Forcing Businesses to Hire Criminals

The civil rights movement was initially focused on ending state-imposed racial segregation, especially in education. From the mid-1960s onward emphasis shifted to compensatory measures such as extra spending for schools with large black enrollments and Head Start. In recent decades, however, the overriding aim has been narrowing economic inequality.

Despite myriad expensive programs, economic equality has proven elusive. But rather than scale back aims, government intervention under the Obama administration has become almost desperate. Alas, not only will these more recent draconian measures fail, but they will only expand government power well beyond constitutional limits. What makes this latest effort especially worrying is that the upcoming failures are absolutely predictable.
Here's the latest installment of equality-by-government-decree: the Equal Employment Opportunity Commission (EEOC) has recently filed complaints in two federal courts against Dollar Stores and BMW. The EEOC claimed that their use of criminal background checks discriminates against African Americans since blacks are disproportionately likely to have legal scrapes (blacks are incarcerated at a rate six times that of whites). The EEOC argues that these background checks are illegal under the 1964 Civil Rights Act that prohibits racial discrimination in employment.

While EEOC edict would not bar criminal background checks, it nevertheless wants employers to evaluate each applicant individually since, at least in some cases, the job-seeker was arrested but never convicted or conviction was years back and the applicant is no longer criminally inclined. The NAACP supports the EEOC on the grounds that such inquires prevent worthy applicants from becoming economically productive. (In the case of Dollar General, 10% of the black applicants were rejected due to a criminal record versus 7% of the whites, a disparity the EEOC called "a gross discrepancy.")

The stakes are huge. Some 92% of U.S. firms check for criminal records for all job openings and a mandated case-by-case determination would sharply raise hiring costs. Actually, firms already face racial discrimination lawsuits when they refuse to hire applicants with criminal records. In 2012 PepsiCo paid $3.1 million to settle accusations that it racially discriminated by using criminal background checks. But on the other side, a business may also risk a lawsuit if it knowingly hired an ex-con who then commits a crime. Imagine if BMW knew full well that it hired a convicted rapist who then assaulted a coworker! A sympathetic jury could easily find the deep-pockets BMW responsible for damages since it did "nothing" to prevent the attack.

This EEOC effort is only the most recent example of an "equalizing" intervention to force businesses to hire otherwise unemployable blacks. This policy began in 1971 with Gregg v. Duke Power case when the Supreme Court ruled that the firm's high-school graduate requirement was discriminatory since fewer blacks were graduates. According to the Court, a high-school degree could be required only if it was clearly necessary for the position. Rather than demonstrate the value of a diploma for each and every job opening, firms often just hired by quota to avoid litigation. A more recent case involved the use of a job applicant's past financial dealings, e.g., bouncing checks (see here). Eventually, however, a federal judge ruled that taking this information into account when hiring was not racially discriminatory though blacks disproportionately had more money problems.

Clearly, this latest EEOC intervention will not significantly narrow black/white employment rates and this should be obvious to anybody knowledgeable about business. Companies can ill afford potentially troublesome employees and, of the utmost importance, can readily avoid EEOC dictates. For example, they can mechanize tasks, subcontract them, or outsource them to China. What firm would now open a business in Detroit if it were forced to hire those with criminal records? Wiser to move to South Dakota. Surely EEOC bureaucrats know that they cannot demand business relocate to areas of high black unemployment though lowering black unemployment may be their ultimate goal.

Let me suggest a more speculative explanation for the EEOC's seeming foolishness: these edicts generate middle class jobs, many of which will benefit middle class blacks, less working class African Americans seeking decent jobs at BMW or Dollar General. The lawsuits are all about job creation but not of the type the EEOC is ostensibly trying to achieve. The pattern is familiar -- government attempts to solve a nearly intractable problem by hiring more middle-class employees. Various anti-poverty programs are the poster child for this bait and switch -- lots of white collar jobs though little reduction in poverty.

Job bloat will begin with the Department of Justice hiring people to write yet more intrusive regulations while monitoring enforcement to "help" businesses navigate the murky distinctions between criminal records and the relationship between the crime and specific job requirements. Extra staff will also be added to investigate accusations and punish discriminatory firms. Then thousands of firms like BMW will spend countless hours revamping work rules to ensure that employees with criminal histories will not be a liability, for example, ensuring that convicted drug dealers cannot peddle their wares on the factory floor (the parallel are laws mandating special accommodation for the disabled).

The big winners, naturally, will be ambitious trial lawyers (nearly all Democrats, many of whom are major donors) trolling for clients claiming racial discrimination owing to past criminality. Another beneficiary will be outside firms performing background checks. Given the numbers, winning class-action lawsuits could mean a $100 million jackpot with a few lawyers splitting a $30 million contingency fee and thousands of plaintiffs at best receiving a few hundred dollars and no job.

The economics of this ill-advised EEOC initiative aside, the real (though far less visible) damage will be the moral lessons. For nearly a half century the Federal government has told people (and especially the poor) that there are few costs for improper misconduct since Uncle Sam will eventually rescue you. No wonder Americans increasingly become dependent on government -- they are encouraged by government itself.

Look at it this way. Many of today's young men and women are disinclined to follow the straight and narrow. But, thanks to our "compassionate" political environment, youngsters quickly learn that their sorrowful academic record is no obstacle to graduation, their lack of job skills does not bring starvation, and ill-advised financial dealings and criminal activity need not be barriers to decent employment. And if all that were insufficient, the can eat and drink themselves into illness and have Washington pay the bills.

People once prayed to deities for salvation. It was, at best, an iffy strategy. Now things are more convenient and nearly guaranteed -- just mobilize sufficient numbers on Election Day and Uncle Sam will be at your service.