American employers increasingly open to hiring workers with criminal records

BOSTON — A run-in with the law isn’t the career death knell that it once was, according to researchers from Harvard Business School. Study authors report many American employers are willing to consider and hire applicants with a criminal record. Employers become even more open to hiring these individuals if offered “crime and safety insurance.”

Traditionally, there’s no denying that it’s been tough for job seekers with criminal records. For instance, the unemployment rate among formerly incarcerated individuals was a whopping 27 percent in 2008. That’s higher than the U.S. unemployment rate among the entire population at any point in the nation’s history.

Study authors made use of a field experiment to test several approaches aimed at increasing the demand for workers with a criminal background. Importantly, these approaches focused on directly addressing the underlying reasons motivating employers to conduct criminal background checks.

The experiment offered close to 1,000 businesses crime and safety insurance to ease any “risk concerns,” as well as screenings based on past performance reviews and information on the amount of time since an applicant’s most recent criminal offenses. Additionally, the team provided hiring managers objective information pertaining to the average performance of workers based on their backgrounds, in an attempt to address risk and productivity concerns.

Study authors then compared the approaches to the effects of a wage subsidy, which essentially means paying businesses to hire applicants with a criminal record. While the subsidy approach to increasing the demand for workers with criminal records is simple, researchers explain it is also quite expensive.

4 in 10 businesses would hire former criminals

This research utilized a leading online labor platform which thousands of U.S. businesses use to find and employ workers for short-term jobs. Typically, employers use this platform to fill a wide variety of entry-level positions in sectors such as general labor, hospitality, and transportation. The platform also helps applicants for entry-level jobs in customer-facing or administrative sectors connect with businesses which are traditionally more hesitant to hire people with criminal backgrounds.

Businesses using this platform don’t actually decide which workers to hire; the platform itself extends job offers to workers who meet the minimum qualifications. Once the offer is made, potential workers can either accept or reject the job on a first-come, first-serve basis.

Overall, the research team’s analysis found 39 percent of businesses using the platform are willing to hire someone with a criminal background. Meanwhile, 45 percent of businesses are open to hiring such employees for jobs that do not involve directly interacting with customers. Another 51 percent of businesses without high-value merchandise were willing to hire individuals with a criminal record. Also, if employers happen to be having a hard time filling various roles, the demand for workers with a criminal background increases to 68 percent.

Notably, demand also increased by 10 percentage points if employers had the option to receive crime and safety insurance, a single performance review, or access to a person’s most recent criminal records.

When study authors limited their assessment to only workers with criminal records who already completed a job on the platform, demand for their services increased by 11 percent — the equivalent effect of an 80-percent wage subsidy.

Meanwhile, limiting the pool to only those with no arrests or convictions over the prior year resulted in a 21 percent increase in demand. That’s equivalent to completely subsidizing wages for employers.

A cheaper way of increasing the labor market

All in all, study authors conclude that policies providing employers with crime and safety insurance, as well as screening for workers based on past performance and the time since their most recent crime, can significantly increase potential job opportunities for job seekers with a criminal record. Even better, these approaches are much cheaper than the cost of providing employers with subsidies to hire such workers.

“With cost-effective policies, platforms can integrate workers with past involvement in the criminal justice system without deterring employers,” says lead study author, Zoë Cullen, Assistant Professor of Business Administration, Harvard Business School, in a media release. “This is a promising approach to expanding labor supply, and simultaneously addressing a pressing social challenge.”

The study is published in The Quarterly Journal of Economics.

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