Wednesday, May 1, 2013

Discrimination Against the Unemployed

A case can be made that chronic unemployment is the biggest problem facing both the US and many other countries around the world, especially the ones in Europe who are experiencing record unemployment levels lead by Spain and Greece at about 26% which are similar to the levels experienced in the Great Depression of the 1930s. 

And as high as the levels that are posted by governments, most agree that these numbers are understated since they don’t include those who have been forced to accept part time work instead of the full time work they are seeking, or those who are underemployed, or those who have given up in despair looking for work. For those who are not in the above categories, it is safe to say that most of us know of a loved one or friend who is struggling.
And make no mistake about it – it is a struggle, not just monetarily but with one’s self-esteem that often can lead to depression! So with all of that these people go through, surely we wouldn’t want to subject them to discrimination on top of all of that – but unfortunately, some people do!

When I heard stories about companies who refused to accept job applications from the unemployed, I couldn’t believe it! Just a bad joke or somebody got their facts wrong, I thought. But it’s true! Check out this link.

With the average length of unemployment steadily increasing, the requirement of being presently or even recently employed disqualifies millions of perfectly qualified job seekers. A recent Paul Krugman NYT op-ed, The Jobless Trap actually sites a recent study that supports this discrimination.
[A]s William Dickens and Rand Ghayad of Northeastern University recently showed, the relationship has broken down for the long-term unemployed: a rising number of job openings doesn’t seem to do much to reduce their numbers. It’s as if employers don’t even bother looking at anyone who has been out of work for a long time. 
To test this hypothesis, Mr. Ghayad then did an experiment, sending out résumés describing the qualifications and employment history of 4,800 fictitious workers. Who got called back? The answer was that workers who reported having been unemployed for six months or more got very few callbacks, even when all their other qualifications were better than those of workers who did attract employer interest.
So we are indeed creating a permanent class of jobless Americans.
It seems to me that someone who has been out of a job longer is going to be more motivated to perform well once they are rehired. But I guess I don’t have the mindset of the geniuses who run HR departments who equate long term unemployment with being lazy or just damaged goods because nobody else wanted to hire them.

Such a policy is not only stupid, but is downright cruel! If I for example had food to share, refusing to share it with the hungriest would obviously be considered to be cruel. But since most of us need a job to get food, is denying a job to a qualified applicant just because he or she has been out of work for too long any different?

Most of us would never do something this cruel to others because we know that the same situation could befall us and wouldn’t want to suffer in the same way. But there are enough others for whom empathy is not a strong point. Maybe they feel that those who have lost their jobs just aren’t as smart or well educated or hard working and that it couldn’t happen to them. In today’s miserable economy, that is little more than a denial of reality!

But wait, there’s more! For those who have been unemployed long enough to where they have been unable to keep up with bills, companies are now discriminating against job applicants based on credit histories.
About 60 percent of employers use credit checks to screen applicants, even though research has shown that people with damaged credit are not automatically poor job risks. Besides, the credit agencies that compile and sell records on about 200 million Americans make mistakes.
But the biggest elephant in the room may well be age discrimination. As someone who was unemployed and on the wrong side of 50, friends were telling me that this would work against me. I didn’t believe them. But after endless rejections for jobs that I was eminently qualified for and then reading this article in Fortune, 50 and Fired the anvil that fell on my head finally got my attention.
Getting fired during your peak earning years has always been scary. You'd scramble for a few months, but you'd find something. Today it's different. Get fired and you can scramble for years--and still find nothing. Welcome to the cold new world of the prematurely, involuntarily retired.
What makes this more alarming is that this article was written back in 2005, well before the Great Recession that started in 2008. So for those of us who are older, out of work, and falling behind in paying bills – we have little more than to hope for a miracle. It shouldn’t be this way. Many of us have so much to give – but we have been relegated to the scrap heap!

While some say that we should have laws that address these forms of discrimination, the truth is that such laws are for the most part unenforceable because it is difficult to prove intent. We presently have laws in the US that make age discrimination illegal but especially with the understaffing of government enforcement agencies that should serve as a watchdog, offending companies know they have little to fear.

Stripping this all to its essentials, what we have is too many qualified workers seeking far too few available jobs. When this happens, employers can become more and more selective to where things get out of hand. The only way this will change is when there are an adequate number of jobs that need to be filled which will require employers to be more reasonable with their requirements.

Experience has shown that increased government spending to create more jobs has worked, most notably the spending on World War II that effectively ended the Great Depression. Of course we don’t need another war – we have a decaying infrastructure that needs to be repaired and upgraded. And as cited at the beginning, the present unemployment woes of much of Europe have shown that decreasing government spending to try and balance budgets have made things far worse for them.

So which path will it be for the US? We can continue to follow the path of disaster that Europe is following but now even they are starting to reconsider the notion that cutting government spending will create jobs instead of destroying them. In the US, we have the land of the sequester where the debate seems to be little more than how much to cut rather than if we should cut.

It was comedian Stephen Colbert who recently commented in his best mock serious tone that "We have to keep cutting the government budget and laying off people until those people get jobs." While this was meant to be funny, what is sad is that too many people in the position of power and wealth really believe this!


Anonymous said...

Good article but it does not attack this problem from both sides. Yes, there is discrimination by business of all sizes. BUT, if the government creates 9and they can create that) a more friendly hiring environment for private business, there will be a lot more employers who are a lot less picky (willing to take more risk on new employees) as they expand.

We can't rely ONLY on government jobs and government growth for the growth of our economy. And grow we must, because to not grow is to be stagnant or receding, and no problems get fixed when things are stagnant or receding.

Tony Polombo said...

First of all, thanks for writing!

But it is hard to imagine a more friendly hiring environment for companies right now. Corporate profits in general are healthy, and the effective corporate tax rates are low with some of the most profitable companies paying little or no taxes.

The result is a lot of money on the sidelines with nowhere to go because companies (understandably) do not want to hire or expand if there isn’t enough demand for their products or services in this weak economy. So according to most mainstream economists who are Keynesians, the government MUST be the last resort generator of demand even if this means more deficit spending.

And while the first jobs may be government generated, if the money is spent wisely on things like infrastructure, those people who are then working and earning a paycheck create more demand and thus more jobs in the private sector. So to your point, we are not ONLY relying on government jobs and growth but using them as a kick start to get the economy going which includes private businesses.

Anonymous said...


I agree that some of those things you mentioned above are favorable for BIG business right now. But What size business has the highest number of employees in this country?

Small business is in a conundrum: we need to PLAN for growth, but the tax situation for us (mostly State but some FED) is not going to be as beneficial for us a big business who has more pull to avoid taxes and get that low 'effective' tax rate you spoke of.

Many of us that own small businesses have future Healthcare issues to contend with that are going to cost us money we likely are going to have trouble passing on to our customer base. Bringing on new employees right now is impossible. Remember, we do not have the power to get State tax breaks like the big business does and many of us file a SCH C as a sole proprietor.

Small business in this nation is now, and has been, trying to tread water and I expect the hiring situation to get worse once the Affordable HC Act is fully implemented and we start to see individual States taking more money from business to cover the additional funds they will have to infuse into their individual MEDICAID programs.

Tony Polombo said...

Your point is well taken that small businesses have it more difficult than big business because they have lesser clout with legislators and in negotiating health insurance rates for their employees. Hopefully when enough people have jobs and money to spend, both small and large businesses will benefit.

There has been much speculation on how the Affordable Care Act will affect the ability of small businesses to provide affordable health insurance for its employees once it fully goes into effect. In theory, the establishment of insurance exchanges will provide competitive pricing, but nobody really knows how this is all going to work out since it is unclear how much control we will have over what the companies will actually charge for coverage. If I am not mistaken, the health insurance industry still has an exemption from federal antitrust laws (the McCarran-Ferguson Act) so this is not encouraging.

So why should any company have to bear the burden of health insurance coverage for its employees? Why not a single-payer Medicare for all system like what other countries use to provide universal health insurance without all of the middle man markup by the insurance companies? It makes sense to me, but for too many others, it smacks of ‘socialism’ and understandably, is fiercely opposed by the insurance lobby and their enablers in Congress.