed or underemployed lose such skills as they have acquired and become chronically superfluous to the economy.”
3. It creates a Catch-22.
Our country is meant to be a meritocracy — wherein only an individual’s effort and/or talent determines social mobility — and a place where people are able to pull themselves back up after hard times. For many Americans who have been debilitated by the recession, or have been duped into one of the many financial strangleholds our country has to offer, the ability to remake their lives is slipping farther and farther from their own hands.
States that limit credit checks for employment purposes
Luckily, some politicians are recognizing the need to limit employers’ use of credit reports. Since 2007, three states — Hawaii, Washington, and most recently Oregon — have passed legislation restricting the use of credit reports in the hiring process. The laws are all quite similar, confining the use of credit reports to only potential hires in the financial industry or whenever the information is “related to a bona fide occupational qualification.” Sixteen other states have introduced bills that would mitigate the use of credit reports in employee selection.
There is some movement on the federal level as well. Representative Steve Cohen of Tennessee introduced a bill to amend the Fair Credit Reporting Act. The proposed Equal Employment for All Act (HR 3149) would “prohibit use of consumer credit checks by employers as part of the hiring or firing process, unless the job involves national security, FDIC clearance, or significant financial responsibility.” The bill was introduced in July of 2009 and still hasn’t made it out of the first phase of the legislative process.
It is unlikely that any federal legislation will get far unless there is some type of public outcry. As of now, there has been very little in the media about employer credit checks and it doesn’t appear that too many people — even the long-term unemployed — are outraged. It seems that the silence on this issue is less due to the public’s ignorance about it than to a uniquely American mode of thinking.
Americans hate nothing more than the idea that something larger than their own fortitude is determining their ability to succeed. Even as is it becomes painfully clear — in the form of an institutionalized Catch-22, say — that there are strong forces working against them, people persist in the belief that all failures and successes are ultimately individual. Due to this stubborn mentality, we are all astonishingly complacent — happy and proud to live in a country that is becoming more socially immobile every day, and that is now frequently referred to as a debtors’ prison.
A nation cannot rightfully deem itself a meritocracy when its most impoverished and indebted citizens are prevented from improving their lot. It seems that working class Americans will endure limitless abuses until they recognize the fallacy in a nation, a “land of opportunity”, that demands its citizens to overcome its failures — unlivable wages, a debt-based economy — before they can ever hope to overcome their own.
This is a guest post by Kathryn Rickson. Kathryn is a playwright and one of the founders of the Portland Peacock Factory. She is learning to play the ukelele and lives in Portland, OR.
Image via thetruthabout
