The Unintended Consequences of Employer Credit Check Bans on Labor and Credit Markets

Since the Great Recession, 11 states have restricted employers’ access to the credit reports of job applicants. We document that county-level vacancies decline between 9.5 and 12.4 percent after states enact these laws. Vacancies decline significantly in affected occupations but remain constant in those that are exempt, and the decline is larger in counties with many residents who are subprime borrowers. Furthermore, subprime borrowers fall behind on more debt payments and reduce credit inquiries post-ban. The evidence suggests that, counter to their intent, employer credit-check bans disrupt labor and credit markets, especially for workers who are subprime borrowers.