It Can Happen to Anybody

One of my dear friends went from a comfortable retirement to a zero net worth in basically one day. The reason? He had parked his retirement with a Bernie Madoff fund. Out of the work circuit and over sixty, he had some serious issues to face. The problem is that in an upside-down economy, even the rich and upper middle class can find their world’s flipped upside down, and if you’re older, the ability to “work it off” with future earnings is slammed both in terms of years left to work and an unemployment rate where there are 5.5 applicants for every job opening. If companies are going to open the “opportunity door” in a highly accelerating society, the folks least likely to be given a shot are the older ones.

Now one more nasty variable has to be taken into consideration. Not only are prospective employers checking out the social networking page of their job applicants, they’re also running credit checks. Conventional wisdom tells employers that if an individual cannot maintain good credit, they must be too irresponsible to perform in a new job. Interesting assumption, but in a world where “it can happen to anybody,” is there any real merit to this position? If you’re laid off or your company files for bankruptcy or your mortgage is way above the value of the house (and you didn’t use a subprime loan to buy the house) or you have a medical bankruptcy or Bernie made off with your nest egg, exactly where is the fault? Where is the underlying responsibility quotient? Are such individuals more likely to steal from their employers, embezzle to survive, commit fraud or pull out a gun and start killing co-workers?

The April 10^th New York Times attacked this “job filter” head on: “Screening the backgrounds of employees ‘is critical to protect the safety of Connecticut residents in their homes and offices, in their cars and in all other places they travel,’ Mr. Rosenberg testified to Connecticut legislators in February 2009, explaining why TransUnion markets its credit reports to employers… Trouble is, researchers say there is no evidence showing that people with weak credit are more likely to be bad employees or to steal from their bosses, a fact that Mr. Rosenberg himself later admitted… ‘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,’ he said in separate testimony to Oregon legislators in January.”

As state and federal legislators propose laws to curb this clearly abusive trend, which only makes finding a path to recovery that much more difficult to those who need it most, there has been an intensified lobbying effort by companies that sell such credit checks to employers to kill this statutory reform. Bills in Connecticut, Maryland and California have stalled by reason of such push-back, even though most legislation still permits credit checking for people in sensitive financial jobs.

How do the credit report companies push their cause? “Several… large credit bureaus also suggest in their marketing materials that credit checks are an important security measure for companies. ‘Every time you hire a new employee, you put a lot on the line,’ an Experian [a credit reporting company] brochure reads. ‘The wrong decision could jeopardize your firm’s assets, reputation or security.’… Kristine Snyder, a spokeswoman for Experian, said the ability to assess risk was important for business owners, particularly those running small companies, given the level of employee fraud. She said the Association of Certified Fraud Examiners found that important indicators of potential fraud were employees living above their means and those experiencing financial difficulties… ‘Employers should have information available to them that protects their businesses from catastrophic losses so that workers can continue to stay employed and remain productive,’ she said.” Unfortunately, the correlation between these credit reports and reliability doesn’t really exist, and in tough economic times – when jobs are scarce and lives hang in the balance – the only plus on the job front is more openings at credit-checking companies.

I’m Peter Dekom, and I believe we really need to make it easier for folks to get back on their feet.