The Growth of Incarceration in the United States Exploring Causes and Consequences (2014) / Chapter Skim
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8 Consequences for Employment and Earnings
8 Consequences for Employment and Earnings
Pages 233-259
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From page 233... ...
. Nonetheless, we believe the findings discussed here suggest an increasing labor market impact of incarceration, at least in terms of the numbers 233
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As discussed elsewhere in this report, those who are incarcerated have certain characteristics associated with both the risk of incarceration and poor labor market outcomes: they average less than 12 years of schooling; have low levels of functional literacy; score low on cognitive tests; often have histories of drug addiction, mental illness, violence, and/or impulsive behavior; and have little work experience prior to incarceration, with at least one-quarter to one-third of inmates being unemployed at the time of their incarceration (Travis, 2005; Bureau of Justice Statistics, 1994)
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The labeling due to criminal conviction can result in both legal and social exclusion. Formal exclusion is imposed through the web of federal and state laws that restrict those with a criminal record from a range of labor market activities (Olivares et al., 1996; Petersilia, 2003)
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These dynamics could likewise cause ex-inmates to concentrate their job search outside the formal sector of the labor market. APPROACHES TO STUDYING EMPLOYMENT EFFECTS This section reviews the various approaches that can be used to study the effects of incarceration on employment.
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According to Holzer (1996) , for example, roughly 40 percent of employers in a sample of four large urban labor markets reported that they would not knowingly hire someone with a criminal record (see also Holzer et al., 2004a, 2004b, 2006, 2007; Husley, 1990, pp.
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Each knew very well that a record was a severe detriment to finding work." Sullivan (1989, p. 69) documents some of the concrete experiences in which employment difficulties appeared to follow directly from criminal justice involvement.
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To the extent that individuals become discouraged in their search for work or avoid formal employment opportunities preemptively, real distortions in labor market outcomes based on these supply-side responses may occur. Experimental Approaches to Studying Criminal Stigma With experimental methods, researchers can control for nonrandom selection into a treatment group (e.g., incarceration)
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To the extent that ex-prisoners find work through networks or intermediaries, audit studies may overestimate the barriers they encounter in the open labor market. Likewise, job applicants with a criminal record may apply to systematically different kinds of jobs from those that are audited, further limiting the external validity of the results.
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Besides the possibility of population inference, survey data provide detailed measurement of labor market outcomes. Respondents often are asked about their current employment status, earnings, occupation, hours worked, job tenure, and multiple job holding.
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Formerly incarcerated respondents in the NLSY exhibit very little earnings growth, a pattern clearly evident in the administrative data as well. Use of Administrative Data While survey studies are relatively rare, a number of researchers have analyzed administrative data linking court or correctional records to earnings data obtained from state unemployment insurance (UI)
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. Despite their advantages, administrative data suffer from three main limitations.
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In summary, the limitations of administrative data may contribute to both noise and a positive bias in the estimation of incarceration's effects on labor market outcomes. Despite these challenges, several studies yield evidence of the negative effects of incarceration on quarterly employment and earnings (see Table 8-2)
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. Several recent studies of administrative data provide much weaker evidence for the negative effects of incarceration on labor market outcomes.
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results, Loeffler's instrumental variables estimates have standard errors about 10 times larger than least-squares standard errors, and none of the Cook County incarceration effects is significant. Instrumental variables estimates are sometimes taken as a gold standard, although these assessments never consider the cost of bias reduction in additional variance.
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A few recent studies of administrative data find no negative effect, as well as short-term positive effects that may reflect increased formal-sector employment while under community supervision and shifting institutional conditions associated with welfare reform. Studies of the labor market experiences of people released from incarceration have adopted a wide variety of methods, examined both the supply and demand sides of the labor market, and analyzed different kinds of qualitative and quantitative data in a wide range of times and places.
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Two lines of research have studied the aggregate significance of incarceration for the labor market: the first views incarceration as a source of "invisible inequality" unmeasured by standard methods such as household surveys; the second assesses the effects of incarceration on aggregate outcomes such as the unemployment rate for different segments of the labor market. The hypothesis of invisible inequality claims that large institutionalized populations significantly distort official measures of employment based on household surveys (Western and Beckett, 1999; Western and Pettit, 2005)
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Paired with the individual-level analyses discussed above -- pointing to employment and wage penalties experienced by ex-prisoners, in some cases more so for blacks -- these results help tell a fuller story about the negative impact of incarceration on labor market outcomes.
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transitional employment programs; (2) residential and training programs for disadvantaged youth; (3)
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, an evaluation using rigorous random assignment, tested transitional employment programs for former prisoners in four cites (Chicago, Detroit, Milwaukee, and St.
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A comprehensive experimental evaluation, using random assignment from 1994 to 1996 and data collection covering a 48-month period after assignment, found that Job Corps improves outcomes for participants -- with large effects in obtainment of general equivalency diplomas (GEDs) and vocational certificates and increased earnings for disadvantaged youth -- but at a high financial cost (Schochet et al., 2008)
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. The program is open only to youth aged 16 to 18 who are drug free and not "heavily" involved with the justice system,7 so the above findings may not apply to youth who have substance abuse problems or have committed serious crimes and/or been in contact with the adult criminal justice system.
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More rigorous research using randomized trials would greatly increase knowledge of how to provide effective, evidence-based correctional education and work programs.
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. Limits on Access to Criminal Records Beyond programs that directly intervene in the job readiness or placement of ex-prisoners, one final approach to improving their employment outcomes is to reduce the labeling consequences of their criminal record.
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A clearer understanding of the mechanisms by which criminal justice involvement leads to poor employment outcomes is critical for addressing the central policy concern of whether and to what extent reductions in or alternatives to incarceration can improve employment outcomes. Research more explicitly comparing estimates derived from administrative data on employment and earnings with those derived from survey data would be useful.
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Limited research has focused on the question of how tight or slack labor markets may affect the reentry experiences of individuals leaving prison. Going forward, it will be important to understand how macroeconomic conditions interact with criminal justice policy to produce observed labor market outcomes.
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As noted throughout this report, the incarcerated population in the United States disproportionately comprises individuals with low levels of schooling and histories of mental illness and substance abuse -- generally poor human capital and "work readiness." These individuals also often have quite limited access to social networks that could yield jobs with high growth prospects. The experience of incarceration thus both reflects and exacerbates persistent labor market inequalities.
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From page 259... ...
, policies aimed at mitigating these consequences must go beyond reducing the numbers of people behind bars. The evaluation literature examining programs designed to improve postrelease employment outcomes yields a mixed record (see also reviews by Mead, 2011, Chapter 4; Bushway and Reuter, 2002; Bloom, 2006; and Visher et al., 2005)
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