As an owner, I don't know why the finances of my employee should be any of my business. Even in assessing credit worthiness, there are plenty of flaws with the current system.

National security reasons if you're a government or contractor, and likewise financial security reasons if you're a corporation.

The former is valid, the latter I disagree with strongly. Specifically...

  Too bad.

There are costs and risks in employment and employees are exposed to lots of risks that can result in health issues, sudden termination (layoff) and a myriad of other problems, the slight risk an employer accepts when hiring new employees and investing in training absolutely can be offset by insurance (employers can get targeted insurance against key personnel departures and against sudden wave departures). So... too bad. Violating this layer of privacy yields nearly no business benefit and costs sanity.

Well, I'm all for saying it should be none of your business (in the general case) after considering that there are reasons that contribute to the case that it might be, and dismissing them. But insurance is a weak argument. Ultimately that means people fit for employment pay for others' incompetence and malfeasance.

I mean, this is a thing that happens. The malfeasance is pretty indefensible, but if you start talking about the employ-ability (or lack thereof) of people judged "incompetent" then we're going to start walking down a really dark path. It'd be nice if everyone was the perfect employee but some people have short tempers and some people are a bit less efficient than others - should these people (if they enjoy and are trained in software development) be unable to find employment because they fall short of a standard?

If so, how should they support themselves? Is it right and just to relegate everyone you judge incompetent (due to training or innate ability) as ineligible to work? There are obviously extremes here that we, as a society, accept - but if we raise that bar and make it more precise with big data some really scary social effects will come out of the woodwork.

Personally, I'm in the camp that we need to shift the morality and realism of working so that everyone has the safety net of a UBI to fallback on in desperate times because I am reading the tea leaves and fewer and fewer people have more and more control of the economy.

It is right that people judged incompetent are free to work for anybody that wants to pay them or judge them differently. They might just want to get their gambling debts in order before being CFO or holding the keys to Gmail.

Edit: Also, the more you know about candidates, the less risky it is to hire them. This generally makes it easier for people to get jobs.

Is it typically free to invoke that insurance? Typically my driving insurance goes up if I make a claim. (Assuming someone stealing from you is not your fault)

To the contrary, commercial insurance is often written to explicitly factor in the amount of claims that occur during the policy term, e.g. using retrospective rating[0]. Additionally, commercial underwriters typically have much more legal latitude in what they can consider when deciding whether—and for how much—to offer a policy contract: all states in the US have very strict rules about which sorts of claims can be considered when determining home and auto insurance rates for individuals (e.g. not-at-fault accidents and certain classes of weather damage are typically excluded)[1].

That being said, the brunt of the risk associated with a hiring decision lies with the employee in most situations (certainly in all the ones I’ve encountered personally working in retail and as a white-collar professional) in the US, and I would have to see some pretty startling numbers for an implied increase in insurance premiums to get anywhere near tipping that balance.

[0] https://en.m.wikipedia.org/wiki/Retrospectively_rated_insura... [1] NB I’m only familiar with US insurance regulation, so perhaps things work differently in other countries.

I can't answer this with confidence, I suspect it would go up if you made a claim similar to other insurances. Though car insurance is a weird racket so business interruption insurances may not be able to get away with it.

> Though car insurance is a weird racket

Ha, I don't think I agree with you on the topic at hand, but this is something I'll get behind.

I've really never understood the point of using credit scores when hiring.

I completely understand it when making decisions on actually loaning money, leasing agreement, etc...

If you're hiring someone who would have access to valuable information that could be sold, who would have information before the market, or who could potentially be paid to sabotage the company, it's important to ensure the candidate has good credit so they're less likely to do those things, since they at least wouldn't feel a financial pressure to do so and would only do it out of greed.

Credit scores aren't an indicator for morals. Do you really have so much faith in the current credit system that you'd be willing to turn someone from a job they're otherwise qualified. The argument could be totally flipped on it's head. It's important to hire someone with a bad credit score (using it as a measure of wealth apparently) because they will value their job more and not do anything to risk losing it.

I didn't say credit scores are an indicator for morals or wealth, or that they're a system I support. But bad debt is a possible incentive to act against your employer's interest that can be controlled against by using credit score as proxy for knowing their exact financials. I'm not saying that's fair, or good, just that that's the thought process behind it.

Is there direct evidence this is true or is it just a "common sense" thing that makes sense but might very well be false?

Do you mean evidence as to whether people with lower credit are likely to do such things against the company's interest? If so, I'm not sure. I just know it's something that is considered for govt purposes re: security clearances and that logic seems to carry over to private sector.

Before I or others go looking for such, what would you consider an acceptable standard of direct evidence?

I honestly don't have an opinion on it. It just seems something that's repeated and accepted often and I'm being skeptical is all.

I will probably look into it myself too! So whatever you can add to the discussion is great :)

I feel like "compensate them appropriately" should be the actual solution to this problem.....

There are real enforceable legal salves you can take for these purposes included targeted NDAs (as opposed to the less enforceable "Don't talk about our stuff") that makes it really easy to prove wrong doings - additionally there are forms of business insurance out there to cover the short term sudden costs of corporate espionage/sabotage.

Basically, trusting in the person to be trustworthy because equifax is giving you a big thumbs up with a stupid grin on their face is a stupid idea. Just set up protections for your company, properly utilize the practice of minimum access and call it a day.

Me neither. I've never understood why it isn't illegal.

I'm not so sure that saying the concept of a credit score is racist is quite the same as saying credit scores perpetuate and reflect racial injustice/inequalities.

Moreover, the article you cited isn't simply making moral claims, but specific examples. In addition, there is a well documented history of racial discrimination within the financial sector (see the Fair Housing Act).

A credit score is not racist because racism implies intent, however credit scores do disproportionately discriminate based on race and thus should not be used for hiring.

Consider the fact that to access any form of credit, and thus a credit score requires a bank account. When you consider the racial disparities between those who are un-banked or under banked it's clear that a credit score disproportionately affects certain communities.

Not only that, but credit ratings in general can be incredibly flawed. Many institutions had their bonds downgraded by the large credit rating agencies after the financial crisis simply due to the fact that balanced sheets were scrutinized more closely due to all the public outrage.

ALL else being equal? I'd flip a coin. Because if all else is equal, the credit score (that indicates past interactions) isn't predictive of future outcomes.

If we're assuming conscientiousness and intelligence aren't equal across these workers, that's a different story. In which case, it depends on particulars; I might take the one with the lower credit score because they've demonstrated willingness to take risks.

But really, the issue is that credit score is a lousy predictor of work performance. I have no reason to believe it's actually correlated.

>>The insidious notion that our credit history speaks to our reliability as human beings is largely taken for granted.

That's literally what a credit score is. A record of (financial) reliability.

What an article