economy gains from hiring second-chancers

Jeffrey Korzenik, chief investment strategist of Fifth Third Bank, advocates for the employment of those with felony records. In the July 2, 2018 Barron's, he looks at today's economy, and wonders how to maintain growth with a shrinking pool of workers from which to draw. He writes, 

Until recently, employers had a ready supply of unemployed individuals to fill open positions, but with the jobless rate at 3.8% and the number of openings exceeding the total of job seekers, that avenue is no longer available. Where can we find the additional one million to two million workers we need to keep our expansion on track? 

Our best opportunity is for businesses to make better use of our most underappreciated labor resource: “second-chancers.” This population—those who have paid for mistakes through incarceration or other forms of supervision—offers a path to expand and extend our economic expansion. 

Second-chancers: a wonderful, hopeful way to refer to those who have a criminal record.

Excluding those now in prison, there are over 16 million Americans with a felony record. Many of the crimes occurred decades earlier or would not have been classified as “felonies” in years past. While some of these ex-offenders are already in the workforce, many are not, and even among those who are employed, second-chancers often do not have the job mobility to reach their economic potential. Increasingly, employers are considering this population for hire. [My emphasis.]

He says employers who partner with a re-entry organization have more success in hiring second-chancers.

Identifying which ex-offenders are ready for employment is critical. Nonprofits that support the re-entry of ex-offenders not only provide pre-employment training, counseling, housing, and other services, they also can fill the critical role of helping to identify for employers which of their clients are actually job-ready.

Ongoing support during employment is important, too. Employers who hire second-chancers recognize that this is a cohort that initially lives with financial instability. Employer models of sustaining workers in such straits can range from flexible work hours (e.g., to accommodate meetings with parole officers), to microloans for such needs as car repairs, to providing a “life coach” for employees. Second-chance employers usually have robust relationships with outside organizations that can provide other benefits, including faith-based counseling, after-hours food-pantry access, and transportation. 

All of this may sound like a lot of extra effort for employers. Is it worth it? The companies we’ve studied all talk about their investment in second-chancers as being handsomely repaid with employee engagement, loyalty, and turnover rates that are far lower than industry averages. Two larger-scale studies, one by the U.S. military and another by the Johns Hopkins Hospital and Health System, both provide evidence that, when hired selectively and appropriately supported, second-chancers are superior workers. [My emphasis.]

Those with a sex offense in their history have added difficulties, of course. Some states include places of employment in registry listings, so employers are reluctant to hire someone that would put the employer's address on the registry, too.

Even when places of employment are not on the registry, the common image of sex offenders--dangerous predators plotting their next child molestation sprees--help explain why some employers refuse to consider hiring people who are listed on the registry. The image is wrong, of course. The long-term rearrest rate exceeding 76%  used by Korzenik applies to felons in general, not to those on the registry, who, at around five percent, have the second-lowest recidivism rate.

Hiring second-chancers has an obvious benefit for the second-chancers and their families but Korzenik shows us a larger picture and a larger benefit by talking about the effect on the economy.

In a January 2018 Entrepreneur article, Carol Roth interviews Korzenik about hiring second-chancers. She asked him why it is important to bring people back into the workforce. His answer:

Our biggest fear for the economy is that we essentially run out of labor. To gauge the importance, look at the numbers: over 2 million incarcerated, 4.8 million currently on parole or probation, 19 million with a felony conviction on their record, 70 million with some kind of past interaction with the law. Put those numbers against the reality that, above and beyond natural demographic growth and immigration, to sustain our expansion we need an additional 1.25 million workers each year, you have to recognize that the number of people who are likely out of the workforce, unemployed or underemployed because of this taint is enormous and economically consequential. 

We are wasting enormous resources, either through the opportunity loss of full labor market participation or through direct costs like the $80 billion spent each year on incarceration.  [My emphasis.]

In Barron's, Korzenik makes his recommendations for employers. He urges those who have successfully hired second-chancers to "spread the word." He says,

...it is important to articulate not just the goal of re-entry, but the method, particularly for the small and medium-size businesses that create the vast bulk of new jobs. Successful private-sector, for-profit models for hiring second-chancers exist and are worth sharing and replicating.

He recommends removing barriers to employment such as licensing or certification requirements. He also recognizes that when federal regulations forbid a business (a financial institution, for example) from hiring someone with a felony record, those businesses can still play a role in the success of second-chancers.

At Fifth Third, we provide funding to many of the workforce development organizations that focus on the formerly incarcerated, support initiatives to create the affordable housing often cited as an obstacle to re-entry, partner with nonprofits to provide financial education and banking services, and fund our research into the business models that actually succeed in employing second-chancers. The bank also worked with our partner NextJob to expand our job-coaching and assistance program to address the unique needs of citizens returning to the workforce from prison.

Offering financial advantages to companies who hire second-chancers is another recommendation.

Existing tax credits for the employers of ex-offenders are beneficial, but short-lived. More ongoing support could be provided through the federal government’s vendor process, which has long sought to redress past barriers by providing set-asides from female- and minority-owned businesses. Businesses that invest in second-chancers could be offered similar advantages.

His last recommendation is hard to argue with:

Recognize success. Business owners who risk their capital and livelihood to provide paths of re-entry for second-chancers are worthy of national recognition, as are their businesses.

Without the registry, it would be far easier for those listed there to re-enter the workforce but Korzenik's point is clear: the economy will suffer without hiring second-chancers. Economic growth is an opportunity for those who need employment. Working with a re-entry or job-training organization can be the key to finding work.

With over 900,000 people on the registry, that means nearly a million people with vastly reduced employment opportunities. Nearly a million that could be contributing--or contributing more--to the continued growth of the American economy.

American businesses need to see that they would benefit from the abolishment of the sex offender registry.