║This is the fifth and final segment in this mini-series on minimum wage, living wages, the middle class, and taxes that I started this year, beginning on 7 January 2014.║

So, we’ve decided (OK, Congress did) that providing long-term unemployment makes folks lazy.  That providing benefits to those unemployed for more than 6 months means they would prefer to take $ 200 a week instead of  a job that would pay at least twice that much (which is what minimum wage provides).

Whether or not you agree with that premise (ok, REALLY?  You think that’s true????) is immaterial to the real facts.  Because the real facts are employers prefer- almost to 100%- to hire someone who already has a job than to hire someone who is unemployed.  So, given that fact, how would you expect the unemployed to get a job?

(Oh, wait, Congress is reconsidering providing long-term unemployment benefits today.  Not because they don’t think it makes them lazy.  But, it finally recognized that providing the unemployment benefits when there are NO jobs to be had is critical- and it also helps the economy in general.)

And, then we get to another fact.  Sometime in the past decade, employers decided they have the right to check the credit of potential (and current) employees.  First of all, the fact that the checking process itself dings one’s credit rating is immaterial to these potential employers. After all, this person wants a job, s/he should just accept the penalty- as part of the process.

But, let’s consider the real process.   Joe- or Tina- is looking for a job.  S/he is unemployed right now.  Which means the wages dropped from $ 70,000 (middle class), or $ 40,000 (working poor)  or even $ 20,000 (minimum wage) to ZERO.  Oh, sure, they get unemployment for the first 26 weeks or so.  But, we have 30 to 35% of the unemployed that have been so for a year or more.  Thanks to the effects of the “Great Recession” (which really was the “Middling Depression”).

What do you think happens to someone’s credit rating when they become unemployed?  Do you think they are able to pay their mortgage (the $70K) guy on time?  Do you think they are paying their bills on time (all of them)?   Do you think they were late for a car payment (the $ 20K person)?  Really?

So, their credit rating is now lower than it was before- in the 500 range.  You can understand that these folks would be poor credit risks for a new car loan or to buy a house.  But, do you think losing your job because a politician decided to cut 2000 teaching jobs to save money or Xerox decided to cut 5000 jobs means this newly unemployed person did something on his/her own accord that made them a “bad person”?  Of course, not.

Losing one’s job means you had a substantial change in income.  And, if you were making $70K a year and now subsist on unemployment (about $ 300 a week in Virginia), how do you pay your mortgage?  How do you pay your utilities on time?  You juggle all your bills doing the best you can- and keep scrambling to find another job.  And, that drop in credit rating does not change immediately when you get a new job- it takes a year or two for it to return to the levels you had when you were working.  So, it’s a long term issue for the unemployed- or even the recently re-employed.

If you had a job that required a security clearance before- and when the government shut down you were laid off- or in 2009 when companies laid off slews of folks- you became unemployed.  And, your credit rating dropped- because you were unemployed AND because you really were unable to pay your bills.  And, now you probably can’t get a security clearance anymore- because your credit rating is critical to getting that clearance.  While you probably are not a security risk if you get a new job, it is a much tougher decision for those types of positions.

But, not for telephone technical support or selling frozen yoghurt!  Yup.  About 1 in 10 Americans looking for jobs in these highly secure positions (sic) were refused jobs because of poor credit.  Which in many cases was the result of their failure to maintain health insurance or having significant medical debt.

Which is why credit checks need to be removed from the arsenal of employers.  Who had no right to pull one in the first place!   Oh, I know the Fair Credit Reporting Act gave businesses the right to verify credit- but it was intended that be used primarily for those with fiduciary (money-handling) positions until around 2008- when it became de rigueur to employ for every applicant.  (About 10 states have outlawed the practice since 2010.)

And, don’t think this is just private employers.  No, even the Virginia State Liquor Board has refused to hire someone who had been in the middle-middle class (a software engineer) before he was laid off because of a poor credit rating.  (There are many other cases- and many, many other state and local agencies using such practices.)  Because he was unemployed and unable to pay his bills on time.  (This has happened a lot- but I am only this case because I only use facts I can prove.)

If sentient beings exist in Congress (is that akin to pigs flying?) a new Senate bill that would outlaw the practice (credit checks for employees in non-fiduciary positions) will pass both the Senate and the House real soon.  (Well, given that only 60 bills were passed last year, maybe not… And, Representative Steve Cohen tried to have a similar bill pass in 2011- and got absolutely nowhere.)

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