Credit reports were developed to help lenders assess the risks associated with making a loan. Over the last few years, they have been aggressively marketed to employers as a means to gauge an applicant’s character or likelihood to commit theft or fraud. Yet there is no proven link between personal credit reports and criminal behavior or performance of a specific job. A spokesperson for TransUnion, one of the major credit reporting companies, admitted in 2010: “We don’t have any research to show any statistical correlation between what’s in somebody’s credit report and their job performance or their likelihood to commit fraud.”
We could keep paying UI checks. But we’re not going to do that. And we’re not going to do relocation assistance. And we’re not going to do direct hiring and public works. We’re going to do nothing. We’re going to tell people to go out and look for work, even though employers looking to hire can still afford to be very choosy and generally refuse to even consider the long-term unemployed as job applicants. The country failed these people first by letting the labor market stay so slack for so long that they became unhirable, and now we’re going to fail them again.
When the history books of the Great Recession are written, there will be chapters and chapters about how a sclerotic and dysfunctional system of governance allowed a short-term aggregate demand shock to rot into a serious structural problem. The question now is whether Congress will let the wounded country keep staggering forward, or keep making things worse until the system completely breaks down.