The Labor Market is Giving Job Applicants With Criminal Records a Second Chance

Image Credit: iStock Images, ablokhin

Sign up for smart news, insights, and analysis on the biggest financial stories of the day.

The US labor market is tighter than a pair of skinny jeans right now, and the positive outcomes — for workers, at least — are going beyond the most obvious ones.

New data shows more American employers are opening up hiring to candidates with criminal backgrounds, a group advocates say is unfairly punished for past transgressions.

Time Served, Job Deserved

A third of American adults have been arrested at least once, a figure that towers above other advanced economies. A first-of-its-kind study by economists at nonprofit think tank RAND, published in February, shows just how drastic this impacts their job prospects: 64% of unemployed 35-year-old men have a criminal conviction.

But even with the stock markets on a headline-driving slump, the US labor market is on a year-long hot streak. Most recently, the economy added 390,000 new jobs in May, according to the Labor Department, and the unemployment rate remained near a half-century low at 3.6% for the third month in a row. With jobs galore on offer, employers are rethinking background checks:

  • A 2017 University of Michigan study found job applicants without criminal records were 60% more likely to get a callback than applicants with minor, nonviolent felony convictions.
  • According to AnnElizabeth Konkel, an economist at the jobs portal Indeed, 2.5% of job listings on the site in May advertised “fair chance” hiring, a term for positions open to people with convictions. That might seem small, but it’s more than double the 1% observed in 2018.

“The majority of people who go to prison don’t go back,” Shawn Bushway, a senior policy researcher at RAND, told CNBC. “How long does this record have to hang over their head?”

Smart Wager: Companies can benefit from widening their hiring pool to tame wages, which grew 5% in the private sector in the first quarter of 2022. “Suddenly employers are faced with a choice of raising wages to attract workers or attempting to increase hiring of people with records to keep wages low,” Beth Avery, an attorney at the National Employment Law Project, told Axios. “I hope the changes are sticky and continue even after the tight labor market is not as tight.”