Meeting of October 20, 2010 - Employer Use of Credit History as a Screening Tool
Good Morning. My name is Dr. Avis A. Jones-DeWeever, and I am the Executive Director of the National Council of Negro Women. Currently serving in its 75th year, the National Council is both a membership organization and an umbrella organization comprised of over 240 community-based sections and 34 national Black women’s organizations. As such, NCNW represents some four million women of African descent all across the US as we hold true to our mission to advocate on behalf of the needs of Black women and their families throughout the United States and across the Diaspora.
The EEOC should be commended for its goal to Eradicate Racism and Colorism in Employment. To do so, it is certainly imperative to first identify and then discontinue practices that lead to systemic discrimination as it relates to employment opportunity in America. Clearly, the broadscale use of credit histories in the employment process is one of those practices that result in system discrimination which disproportionately disadvantages communities of color and especially hampers employment possibilities for African Americans.
An often-cited study conducted by Fannie Mae in 2007, firmly established a strong link between race, ethnicity and credit ratings. At that time, African Americans were said to be 21% more likely to have what would be considered “bad” credit scores than their white counterparts. Further, race seemed to be an even greater predictor of credit score quality than was the case of income. Several scholars have pointed out a multitude of reasons as to why Africans Americans tend to typically have significantly lower credit scores than whites. Specifically, the reality of lower earning-power across every level of education (a problem that is of course, compounded for Black women), the lack of assets from which one can draw upon in case of any type of disruption in earnings, and poor access to credible financial institutions within the neighborhoods where they live, make African Americans particularly vulnerable to falling behind, and staying behind, thus significantly hampering their credit score possibilities.
Because there is no data that supports the assertion that low credit scores are correlated with increased risk of theft by employees, or increased risks of workplace violence, or any of the other contentions that credit scoring agencies utilize as a marketing tool to sell their service, the use of credit scoring as a mechanism for screening potential employees is just plain bad policy. Bad policy, that has much more to do with stereotypical notions than it does with reality based on empirically proven fact.
While such practices would be unfortunate at any time, to screen potential employees through the use of credit scores now, when we are still, as a nation struggling to recover from the worse fiscal calamity that we have seen since the Great Depression, is not only nonsensical, it borders on criminal.
Today, we know tens of millions of Americans have either lost their homes, their jobs, or both. We also know that the leading cause of bankruptcy in America is not over spending, it’s not indulging in far too many shopping trips to the mall, it happens because one has experienced a medical tragedy that has resulted in financial devastation. To punish those Americans who have already suffered so much, and who need employment not only for their own survival, but for the well-being of their families is uncontainable. In America, if nowhere else in the world, we tell our children, that here, if you get knocked down, you can pull yourself up by your bootstraps and start all over again. Well, I submit to you, that utilizing the practice of taking into account a job-seeker’s credit history in the employment process is tantamount to the action of taking away that job seeker’s boots. It stunts that person’s ability to start over, and it does so by cutting off at the knees the type of personal work ethic and ambition that we as a nation claims to hold dear.
There are a multitude of other problems with this practice. Problems like the high error rate that is commonly known to exist among credit reporting agencies, the reality of certain types of employment used as a drag on one’s credit record, and the devastating effects that a foreclosure or bankruptcy can have after years of stellar payment history. Yet, the biggest problem is that it results in systemic discrimination. The type of discrimination that was outlawed under Title VII; the type of discrimination that no longer has a place in the nation I call home.