Should credit determine employment?
EDITOR’S COMMENTARY
IN A BAD ECONOMY, DENYING EMPLOYMENT BECAUSE OF CREDIT IS TOO PUNITIVE by Wayne Hodges
LOS ANGELES, CA – Ever applied for a job, only to be denied because of low credit scores? If so, you’re not alone. Thousands of Americans are sitting in a similar boat, thanks to some employers’ decision to use consumer credit reports to help determine employment eligibility. Is it fair? Probably not. Why? I’ll explain. Our faltering national economy is just simply too weak to penalize job-seeking citizens for below average credit scores. Think about it. As of today, 28% of all real estate properties in the U.S. are either in foreclosure or headed towards it. The national unemployment rate, which is currently at 9.8%, could exceed 10% in the next couple of months. Yikes! And it gets worse.
In lieu of government bailouts, many large corporations continue to pay massive bonuses to CEO’s. And thousands of U.S. companies continue to cut jobs, or outsource, in an effort to scale back on business operating expenses. According to CBS News, since the recession began at the end of 2007, jobs in the U.S. have been vanishing at an alarming rate of 11,000 per day. And more than 13 million Americans are unemployed. Scary, isn’t it? The recession has also forced our Federal and State Government branches into the precarious situation of having to eliminate several key programs to help reduce rising budget deficits.
OK, I understand the credit argument as it pertains to the hiring of CEO’s and CFO’s to manage corporate finances. But, keep in mind, some companies have hired executives with outstanding credit histories only to get stabbed in the back with embezzlement, fraud and other shady, unethical tactics. Does the name ‘Enron’ ring a bell? The Board of Public Utilities in Kansas City, Kan. is another serious example of fraud and embezzlement. In other words, high credit scores don’t determine whether or not an employee will respond with fair business practice; which, in the grand scheme of things, should be most important to a company.
So, should credit be used as employment criteria? Depends on who you ask. Those individuals struggling to pay bills would probably answer “no.” However, people with credit scores in the 700 to 800 range would probably recommend otherwise, and say “yes.” But, keep in mind; in a bad economy, anybody’s credit rating could take a hit. Seriously, a job layoff or termination is certain to inflict serious pain on a consumer’s credit score. Not convinced? Ask Andrew Balzer. As a staff recruiter in Los Angeles, Balzer went from earning a six figure salary in the corporate world to applying for food stamps. Now, he has a case worker.
“The household income is just unemployment: $950 every two weeks,” Balzer told his case worker recently. Hey, that’s the limit for unemployment. Just $1,900 to support his wife Michelle, and daughters Brandi, Bailey, Shasta and Skylar. Balzer is already six months behind on his $3,100 mortgage, and one of his two cars has been repossessed. “It’s been very tough,” said Balzer. “Can’t lie. It’s been very stressful.”
Hmm…should Balzer be penalized in the job market for his declining credit? Is it his fault he’s out of work? After all, creditors can’t get paid until consumers lock down some form of steady employment, right? Most importantly, as a society, we must avoid treating applicants with unfavorable credit histories as ex-convicts. Seriously, being denied a job for criminal reasons is one thing. But, losing out on employment because of shaky credit is another.
So, to those individuals basking in the glow of high salaries and near-flawless credit scores, please understand you’re only a pink slip away from ending up like Balzer. Once again, I propose the question: should credit scores be used to determine employment eligibility? Hopefully, those of you originally on the “yes” side will submit completely different answers this time around. To view this article on the Topeka Examiner, please click here.
Wayne Hodges, an MBA from St. Mary University, is the Editor-in-Chief of “Mass Appeal News.” He is also an adjunct professor, MPA at Kansas University, and intern with the Kansas Senate. Wayne welcomes your comments at whodges@massappealnews.com
To learn ways to find a job during a recession, click the play arrow.
April 21st, 2009 at 11:33 am
All good points. But, remember, most ex-convicts can’t get jobs when they get released from prison either. It seems like we’re living in a society that steps on you when you’re down and won’t let you get back up. I believe in second chances.
April 21st, 2009 at 11:36 am
Credit checks are crucial to large corporations when hiring CEO’s and CFO’s. If you owned a company, would you want someone with questionable credit balancing your budget? Some companies just don’t have a choice.
April 21st, 2009 at 11:45 am
Personally, I feel a credit score should be looked at for certain positions. I feel that if a person cannot manage their own (financial) affairs, then they surely should not be in a position to manage a company’s because they make the same bad decisions (in many cases) in managing a company that they make/made with their own (financial) affairs.
April 21st, 2009 at 11:46 am
I say if a person has the skills and education necessary for the position, give ‘em the darn job.
April 22nd, 2009 at 8:12 pm
On the topic, I have always thought with the exception of maybe a CFO position or Comptroller, there is no reason why anyone’s credit score should determine someone’s employment. You never know people’s situation…maybe they are going through a tough time and currently the credit report is bad. Most likely they are seeking employment to try to improve their credit score.
April 22nd, 2009 at 8:14 pm
Nikki, I couldn’t have said it better. I agree with every word. However, I’d like to touch on something Angela said. Good credit, unfortunately, doesn’t guarantee financial officers will perform ethically. I’m sure the CEO’s and CFO’s of Enron had spotless credit prior to ripping off the company. We need to keep this in mind.
April 23rd, 2009 at 7:14 am
I don’t feel it is right to go by a person’s credit to determine qualifications for a job, because you never know a person’s situation and if they are looking for a job, more then likely they did not have money to pay certain bills. Also, the way the economy has been in the past 8 years since Bush was in office, even if you have a job, you still might not have the resources to pay certain bills based on family situations, so NO do not go by a person’s credit.
April 23rd, 2009 at 7:33 am
Preach LaTosha, preach!!!
April 25th, 2009 at 3:01 pm
Wayne, KUDOS to you! Once again, excellent job and great article.
April 25th, 2009 at 3:02 pm
Thanks! Now let’s protect the consumer.
May 8th, 2009 at 5:41 pm
Nice article! You make a couple of great points about Enron and BPU. Good stuff!
May 28th, 2009 at 6:47 am
The greed by corporate executives is why our country is in the bind its in. We trust that our bosses will perform in the best interest of the employees but they are busy exploiting new ways to get richer at the expense of the workers.
July 7th, 2009 at 7:51 am
This economy STINKS!!! The White House keeps approving these stimulus packages but everytime I look up a company is laying off its workers.
December 30th, 2009 at 3:44 pm
Loved the article! All points well taken. It is very difficult to maintain good credit when everything is increasing but our wages. Gas, food, utilities and healthcare expenses have all gone up in cost, but our salaries remain the same. It’s a flawed system that must be fixed.