Credit as an Effective Barrier to Employment & Tax Incentives for the Protracted Unemployed
A feast is made for laughter, and wine maketh merry: but money answereth all things.
IMPACT OF BAD CREDIT ON THE UNEMPLOYED JOB SEEKER
The concept of credit and creditworthiness as applied to individuals in modern society is a misnomer and oxymoron for there is no such thing as good credit, all credit is bad in that credit is a legally binding financial obligation and hence a liability that must be repaid at some point in time. Consumer credit fueled much of the growth in the U.S. economy over the past 40 years. What is often not mentioned is that it also creates an unending cycle and loop of financial data that when accumulated outside of its relationship to basic economic values of a convertible or performing asset undermines economic stability in the financial system, especially when applied to households and individuals where the buck stops in the modern economic order.
A term coined by some theorists to express this new social phenomenon is credit inflation, i.e., the growth and expansion of money supply beyond it relationship to anything of real value in the economy that can be used to set a base or floor for economic exchange.
In this sense, you can't use credit to define credit or creditworthiness, which is commonly done in financial system for households and individuals, which much of the world has adopted at face value without question, reason or compromise.
In this regard, credit must always be defined by something else which usually is a derivative of real convertible assets, net performing assets, equity, liquidity or the number of yellow stones in a river that creates a channel, shaft or vessel for the energy of monetary currency to flow.
When you use credit (i.e., one's ability to obtain and manage a liability under the false assumption that most people do not want to pay their bills or if given an option will not pay their bills on time) to define credit or creditworthiness, as is often done for households and individuals, you get a loop or feedback in financial information that produces chaos and nonsense since it is the form and substance of an element attempting to define itself by itself and not by relating itself to something else that is of real or measurable value, such as an asset, that can provide a reflection of what constitutes its relative value that may serve as a barometer of its true worth.
In this regard, all values of money and monetary assets that are built on credit systems, that is a system of blind trust with nothing substantial to support it other than the fractional reserve of the banking system deposited with the Federal Reserve, are essentially a Ponzi scheme or deck of cards; the slightest wind will blow the whole stack down as we experienced in the 2008 and 2009 credit crisis.
The common mistaken idea of the current financial practice that one needs credit to establish good credit for households and the individual is the biggest fallacy in economic thought that has invaded and clouded the imagination of modern economic thinkers in the 21st Century serving as social indicators of moral and intellectual self illusion that promotes slackness, regression and eventually to destruction and decay, which Pluto's transit of Capricorn shall reform over the next 15 years from 2008-2024.
This mysterious social phenomenon of credit being used to define credit with no relationship to real assets or earnings has had a deep impact on the U.S. and global economy.
Of equal intellectual and economic embarrassment is the modern banking idea that one needs to have good credit in order to get a job, and that bad credit is legal grounds for job denial. In this regard, credit has become an electronic means of not only profiling the household and individual, but it has been socially elevated to define an individual's personal character as shown in the "Release to Procure a Consumer Credit Report" below:
Most employers in the United States require that job seekers provide authorization to obtain a consumer credit report that may include an investigative consumer report before considering a job seekers' application for any job in the country. An example taken from a typical employer's job application form, which can be found on many job websites, reads as follows:
[INVOLUNTARY] RELEASE TO PROCURE A CONSUMER CREDIT REPORT
I have read the "Notice to Applicant or Employee of Intent to Obtain Consumer Credit Report" attached to this job application form.
I understand that I have the right to decline authorization for [THIS EMPLOYER] to procure a consumer credit report (including without limitation, an investigative consumer report) concerning me [the job seeker]. However, I also understand that should I so decline, [THIS EMPLOYER] may not longer consider me for employment.
[This means that the job seeker never had the right to refuse giving authorization to the employer to obtain a consumer credit report since that would not be in the best interest of the job seeker. Hence, the job seekers' authorization is involuntarily sought and obtained by the employer through overwhelming social and economic coercion.]
I understand that the consumer report may contain information concerning my: credit, credit worthiness credit standing, general reputation, personal characteristics, mode of living [WHICH IS NEVER DEFINED BY BIG BROTHER GOVERNMENT], and/or criminal background. This information may be gathered from my current and former employers, any educational institutions I have attended, and public agencies, as well as from personal interviews with my neighbors, friends, associates and acquaintances or other persons who may have such knowledge on me.
I authorize [THIS EMPLOYER], its affiliates subsidiaries or agents to procure a consumer credit report both now and at anytime during my employment without my further permission or knowledge.
In addition, I hereby authorize any persons contacted by [THIS EMPLOYER] and/or any consumer reporting agency it retains to release any and all pertinent information concerning me that they have, including the results of any attitude or character assessment questionnaires that I may have completed in relationship with other job applications, personal or otherwise, and release all such persons who in good faith release such information from liability for any damages that may result there from. A photocopy or fax of this authorization is as valid as the original.
Finally, I understand that [THIS EMPLOYER] has no legal obligation and will not share or provide copies of the consumer credit report or other personal or character forming information that is collected about me now or in the future whenever additional consumer and investigative consumer reports are obtained on me.
In other words, in the financial and employment worlds, a person with bad credit is automatically assumed by most employers to be of poor social and moral character and will find it very difficult to find a job in the United States even at the lowest levels of employment.
Make no mistake about it, if you have bad credit in the United States, you will be socially castrated and eliminated in the job market place with respect to job decision making and will be legally denied employment depending on how bad your credit is.
Decades of out of control healthcare costs is one of the reason some people develop bad credit forcing them to file bankruptcy. Other reasons include life changes such as the loss of one income through divorce and other social maladies. When an employer discriminates against a job seeker based on his or her credit score, worthiness, standing or history as is often done when employers request a job seeker's authorization to obtain a consumer report, it makes it more difficult for that family, individual or person to get a job and contribute as a productive member of society.
Instead of increasing individual freedom and liberty under the constitution, Big Brother government tacitly allows employers to discriminate against job seekers based on credit thereby punishing those members of society who are having difficulty finding a job in a hostile market place. The impact is to increase the unemployment rate, reduce consumer spending and decrease economic growth.
The impact on the unemployed can be devastating, driving some people into a permanent state of homelessness. The U.S. government don't need to provide Columbia, Yale and Harvard with a $5 million grant and wait 5 years to know that this is happening in the country every single day of the year.
But the point that needs to be made is that consumer credit for the most part is negative money in that it does not exist in any real form that can be positively related to a tangible substance such as assets, sustainable earnings or valuable possessions or collateral, especially when applied to households and individuals and for this reason should never influence or have an impact on an individual getting a job in the local or global economy, but it does, in a major and significant way, especially after 9-11.
The idea established by the modern banking system that one needs to establish good credit by borrowing and paying back the liability over time in order to get a job is ludicrous and has no social, moral or religious basis in modern economic thought.
When you deny an individual a job based on his or her credit score or profile, you not only maintain the unemployment rate at very high levels, you also reduce economic growth and consumer spending as well. And if that is the case, why is it done and accepted by the justice department and law makers in Washington, DC if for no other reason than the banks have gotten away with it for the past 40 years.
It is time for Congress to recognize that the system of job discrimination through the procurement of consumer credit reports and other character assessment techniques are invasive and must be reversed because they affect many Americans, including African- and Latin Americans. Congress should do whatever it can to increase job creation in these difficult financial times. Outlawing the practice of job discrimination through credit profiling is one way to help people find employment.
TAX INCENTIVE TO EMPLOYERS TO HELP REDUCE THE UNEMPLOYMENT RATE
The U.S. Congress should go further and commission a thorough review of social and legal barriers and impediments to employment in the modern economy including credit.
Congress should provide tax incentives to encourage employers to hire the unemployed job seeker over hiring those who already have a job with another firm in order to put people who are unemployed back to work at a faster rate than would otherwise occur.
In this regard, Congress should consider giving tax credits to employers who hire job seekers who are on the unemployment line but have not found a jo over a protracted period of six-months or more. This would help change employer psychology who often prefer to hire those who are currently employed, often leaving the protracted unemployed to spiral out of control into an abyss of increasing hopelessness without adequate aid or assistance from state and federal labor authorities, when it is often the state of the economy caused or explosive economic dramas such as 9-11, Katrina or the 2008-09 credit crisis that may be responsible for job seekers prolonged period of unemployment. The tax credit may be structured as 10% of federal taxes paid by the protracted unemployed period for every six months that the employer keeps that newly hired protracted unemployed person on the job a for a maximum period of two years. This incentive would help take people off the unemployment line and boost consumer spending and economic growth. This presents a win-win solution that has a positive net economic benefit to the economy by increasing government revenues in the short term.
Congress should disallow job discrimination based on credit and provide positive tax incentives to encourage employers to hire the progressively and hopelessly unemployed.
Business Affairs Unit - Copyright © 2009
First Posted: August 31, 2009. Updated: October 20, 2009