I've written before that "one way to think about the cost of incarceration is that every person who is in jail or prison is someone who is not just out of the labor force but an active ward of the state." The Center for Economic and Policy Research has done a study on the effect of incarceration on the labor force, aimed at identifying how incarceration affects the unemployment rate. The answer? The difficulties faced by the formerly incarcerated lower the employment rate by almost a full percentage point and cost the country between $57 billion and $65 billion:
Given the number of ex-offenders and the best estimate of the associated reduction in employment suffered by this population, our calculations suggest that in 2008 the US economy lost the equivalent of 1.5 to 1.7 million workers, or roughly a 0.8 to 0.9 percentage-point reduction in the overall employment rate. Since over 90 percent of ex-offenders are men, the effect on male employment rates was much higher, with ex-offenders lowering employment rates for men by 1.5 to 1.7 percentage points. Even at the relatively low productivity rates of ex-offenders (they typically have much less education than the average worker), the resulting loss of output that year was likely somewhere between $57 and $65 billion.
The eerie thing about this number? It's even greater than the more than $50 billion a year states are paying in corrections costs. While this study is helpful in identifying the direct cost of unemployment faced by the formerly incarcerated, we should also remember that there are sustained, cumulative collateral costs on the families of ex-offenders, children in particular. Because of the growth in the number of people the U.S. incarcerates, this is going to be a problem for an increasingly large number of people. The good news is employment is also cumulative -- the employed are less likely to re-offend, less likely to go back to prison, and so on and so forth.
There are some caveats here, namely that people who are convicted of crimes tend to be less employable than those who aren't to begin with, and the social skills developed in prison are basically antithetical to holding a decent job -- but that's another reason to ensure prison serves some rehabilitative function, rather than acting as an advanced trade school for career criminals. There's no single easy answer to solving this problem, but we can start with the obvious: We need to incarcerate fewer people for less time, particularly for nonviolent drug offenses.
The CEPR report also recommends "lowering barriers to employment for ex-offenders." There are a number of jobs former offenders are legally prohibited from holding, and many businesses have blanket policies prohibiting the hiring of ex-offenders, in part because there are strong financial incentives for avoiding lawsuits based on "negligent hiring." Theoretically, you could ban discrimination or make it harder for employers to access criminal history, but neither of those options is likely to make it very far for obvious reasons.
Beyond the human-capital concerns, explicit legal regulations, and general business practices, there are just a lot of de-facto barriers to employment for ex-offenders, many of which are very much intertwined with matters of race. Here's an example from a 2003 Urban Institute study:
For one thing, employers who check criminal backgrounds tend to higher more black men than those who don't. Apparently, access to information on criminal backgrounds seems to reduce the “statistical discrimination” that employers engage in against black male applicants when they don't have the explicit information on individuals that they need to make these decisions accurately.
Apparently, if you're black, some employers assume you've done a bid unless they know for a fact you haven't.
