Elizabeth Warren Proposes A New Bill Aimed At Eliminating Credit History As a Metric For Employment

By Chris Lazare

Photo by Tim Pierce

Many Americans are still afflicted by the damages created by the financial downturn in 2008.

Millions of Americans were put out of work, lost their savings, and had their homes foreclosed. One of the most prominent side effects stemming from the recession is a growth in poor credit ratings.

Americans are now trying to get back on their feet, however, being denied jobs because of poor credit ratings is all too common. Elizabeth Warren has just introduced a bill in the Senate which would bar prospective employers from checking and denying employment based on credit scores.

The Equal Employment For All Act would help millions of poor Americans who were disproportionately affected by the financial crisis. According to research, roughly 47 percent of employers check credit history in order to judge the competence and character of job applicants.

However, the credit rating of individuals doesn’t necessarily predict the potential productivity of their labor.

Let’s consider the logic used to deny Americans jobs based on their credit ratings.

A potential employer refuses to hire an individual because they have shown an inability to pay their credit card bills, healthcare bills or their mortgages. However, the credit report doesn’t explain why the individual wasn’t able to pay their bills. Perhaps, like many Americans, they are suffering from chronic unemployment since 2008. It is also possible his/her home was foreclosed on improperly, which can hurt credit reports by 250 points!

Now the individual is disqualified from employment because they didn’t have the means to pay their bills, presumably because they didn’t have a job in the first place. These metrics are unfair and unjust. Clearly, low wage workers and the middle class are disproportionately afflicted by such policies. Utilizing credit checks only exacerbates the issue of chronic joblessness.

After introducing the bill, Elizabeth Warren highlighted the unfairness of credit checks:

“A bad credit rating is far more often the result of unexpected medical costs, unemployment, economic downturns, or other bad breaks than it is a reflection on an individual’s character or abilities. Families have not fully recovered from the 2008 financial crisis, and too many Americans are still searching for jobs. This is about basic fairness—let people compete on the merits, not on whether they already have enough money to pay all their bills.”

Using credit scores for hiring is already frowned upon.

More than 40 citizen advocate organizations support the bill. California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington currently have laws, barring or limiting the use of credit checks for prospective employees. There isn’t a justifiable reason to place more barriers in front of individuals searching for a job.

Many Americans who possess poor credit ratings have them due to unforeseen circumstances. Although there hasn’t been any federal jobs bill passed in Washington, measures like the Equal Employment For All Act can help millions of Americans looking for work.