Banning credit checks for employment screening harms African-Americans

[Axulus]

But a new study from Robert Clifford, an economist at the Boston Fed, and Daniel Shoag, an assistant professor at Harvard’s Kennedy School, finds that when employers are prohibited from looking into people’s financial history, something perverse happens: African-Americans become more likely to be unemployed relative to others.

There were always going to be winners and losers from these bans, Shoag says. That’s because these kinds of regulations don’t really create new jobs. They help some people to get hired at the expense of others. “Even the strongest proponents of the bans, I think, didn’t expect employment to increase overall,” Shoag says. “There was going to be some redistribution of jobs.”

What’s surprising is how that redistribution happened. In states that passed credit-check bans, it became easier for people with bad credit histories to compete for employment. But disproportionately, they seem to have elbowed aside black job-seekers.

...

Why did black unemployment go up?

To understand how banning credit checks can lead to unforeseen repercussions, consider the problem from the employer’s perspective. A single job opening these days can get hundreds of applications. Since hiring managers can’t interview every candidate, they need some way to narrow the field. Filtering out people with bad credit helps them bring the number of applicants down to a manageable size. But if employers can’t look into a job-seeker’s financial history, they try something else.

“Employers have many screening measures to narrow down who they want to hire,” Shoag says. “If you take one away, they'll put more weight on the others.”

That’s exactly what seemed to happen in places that outlawed employer credit checks. Looking at 74 million job listings between 2007 and 2013, Clifford and Shoag found that employers started to become pickier, especially in cities where there were a lot of workers with low credit scores. If a credit-check ban went into effect, job postings were more likely to ask for a bachelor’s degree, and to require additional years of experience.

And also:

A powerful study published last year in the Review of Economics and Statistics shows something of the opposite happening: When employers began to require drug tests for job applicants, they started hiring more African-Americans.

“The likely explanation for these findings is that prior to drug testing, employers overestimated African-Americans' drug use relative to whites,” the study’s author explained in an op-ed. Drug tests allowed black job applicants to disprove the incorrect perception that they were addicts.

It’s possible that credit checks were playing a similar role to drug tests, offering a counterbalance to inherent biases or assumptions about black job-seekers. In the absence of that information, employers had to rely more on other clues about the quality of applicants, including their education and experience levels, but also, perhaps, their interview skills or their recommendations. Whatever the new criteria were, they seem to have put black applicants at a disadvantage.

https://www.washingtonpost.com/news...ation-but-it-made-hiring-more-racially-biased

 

[Jimmy Higgins]

The OP title is mistaken. Prejudice harms African Americans. The applicants are the exact same people seeking the job. Their credit or drug use is whatever it is, it is the prejudice that leds to non-employment.

 

[coloradoatheist]

The OP title is mistaken. Prejudice harms African Americans. The applicants are the exact same people seeking the job. Their credit or drug use is whatever it is, it is the prejudice that leds to non-employment.

It talks about and it's not. What they found out is that people with lower credit scores would cross lines and get hired but it hurt blacks because people could fall back to their stereotypes.


But I think this work also needs to be independently verified

 

[Axulus]

The OP title is mistaken. Prejudice harms African Americans. The applicants are the exact same people seeking the job. Their credit or drug use is whatever it is, it is the prejudice that leds to non-employment.

The credit checks and the drug tests serve to reduce prejudice. Therefore, banning them allows prejudice to thrive more then it otherwise would and is thus harmful to african americans. The OP title is accurate.

 

[AthenaAwakened]

The OP title is mistaken. Prejudice harms African Americans. The applicants are the exact same people seeking the job. Their credit or drug use is whatever it is, it is the prejudice that leds to non-employment.

The credit checks and the drug tests serve to reduce prejudice. Therefore, banning them allows prejudice to thrive more then it otherwise would and is thus harmful to african americans. The OP title is accurate.

No. Just no.

But I will buy at least the sincerity of such articles, just as soon as CEO's CFO's and COO's are made to pee in a cup every six months with 1-3 random checks in between.

 

[Nice Squirrel]

The OP title is mistaken. Prejudice harms African Americans. The applicants are the exact same people seeking the job. Their credit or drug use is whatever it is, it is the prejudice that leds to non-employment.

The credit checks and the drug tests serve to reduce prejudice. Therefore, banning them allows prejudice to thrive more then it otherwise would and is thus harmful to african americans. The OP title is accurate.

Credit checks tell nothing about the performance or personality of the individual. People can get into credit traps without being irresponsible. Preventing them from getting employment can exacerbate it.

 

[Axulus]

The credit checks and the drug tests serve to reduce prejudice. Therefore, banning them allows prejudice to thrive more then it otherwise would and is thus harmful to african americans. The OP title is accurate.

No. Just no.

But I will buy at least the sincerity of such articles, just as soon as CEO's CFO's and COO's are made to pee in a cup every six months with 1-3 random checks in between.

You don't believe African Americans with good credit records and no drug problems having more difficulty finding a job harms them?

 

[Axulus]

The credit checks and the drug tests serve to reduce prejudice. Therefore, banning them allows prejudice to thrive more then it otherwise would and is thus harmful to african americans. The OP title is accurate.

Credit checks tell nothing about the performance or personality of the individual. People can get into credit traps without being irresponsible. Preventing them from getting employment can exacerbate it.

Yes and no. Apparently it is used as a lazy way to narrow the applicant pool. African American's have improved odds after that is done. However, not every employer does them and not every employer automatically throws out someone who has poor credit, so it doesn't prevent them from getting a job. Just makes it harder.

 

[laughing dog]

The credit checks and the drug tests serve to reduce prejudice.

The cited articles indicate that those check and tests may have reduced the directly observable effects, but that does not mean the prejudice was reduced. If credit checks and drug tests reduce prejudice, then there would be not sliding back when those checks and tests are banned.

 

[Axulus]

The credit checks and the drug tests serve to reduce prejudice.

The cited articles indicate that those check and tests may have reduced the directly observable effects, but that does not mean the prejudice was reduced. If credit checks and drug tests reduce prejudice, then there would be not sliding back when those checks and tests are banned.

Why wouldn't there be sliding back? It is information that helps employers make a more objective, less biased decision on the quality and suitability of their black job applicants. Remove that source of information and their bias fills in the gaps.

 

[laughing dog]

The cited articles indicate that those check and tests may have reduced the directly observable effects, but that does not mean the prejudice was reduced. If credit checks and drug tests reduce prejudice, then there would be not sliding back when those checks and tests are banned.

Why wouldn't there be sliding back? It is information that helps employers make a more objective, less biased decision on the quality and suitability of their black job applicants. Remove that source of information and their bias takes over.

You agree that those checks and tests do not reduce bias. You agree that they reduce the possible effects of that bias. If the checks and tests reduced the bias, there would be no sliding back. Your posts conflate bias with the effects of the bias.

 

[coloradoatheist]

Why wouldn't there be sliding back? It is information that helps employers make a more objective, less biased decision on the quality and suitability of their black job applicants. Remove that source of information and their bias takes over.

You agree that those checks and tests do not reduce bias. You agree that they reduce the possible effects of that bias. If the checks and tests reduced the bias, there would be no sliding back. Your posts conflate bias with the effects of the bias.

Huh? If a hiring manager manager believes that blacks are financially worse off or drug addicts and they see from a test that they aren't, it doesn't reduce overall bias but it does reduce a bias against an individual. If they don't have a drug test/credit check then they will go back to their group bias.

 

[laughing dog]

You agree that those checks and tests do not reduce bias. You agree that they reduce the possible effects of that bias. If the checks and tests reduced the bias, there would be no sliding back. Your posts conflate bias with the effects of the bias.

Huh? If a hiring manager manager believes that blacks are financially worse off or drug addicts and they see from a test that they aren't, it doesn't reduce overall bias but it does reduce a bias against an individual. If they don't have a drug test/credit check then they will go back to their group bias.

Then obviously the group bias was not reduced. If it had been, then there would not be there to return to.

 

[coloradoatheist]

The OP title is mistaken. Prejudice harms African Americans. The applicants are the exact same people seeking the job. Their credit or drug use is whatever it is, it is the prejudice that leds to non-employment.

Are you saying that only blacks have low credit scores?

- - - Updated - - -

Huh? If a hiring manager manager believes that blacks are financially worse off or drug addicts and they see from a test that they aren't, it doesn't reduce overall bias but it does reduce a bias against an individual. If they don't have a drug test/credit check then they will go back to their group bias.

Then obviously the group bias was not reduced. If it had been, then there would not be there to return to.

The group bias wasn't reduced, the individual bias was reduced.

 

[laughing dog]

The group bias wasn't reduced, the individual bias was reduced.

You need to make a distinction that 1) makes a difference, and 2) makes sense.

 

[AthenaAwakened]

No. Just no.

But I will buy at least the sincerity of such articles, just as soon as CEO's CFO's and COO's are made to pee in a cup every six months with 1-3 random checks in between.

You don't believe African Americans with good credit records and no drug problems having more difficulty finding a job harms them?

I know that AA with good credit, bad credit, or no credit have difficulty finding jobs because of the beliefs of others about AA. I know this because I deal with incompetent, inept, and incorrigible white folk in jobs they can't do all the time and yet they have the jobs. Black people with graduate degrees, no late payments and clean pee are wearing out shoe leather looking for the jobs they are trained for while holding down 2 and 3 jobs will beneath their credential so that they don't get any late payments and they aren't tempted to foul their urine.

And I will tell you something else about AA, we know the difference between a reason and a rationalization and we know bullshit when we read it.

White people do know the rest of us see y'all, right?

 

[Loren Pechtel]

And also:

A powerful study published last year in the Review of Economics and Statistics shows something of the opposite happening: When employers began to require drug tests for job applicants, they started hiring more African-Americans.

“The likely explanation for these findings is that prior to drug testing, employers overestimated African-Americans' drug use relative to whites,” the study’s author explained in an op-ed. Drug tests allowed black job applicants to disprove the incorrect perception that they were addicts.

It’s possible that credit checks were playing a similar role to drug tests, offering a counterbalance to inherent biases or assumptions about black job-seekers. In the absence of that information, employers had to rely more on other clues about the quality of applicants, including their education and experience levels, but also, perhaps, their interview skills or their recommendations. Whatever the new criteria were, they seem to have put black applicants at a disadvantage.

https://www.washingtonpost.com/news...ation-but-it-made-hiring-more-racially-biased

It doesn't require employers to overestimate black drug use to get this effect.

Employers are interested in hiring the best employees they can find. Things like drug tests let them single out the actual drug users so they no longer have a reason to avoid those they suspect might be drug users--they can test and find out.

The more accurate the measuring tools employers have the less likely they are to reject those who share attributes with the undesirable ones.

The problem with a credit rating as a measure of what an employee is like is that it doesn't take into consideration the economy. In good times a poor credit rating is a fair indication of a lack of being careful. In the recent economy it could simply be an indication of sufficient bad luck.

Likewise, the issue of current employment status. Again, in good times that was a good yardstick but not anymore.

- - - Updated - - -

The OP title is mistaken. Prejudice harms African Americans. The applicants are the exact same people seeking the job. Their credit or drug use is whatever it is, it is the prejudice that leds to non-employment.

The thing is the employers are making a rational decision, not a racist one. Barrel A has 5 bad apples. Barrel B has 10. If you can't inspect an apple to see if it's bad which barrel are you going to choose from?

 

[Loren Pechtel]

The credit checks and the drug tests serve to reduce prejudice. Therefore, banning them allows prejudice to thrive more then it otherwise would and is thus harmful to african americans. The OP title is accurate.

No. Just no.

But I will buy at least the sincerity of such articles, just as soon as CEO's CFO's and COO's are made to pee in a cup every six months with 1-3 random checks in between.

Actually, there's a good argument for pre-employment drug testing--it separates the casual user (who can abstain if he knows there's a test coming up--say, because he's job hunting) from the addict (who can't abstain even if he knows there's a test coming.)

The casual user is probably fine to hire, you don't want the addict.

 

[whichphilosophy]

And also:

A powerful study published last year in the Review of Economics and Statistics shows something of the opposite happening: When employers began to require drug tests for job applicants, they started hiring more African-Americans.

“The likely explanation for these findings is that prior to drug testing, employers overestimated African-Americans' drug use relative to whites,” the study’s author explained in an op-ed. Drug tests allowed black job applicants to disprove the incorrect perception that they were addicts.

It’s possible that credit checks were playing a similar role to drug tests, offering a counterbalance to inherent biases or assumptions about black job-seekers. In the absence of that information, employers had to rely more on other clues about the quality of applicants, including their education and experience levels, but also, perhaps, their interview skills or their recommendations. Whatever the new criteria were, they seem to have put black applicants at a disadvantage.

https://www.washingtonpost.com/news...ation-but-it-made-hiring-more-racially-biased

Why should the credit rating of an employee be the business of any employer? It's perhaps because some idiots AKA human resources who rarely understand the job description want to find something to do. Is this perhaps to see if the person is financially hard up so he can be offered less money? I can't think of any reason. There is nothing to show a person with bad credit will make a risky employee.

 

[coloradoatheist]

The group bias wasn't reduced, the individual bias was reduced.

You need to make a distinction that 1) makes a difference, and 2) makes sense.

So a person can have a bias against all blacks that they think they are lazy and addicted to drugs. That's a general bias. If the same person finds out one member of that group isn't either one of them, then their individual bias will go down but they can still think blacks are lazy and addicted to drugs.