It’s the classic Catch-22 of the doomed job search: How do you get a job? You need experience. And how do you get experience? Get a job. But for many, the unemployment cycle gets further twisted when it intersects with the debt cycle. When prospective employers run credit checks, a bad report becomes a financial scarlet letter.
New York City policymakers are pushing a landmark bill that could free workers from the chains of bad credit history—pernicious records of old debt or loan defaults. The new City Council legislation would impose a general “ban on personal credit checks by all employers, employment agencies and licensing agencies.” The measure aims to comprehensively shield workers from what economic justice advocates see as an arbitrary and inherently discriminatory screening process.
Those most affected by “bad credit” histories are typically victims of circumstance, not con artists. They’re often people who’ve fallen on hard times, like Alfred Carpenter, who recalled in an interview with the advocacy group New Economy Project (NEP) how a bad knee injury, combined with a lack of health insurance, drove him into bankruptcy:
I started noticing, everywhere I went, I suddenly was not good enough to work there. Then I realized it was the bankruptcy. I went to [look for jobs at] all these nice stores where they loved me…. But the bankruptcy just killed me. I was on welfare for awhile—there’s no reason a guy like me should be on welfare, a strong, able guy who’s a very good worker—but basically it was a blacklist.
But don’t credit checks reveal useful background information about how trustworthy a job-seeker is, especially if they are seeking a job in, say, sales or security? Actually, there’s no evidence that credit reports correlate with a prospective employee’s competence or propensity to commit financial crime, and plenty of evidence that they invade privacy and institutionalize discrimination.
The credit history check, say labor advocates, is not an effective evaluation tool but an arbitrary measurement that tracks people into a self-fulfilling prophecy of structural disadvantage. Many people’s credit problems are not their fault, but the result of the joblessness and turmoil of the recession. Meanwhile, these checks are routinely used by big retailers when vetting applicants for low-wage jobs, which also feed into social inequality in the communities beset with cyclical debt and poverty.