Employer Credit Checks Are a Major Factor In Cause of Black Unemployment

Employers have so many easy ways to discriminate against blacks, foreigners, older workers, etc. They ask for the year of your college graduation on all applications I have ever seen. This clearly gives them a way to determine your age. They also go by zip codes to guess if a person is white or non white and of course they go by the type of college you attended (whether it was an HBCU or not) and your name. I abbreviated my name and the responses to my resumes suddenly went up. However, I found myself on the other end of the phone with Hiring managers and recruiters who were clearly surprised they had called a black guy. 

When I was hired on at Wingspan Portfolio Advisors we were put through extensive credit checks and many blacks who came through agencies were told that they had to pass the credit background. We later found ourselves working around white guys who had been hired by the company "straight on" and who were quite open about their foreclosures and repossessions and bankruptcies. How in the hell did they get the job with terrible credit, yet the blacks were told we needed 'good' credit? There has always been a different system for whites and blacks and this is just more proof that blacks need to go into business for themselves. We need more black businesses. 

When New York State Attorney General Eric T. Schneiderman broke the news that to help customers, his office had reached a settlement with the three big credit bureaus—Experian, Equifax and TransUnion—it got a huge reaction.

John Ulzheimer, speaking for CreditSesame, told the New York Times, “In today’s world, the consumer’s input is less important than the bank or collector’s input. The attorney general’s settlement changes that.”

But there is another, more insidious story at work here. Generally bypassed by policymakers is how people of color lose out because of an overall discrimination based on the credit checking of potential job candidates.

It turns out that employer credit checks are a significant cause of the constant unemployment in the still-recovering employee market, and they are preventing many talented and suitable candidates from obtaining full-time jobs. Sadly, African-Americans are affected disproportionately because of poor credit from lost jobs, foreclosures, and other outstanding bills incurred during the Great Recession.

Since outstanding debt often prevents employment, the recent credit bureau reforms have little effect on this. Significant change will only arrive when these blanket credit checks cease to double as a means of hiring discrimination.

“The most insidious and alarming part of the rise in credit-check use stems from its ostensibly race-neutral facade,” said New America Foundation’s Hannah Emple. “People of color are more likely to have poor credit because of historical and contemporary forms of discrimination that limit educational, employment, borrowing and housing opportunities.”

Emple considers the credit check decision-making process as a way around discrimination laws, a way of “operationalizing racial discrimination in a supposedly race-neutral way that will [unfortunately] stand up to legal scrutiny until we make it illegal.”

This accords with a 2012 Demos National Survey on Credit Card Debt. It found that 1 out of 10 unemployed laborers mentioned that credit checks had prevented them from being hired. The statistics are even starker regarding Black Americans, since only about a quarter of their households have credit scores of 700 or higher.

Though the Fair Credit Recording Act allows for employee credit checks, Demos points out that, “[C]redit reports were not designed as an employment-screening tool.”...

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