How Elizabeth Warren's Privacy Rules Will Fight the Corporate Snoops
This week Sen. Elizabeth Warren and six colleagues introduced the Equal Employment for All Act, which would make it illegal for employers to disqualify job applicants based on their credit scores. It's an admirable and important bill which deserves our support. It also gives us an opportunity to have a broader discussion about the kind of society we hope to become.
Here are six reasons to support a bill which will help all of us in the end:
1. It aids the long-term unemployed.
Long-term unemployment is at historically high levels in this country, and policymakers have done far too little for this hard-hit group of Americans. They have experienced the ongoing loss of their way of life - often accompanied by the loss of their homes, their belongings, and their sense of self-worth.
Long-term unemployment is almost always accompanied by unpaid bills, which drastically lower a person's credit score. Today that lower credit score can render a person unemployable, leading to the kinds of heartbreaking stories described in a New York Times article on the subject earlier this year.
Instead of alleviating the problem of long-term unemployment, the use of credit scores in hiring makes it worse. On a societal level, that's indefensible. And on an individual level, it's inhumane.
2. It begins to right a terrible injustice.
One of the great injustices of the past five years is the way that Wall Street, whose fraud caused the current economic crisis, still holds enormous power over its victims.
We've seen that injustice played out in continued foreclosures, as banks evict families because their homes are worth less than the outstanding mortgage loan - thanks to the banks who created a housing bubble - and because many homeowners are unable to find adequate work as a result of the bank-created jobs recession.
We've seen that injustice reflected in credit card debt and other loans, whose costs have soared as the result of overly complicated contracts with hidden provisions.
And we see that injustice in the spectacle of Americans who are unable to find work as the result of foreclosures, soaring borrowing costs - and a credit-scoring system created for the banks.
This bill begins to end that pattern of injustice, by ending at least one of these practices. It's a start.
3. It also begins to level the playing field between Wall Street and ordinary Americans.
Financial institutions enjoy extraordinary, even unprecedented power over individual Americans. A consumer's relationship with a bank is no longer even the semblance of a contract between autonomous equals. It's an asymmetrical relationship in which one party - the bank - can unilaterally change the terms of the agreement, in many cases leaving the consumer with no recourse.
Sen. Warren's brainchild, the Consumer Financial Protection Bureau, goes a long way towards leveling this relationship. But financial institutions and other corporations still hold excessive power over individuals. One of their most powerful tools is the credit score.
The greatest tool consumers have against corporations and banks is, or should be, the ability to withhold payment when a contract isn't honored. But a bad credit score hurts consumers in a number of ways. It makes it harder for them to find housing, it makes borrowing more expensive, and many consumers understand that it will make it harder for them to find a job - whether they are searching for one now, or (like most Americans) consider it likely that they'll be looking for one at some point in the future.
Because of this leverage, many people are forced to passively accept injustices from misbehaving corporations. If they withhold payment, even in cases where a product was defective or services not rendered, they may find themselves unemployable.