Criminal Records Could Be Having A Huge Impact On Labor Force Participation
JP Morgan's David Kelly has a post on the five reasons he thinks the LFPR is declining.
"While some of this decline may be cyclical, we believe most of it is structural," Kelly writes. "In particular, the aging of the baby boomers, a rise in the number of Americans receiving disability benefits and an increase in criminal records and background checks all seem to have played a role in depressing the employment rate."
This last reason is interesting, and underreported. If the LFPR really is being depressed by companies that won't hire people with criminal records, that cuts a huge chunk of the population off from a lot of job options - they are more likely to get discouraged, and more likely to never return to the labor force if they are unemployed.
Just how many people does it affect?
Measuring The Number Of People With Criminal Records Is Tricky
The answer is sort of unclear. According to Kelly's data, 22% of the population had a criminal record in 2012, up from 13% in 1991.
The most widely cited estimate is about 65 million people, a little over 20% of the population. That number comes from a National Employment Law Project report from 2011 on this problem. It used 2008 data from the Justice Department, which showed that there were 92.3 million people with criminal records in the 50 states. They reduced that number by 30% "to account for individuals who may have records in multiple states and other factors." That comes out to roughly 65 million people - about 21% of the population, and 28% of the population above 18.
More recent data from the Justice Department shows that in 2012, there were 100.5 million people with criminal records, meaning that, when using NELP's methodology, the number of people having a tougher time getting a job because of a criminal record is now likely above 70 million. That includes people with all sorts of criminal records, from committing violent felonies to minor charges, including in many cases people who were arrested but never convicted.
(A note on these numbers: We contacted the Bureau of Justice Statistics to ask how the data was collected and how often it was updated to reflect only living people with criminal records. Because the BJS gets the data from the states, they don't audit it directly. "I would venture to say there are states that have records of deceased persons still included in the counts provided in the 2012 report; however, I cannot be any more definitive than that," Devon Adams, the chief of the Criminal Justice Data Improvement Program, told Business Insider.)
Having A Criminal Record Doesn't Help Employment Prospects
How much does having a criminal record affect employment prospects? It outright blocks people from being hired for many government jobs.
In the private sector the question is blurrier. An outright ban on hiring people with criminal records is considered to be a violation of Title VII of the Civil Rights Act, according to the Equal Employment Opportunity Commission. Some states are banning asking about a criminal record on an initial employment application. But in practice, there are plenty of ways around that. Employers are allowed to consider a criminal record as part of a larger application.
If this is true, you would expect to see a much bigger decline in the LFPR in men in the last couple of decades than in women, as men are much more likely to have criminal records. After a cursory look appears to be true, although there are so many other factors it's difficult to isolate.
On the other side of this, a study in 2006 by Harry Holzer (Georgetown), Steven Raphael (Berkeley), and Michael Stoll (UCLA), published in the Journal of Law and Economics found that employers that conducted background checks were actually more likely to hire black people, particularly black men, than if they didn't. Without the background check, researchers found, employers were more likely to reject applicants based on stereotypes and assumptions about racial and ethnic groups.