Ex-offenders and the Labor Market

Executive Summary:

We use Bureau of Justice Statistics data to estimate that, in 2008, the United States had between 12 and 14 million ex-offenders of working age.  Because a prison record or felony conviction greatly lowers ex-offenders’ prospects in the labor market, we estimate that this large population lowered the total male employment rate that year by 1.5 to 1.7 percentage points.  In GDP terms, these reductions in employment cost the U.S. economy between $57 and $65 billion in lost output.

Our estimates suggest that in 2008 there were between 5.4 and 6.1 million ex-prisoners (compared to a prison population of about 1.5 million and a jail population of about 0.8 million in that same year).  Our calculations also suggest that in 2008 there were between 12.3 and 13.9 million ex-felons.

In 2008, about one in 33 working-age adults was an ex-prisoner and about one in 15 working-age adults was an ex-felon.  About one in 17 adult men of working-age was an ex-prisoner and about one in 8 was an ex-felon.

An extensive body of research has established that a felony conviction or time in prison makes individuals significantly less employable.  It is not simply that individuals who commit crimes are less likely to work in the first place, but rather, that felony convictions or time in prison act independently to lower the employment prospects of ex-offenders.

Given our estimates of the number of ex-offenders and the best outside estimates of the associated reduction in employment suffered by ex-offenders, our calculations suggest that in 2008 the U.S. 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 less education than the average worker), the resulting loss of output that year was likely somewhere between $57 and $65 billion.

The rise in the ex-offender population — and the resulting employment and output losses — overwhelmingly reflects changes in the U.S. criminal justice system, not changes in underlying criminal activity.  Instead, dramatic increases in sentencing, especially for drug-related offenses, account for the mushrooming of the ex-offender population that we document here.

Substantial scope exists for improvement.  Since high levels of incarceration are not the result of high levels of crime, changes in sentencing today can greatly reduce the size of the ex-offender population in the future.  Moreover, the high cost in terms of lost output to the overall economy also suggests the benefits of taking action to reduce the substantial employment barriers facing ex-offenders.

In the absence of some reform of the criminal justice system, the share of ex-offenders in the working-age population will rise substantially in coming decades, increasing the employment and output losses we estimate here.

Full Text:

John Schmitt is a Senior Economist and Kris Warner is a Program Assistant at the Center for Economic and Policy Research, in Washington, D.C.  This article was first published by CEPR in November 2010 under a Creative Commons license.  See, also, John Schmitt, Kris Warner, and Sarika Gupta, “The High Budgetary Cost of Incarceration” (Center for Economic and Policy Research, June 2010).

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