Credit Checks as an Unlawful Practice

A friend of mine who is getting an MBA asked me the other day if he should be worried about credit checks from prospective employers once he graduates.  My friend has terrible credit, a result of a failed business he had in which he invested his own funds.  I'd like to tell him not to worry, but in this day and age of limited privacy, most employers insist on reviewing your credit prior to hire.

Under the Fair Credit Reporting Act, an employer is entitled to run background checks and credit checks if you sign an authorization.  Given the fact that an applicant isn't going to get the job unless she signs, most everyone signs the authorization. 

The argument in favor of credit checks is that someone with a bad credit history, or with lots of debt, may be tempted to steal or embezzle.  Assuming this is true -- and it seems dubious to me -- there are very few jobs these days that give employees unfettered access to cash.

Because of the tenuous link to employment, the Equal Employment Opportunity Commission is holding public hearings to discuss whether the use of credit history has a disparate impact on minorities and women.  Employment practices that have a disparate impact on protected groups are illegal unless they can be shown to be consistent with business necessity.  So, for example, requiring applicants at McDonalds to hold a college degree would be illegal because it would have a disparate impact on some minority groups, and there is no business reason for such a test.

Since some minority groups have lower credit scores than the general population, disqualifying applicants from employment based on a credit check has a disparate impact.  The question then becomes whether the tests are predictive of performance, or trustworthiness, and therefore are consistent with business necessity.  Proponents of checks say yes, while opponents say there is no correlation. 

Using credit checks as a blunt tool can't really be justified in my opinion, though it might be useful in certain contexts.  Dr. Michael Aamodt, an industrial psychologist, testified at the EEOC hearing that there is not much  research validating credit checks in the employment context.  Aamodt concluded that an applicant’s credit history should be considered only within the context of a thorough background check.

When my friend asked about background checks, I told him that he shouldn't worry, because in the corporate context he would be able to explain how his credit history turned south.  I'd like to think that a prospective employer would listen and take his explanation into account.  In this economy, however, I'm not so sure.

Pat Toomey's Policies for the Poor

This is rich, coming from the campaign of the candidate who wants to raise the retirement age, abolish Social Security and privatize it, opposes the National Labor Relations Act (or at least any NLRA reforms), opposed any form of health care reform, thinks that wealthiest one percent of Americans should pay the same tax rate as the poorest:

Unions "support Sestak because he has the same policies they have, because he supports empowering union bosses at the expense of workers,” said Nachama Soloveichik, Mr. Toomey’s spokeswoman.


Yeah, that's it.  Favoring policies that help working people doesn't help them.  It only helps "union bosses," whoever they are.  The solution to helping workers must be making sure they work longer, shifting the risk to them of their pensions, making sure they can't afford health care, and making sure that those with the most money pay the least proportional taxes.


These are just a few of the reasons why it's important to vote.

Vive le France

During the war in Iraq "France" became synonomous with "wimp" due to the French government's refusal to participate in the war.  Remember "freedom fries?"  It's  hard to reconcile the notion of a nation of wimps with the widespread strikes and protests against the French President's proposal to raise the minimum retirement age from 60 to 62.  We should be so wimpy.

Since September 7, when President Sarkozy announced plans to raise the retirement age, millions have taken to the streets in protest against the measure.  Trade unions organized the protests, and strikes shut down key industries in transportation, gas, trash, and other services.  Unions estimate the number of people involved in the general strike at 3.5 million, with govenment estimates at 1.2 million.  In a country of 62 million, those are huge numbers.  And, according to some polls, more than 70% of French citizens support the strikers.

Compare that to our own situation.  The age at which a person can receive a full retirement benefit from Social Security has gone from 65 to 66, and increases by two months a year until 2022, when the retirement age will be 67.  There were no protests, or even a political price to be paid for raising the retirement age.  And now the next potential Republican leader of the House is endorsing raising the age to 70.  Again, no political price to pay.

I'll save my thoughts on the wisdom of raising the retirement age for Social Security for another day.  Suffice to say that I am opposed.  All the talk of the system's insolvency is overstated, and is really a proxy for eliminating the system altogether.  A quick summary of some of the reasons why it will not "go broke" can be found here. The point here is that on an issue that affects nearly every working American, there is surprisingly little opposition, and certainly no calls for marching in the street, when politicians propose gutting or making social security harder to get.

Despite the French public's protests, it is predicted that President Sarkozy will get his way and the French will have to wait until they turn 62 to retire.  However, with large majorities opposed to the proposal, Sarkozy is expected to lose big in the political arena.  The strikers may not have mobilized such that the policy will be changed, but they certainly rallied the public.

The only thing more difficult than getting workers to unite and strike in this country is getting the public behind the strike.  When SEPTA workers shut down trains in Philadelphia a few years ago, the public was on the side of management, not the workers.  Of course, it is difficult to get the public behind you when the benefits you are trying to preserve are benefits the public doesn't have.  But with social security, when normal retirement age is raised to 70 (which I expect it will), everyone under 70 loses out. Just don't expect a general strike, or even a political firestorm. 

A Tale of Two Union Elections

It is not news that union density in the private sector has declined from 25% in 1975 to 7.2% in 2009. At the same time, union density in the public sector increased from approximately 24% to 37% in 2009. There are many reasons for this, but one of the reasons is that union elections are (or were) rarely contested in the public sector. When employers let employees decide for themselves, rather than making threats of plant closure, not to mention threatening or actually firing employees, employees most of the time choose to unionize.

Two recent union drives illustrate the point. UFCW Local 1776 recently had two election drives that featured similar workforce demographics, similar size of bargaining unit, and similar geographics. In one campaign, the employer threatened to close the plant if the union won, hinted at deportation of immigrants, and ran a hard campaign. The union still won the election, though by a slim margin – and the employer is challenging the election through meritless challenges.

The other election took place at JBS meatpacking plant in Souderton. For this campaign, the union secured the employer’s agreement to be neutral during the election, and agree to a quick election. Employees voted overwhelmingly for the union by a margin of ten to one. As Local 1776 President Wendell Young, IV, pointed out, the outcome of the election “shows that when workers get a free and fair process, they choose union representation.”

Employers argue that they have to run anti-union campaigns so that workers have all the information they need to make an informed choice. I’ve always found this somewhat offensive and patronizing. Employees are perfectly capable, particularly in this day and age of the internet, to make their own choice; additionally, there are always at least some employees opposed to unions who make their views known.

I have more respect for employers who are at least honest and say the reason they want to defeat a union is because they don’t want a union interfering with the way they run a business.

In this era of declining union density, organizing more than a thousand workers at a plant counts as a major win. And the win is not only for the workers, it is also, as Mr. Young said, “better for everyone, workers, the company, and the larger community.”

Shifting The Cost of Health Care to You

One thing I never understood about the fierce opposition to health care reform is why someone would be against something that could help them financially.  Increasingly, employees are being forced to bear the cost of their own health insurance, as more and more companies lay the burden of increased premiums on their employees.

The Kaiser Family Foundation, in its 2010 Employer Health Benefits Survey reports that while the total jump in premiums last year was 3%, employee contributions rose 14%.  Workers are now paying, on average, $4,000 a year towards their health insurance.  According to the report, "since 2005, workers’ contributions to premiums have gone up 47 percent, while overall premiums rose 27 percent, wages increased 18 percent, and inflation rose 12 percent."  Additionally, many employers raised the deductible workers have to pay before they see any help from their employer.  Currently some 27% of workers have to pay for the first $1,000 for coverage before they receive anything from their health plans.

Given the dramatic increase in premium share, along with the low wage increases, many employees are worse off now than they were five years ago.  And, it isn't getting any better.  Employers know that in this economy they can force employees to accept worse coverage because many employees are afraid of losing even more.

By the 1940s, most industrialized nations had begun providing health care to its citizens.  In America, we ended up with employers providing that insurance, in part because wage caps during WWII led employers to give compensation to workers in other forms, such as health care benefits.  Employers are now reneging on their end of the bargain and, ironically, are also the loudest opponents of health care reform.

The massive shift in risk to employees for their health care and pensions has had no consequences for employers, corporations, and those who advocate for workers to bear the cost of benefits that employers used to provide.  Oddly, it has been Obama and those who want to protect pensions and enact reforms that would lower premiums that have been subject to the rage and fury of the Right.  I still can't help wondering though why a worker paying $4,000 a year for health insurance plan with high deductibles would buy into the rage.

A Featherman in City Hall?

Normally I wouldn't post a link to an op-ed article explaining why Philadelphia needs a Republican mayor.  But the author of the piece is my cousin, John Featherman, and he himself is running for mayor of Philadelphia as a Republican.  It's an extreme longshot -- the last time Philadelphia elected a Republican mayor was in 1952 -- but Sam Katz almost won as a Republican in 1999, so who knows?  Featherman makes the case for a GOP mayor here.