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Criminal Records and Unemployment: The Impact on the Economy

August 20, 2017

Coming off of the celebration of our nation’s independence, it is certainly fair to say the last few weeks and days have produced a glut of think pieces pondering whether or not America is still, in 2017, exceptional. 

One way America is unquestionably exceptional, however, is in its carceral state. Often cited are the basics: America locks up more of its citizens than any other country on earth, with 2.3 million people currently in state or federal detention of some sort [1]. This does not even include the millions more who are also under state control or supervision. Nonviolent drug offenders are frequently seen as those for whom we should have mercy, but even if we released every single nonviolent drug offender tomorrow, while it would cut the federal prison population nearly in half, it would make merely a dent in state and local incarcerated populations. 

These basics about the sheer scale of the problem and who is in jail miss something very important about people who are incarcerated. They are people, as well as “criminals” with a good number of them are not even criminals [2]. Setting aside the massive moral implications of that sentence, those statistics that are most often cited fail to grapple with the effect that incarceration has on local communities, especially those that are communities of color, impoverished neighborhoods, and where those two groups overlap. The criminal justice system often takes working age men out of communities where they would normally be a household’s primary earner in mass and, when they are released, severely inhibits their ability to regain a strong footing in the labor force helps to propel the “cycle of poverty”. In fact, studies have found that in large urban centers as many as one in four black men who live in that community are incarcerated at any given time [3].

While much attention in the reform community talks about those who are incarcerated, there are also myriad severe issues for those who are released from prison. From mental health to housing to socialization, people recently released from jails and prisons face enormous obstacles in almost every aspect of life. One area that is critically important is employment.

Despite the recent groundswell of support for initiatives like Ban the Box and similarly oriented projects, only 28 states representing just 62.2% of the population have passed state laws banning employers from placing the conviction history question on job applications [4]. Conviction history, as Dr. Devah Pager famously showed in her 2003 study, is a devastating obstacle to people trying to gain entry level employment [5].

Pager found that a criminal record, specifically, a non-violent drug conviction, made an employer almost half as likely to call someone back, and the effect was even more deleterious if the person seeking employment was black. In fact, Pager found that in the study the white male applicant with the criminal record was more likely to get a call back from an employer who had a17% callback rate, than a black male applicant without a criminal record who had a 14% callback rate in the study.

On its face, these findings, seem troubling when you zoom out and look at who this incisive policy is harming. The incarcerated population in the United States is not a random or representative sample; a vast majority of people who are incarcerated come from poor communities, particularly concentrated in those of color. Therefore, those most vulnerable to the formal criminal justice system are also subject to the brunt of the abuses of the informal criminal justice system, bearing the mark of “convict” for the rest of their lives. 

This is a human tragedy, of course and could be written about at length in gut wrenching and tear jerking detail, as Bruce Western and Penn alum Alice Goffman have [6] [7]. There is a profound economic dimension to this workforce exclusion.

Much has been made about the puzzlingly low labor force participation among 25 to 54 year olds in the American workforce [8]. The percentage of men under 65 who are not working has doubled since the boom that followed the end of World War II. Given the demographic breakdown of the 2016 election, members of the mainstream media have waxed poetic about working class white men and their discontentment with the disappearance of manufacturing jobs, the perception that immigrants are taking the jobs that are rightfully theirs, and a federal minimum wage that is only 68% of what it should be [9]

Seldom mentioned, however, is the effect of incarceration and the legal post carceral scars left by a conviction. Men between the ages of 25 and 54 make up over 70 percent of the federal prison population, meaning those people are taken out of the workforce in their prime earning years right off the bat [10]

This effect does not end at release. As seen above, people convicted of a felony have particularly difficult times finding employment. A record of a felony conviction reduces the likelihood of an employer calling the applicant back by about 50 percent [11]. Employment and steady income are the greatest stabilizing forces an adult can have in their life, and this is no different for those who are recently released from jail or prison. Studies have shown that just a one percent drop in the unemployment rate can cause a one to two percent decrease in some crimes, reflecting the importance of employment when it comes to recidivism [12].

This type of labor force discrimination creates a drag on the whole economy, sharply targeted at the most vulnerable communities. Estimates range from $78 to 87 billion annually lost nationwide due to lost output from people with criminal records [13]. Those estimates do not even account for the money lost locking people up who return to criminal activity as a result of long term unemployment.

For the 70 million Americans with a criminal record of some sort, “pulling yourself up by your bootstraps” is particularly difficult when wages, hiring practices, and discrimination based on stereotypes make obtaining gainful employment a near Sisyphean task. Banning the box is one way activists are trying to eliminate the stigma around this issue, but even that has had mixed results [14].

The sad irony of the issue of employment is that in a few areas of the country, this issue is starting to become mitigated because of the sheer magnitude of the criminal justice system. In some communities, because so many young men, and young men of color particularly, have been in contact with the criminal justice system in some way, it is rare for entry level positions to get applicants who don’t have a criminal history. This is, of course, far from an ideal solution. Tens of millions of Americans want exactly what everyone else wants: a chance to provide for their family and live a better life than their parents did. Unfortunately, those tens of millions of Americans are nearly guaranteed to never see that dream realized because they cannot get a chance [15]

Student Blog Disclaimer
  • The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Wharton Public Policy Initiative’s strategies, recommendations, or opinions.


 [1] https://www.prisonpolicy.org/reports/pie2017.html

 [2] https://www.bjs.gov/content/pub/pdf/ji15.pdf

 [3] http://proxy.library.upenn.edu:2145/stable/pdf/40040178.pdf?refreqid=excelsior:3357e260a84cc87ddabc018f5ac7d0e2

 [4] http://bantheboxcampaign.org/about/#.WX9twtPys6g

 [5] http://www.journals.uchicago.edu/doi/full/10.1086/374403

 [6] http://www.mitpressjournals.org/doi/pdf/10.1162/DAED_a_00019

 [7] https://www.amazon.com/Run-Fugitive-Fieldwork-Encounters-Discoveries/dp/022613671X

 [8] https://www.vox.com/policy-and-politics/2017/6/2/15728650/unemployment-rate-jobs-report-may

 [9] http://www.huffingtonpost.com/kurt-a-gardinier/no-one-can-live-on-725-an_b_4655945.html

 [10] https://www.bop.gov/about/statistics/statistics_inmate_age.jsp

 [11] http://scholar.harvard.edu/files/pager/files/pager_ajs.pdf

 [12] http://www.nelp.org/content/uploads/Ban-the-Box-Fair-Chance-Fact-Sheet.pdf

 [13] http://cepr.net/publications/reports/the-price-we-pay-economic-costs-of-barriers-to-employment-for-former-prisoners-and-people-convicted-of-felonies

 [14] https://www.vox.com/2016/6/6/11843118/ban-the-box-discrimination

 [15] http://www.mitpressjournals.org/doi/pdf/10.1162/DAED_a_00019


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