BOSTON— A run-in with the law isn’t the career death knell it once was, according to researchers at Harvard Business School. The study authors report that many US employers are willing to consider and hire applicants with criminal records. Employers become even more open to hiring these people if they are offered “crime and safety insurance”.
Traditionally, there’s no denying that this has been difficult for job seekers with criminal records. For example, the unemployment rate among formerly incarcerated people was a whopping 27 percent in 2008. That’s higher than the US unemployment rate among the whole population at any time in the nation’s history.
The study authors used a field experiment to test several approaches to increase demand for workers with criminal histories. Importantly, these approaches have focused on directly addressing the underlying reasons that motivate employers to conduct criminal background checks.
The experiment has offered nearly 1,000 businesses crime and safety insurance to allay any ‘risk concerns’, as well as projections based on past performance reviews and information on time since criminal offenses the most recent of a candidate. Additionally, the team provided hiring managers with objective information regarding the average performance of workers based on their backgrounds, in an effort to address risk and productivity issues.
The study authors then compared approaches to the effects of a wage subsidy, which is essentially paying companies to hire candidates with criminal records. While the grant approach to increasing demand for workers with criminal records is straightforward, the researchers say it’s also quite costly.
4 out of 10 companies would hire former criminals
This search used a leading online workforce platform that thousands of American 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 industries such as general labor, hospitality, and transportation. The platform also helps candidates for entry-level jobs in customer-facing or administrative sectors connect with companies that have traditionally been more reluctant to hire people with criminal backgrounds.
Companies using this platform don’t actually decide which workers to hire; the platform itself extends job offers to workers who meet minimum qualifications. Once the offer is made, potential workers can accept or decline the job on a first-come, first-served basis.
Overall, the research team’s analysis revealed that 39% of companies using the platform are willing to hire someone with a criminal history. Meanwhile, 45% of companies are willing to hire such employees for jobs that don’t involve direct interaction with customers. Another 51% of businesses without high-value goods were willing to hire people with criminal records. Additionally, if employers struggle to fill various roles, the demand for workers with criminal backgrounds increases to 68%.
Notably, demand also increased by 10 percentage points if employers had the option of receiving crime and safety insurance, a single performance review, or access to a person’s most recent criminal records.
When the study authors limited their assessment to only workers with criminal records who had already completed work on the platform, demand for their services increased by 11% – the equivalent effect of an 80 percent wage subsidy. %.
Meanwhile, limiting the pool to only those who have not been arrested or convicted in the previous year has resulted in a 21% increase in demand. This amounts to completely subsidizing employers’ wages.
A cheaper way to increase the labor market
Overall, the study authors conclude that policies that provide employers with insurance against crime and safety, as well as worker selection based on past performance and time since their most recent crime, can significantly increase potential employment opportunities for job seekers with criminal records. 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 who have previously been involved in the criminal justice system without deterring employers,” says the study’s lead author, Zoë Cullen, assistant professor of business administration at Harvard Business School, in a press release. “This is a promising approach to increasing labor supply and simultaneously addressing an urgent social challenge.”
The study is published in The Quarterly Journal of Economics.