TRENTON — Frederick Reid wonders if he’s stuck in a vicious cycle. The 45-year-old forklift driver from Ewing has been unemployed for the better part of six years. Reid said he desperately wants a job, but employers often require credit checks. When they don’t hire him, he wonders whether the debt he’s racked up on several credit cards and unpaid...
TRENTON — Frederick Reid wonders if he’s stuck in a vicious cycle.
The 45-year-old forklift driver from Ewing has been unemployed for the better part of six years. Reid said he desperately wants a job, but employers often require credit checks. When they don’t hire him, he wonders whether the debt he’s racked up on several credit cards and unpaid medical bills have hurt his prospects.
"With the credit history that I’ve got, it is pretty bad," Reid said.
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Clik here to view.Sen. Shirley Turner, who supports a bill that would limit employers' ability to do credit checks. He had hoped proposed legislation that would limit companies’ ability to perform credit checks would help people like him in New Jersey, where the unemployment rate is 9.8 percent.
"I guess the people didn’t win," said Sen. Shirley Turner (D-Mercer), a strong supporter. Turner later said she would keep pushing for the bill, which is similar to measures proposed in state capitals across the country.
The legislation would allow credit checks for prospective managers involved in finances or employees with access to sensitive personal financial information.
Businesses say the credit check — which does not include a credit score — is an important tool but only one way to evaluate applicants.
"Companies ... are not fishing for reasons to disqualify a prospective employee, but rather are doing their due diligence to ensure that they are not putting their business interests at risk," said Dominick DiRocco of the New Jersey Business and Industry Association.
The credit checks are "proven predictors of risk," said Eric Ellman, a vice president at the Consumer Data Industry Association, a Washington, D.C., trade group for credit reporting agencies. "Employers should not throw caution to the wind when hiring people."
Most employees who steal from their companies are first-time offenders, and financial problems are common among those caught stealing, according to a 2008 study by the Association of Certified Fraud Examiners, a training and education group based in Austin, Texas. In the cases studied, about 22 percent of victimized employers had conducted credit checks. The group said it would be "advisable" for more companies to run credit checks.
Consumer advocates, though, question what companies can glean from credit checks. The financial snapshot might show that an unemployed person has fallen behind on credit card, mortgage or car payments — but say nothing about customer-service approach, loyalty, or technical or other skills.
"That’s really what should be the main consideration when somebody gets hired: Can they do the job?" said Phyllis Salowe-Kaye, the executive director of the advocacy group New Jersey Citizen Action. "It puts people in this Catch-22. They can’t clean up their credit, or they can’t get out of debt, or they can’t save their home if they can’t get a job."
Sixty percent of employers surveyed by the Society for Human Resources Management, an Alexandria, Va., trade group for human resources workers, conducted credit checks on at least some applicants.
As of April 15, three states had passed laws similar to the one proposed in New Jersey, while bills had been introduced in 20 states, according to the National Conference of State Legislatures in Washington, D.C.
"One thing, I guess, would help is if we had some legislators who were unemployed," Turner said. "We’d be a little more sympathetic to this kind of requirement."
Lisa Fleisher contributed to this report.