Economic context
Research Summary

Better Local Labor Market Conditions Can Help Reduce the Risk of Reincarceration in the United States

Marokey SawoLast updated on June 11, 2024
Source: Journal of Public Economics Title: Local labor markets and criminal recidivism Author(s): Crystal S. Yang Original Publication Date: March 2017 Read Full Research Article

Communities across the United States often face a dual challenge of high costs to incarceration and working age people being out of the labor force. Evidence suggests that both can be improved by boosting US labor market conditions, which is characterized by longstanding structural problems that manifest as persistent wage gaps and other workplace inequities between workers primarily across race and gender. These issues are exacerbated by a number of other factors when it comes to formerly reincarceration people.

Research shows that Black, Latinx, and Native people in the United States are significantly more likely to be incarcerated and are notably overrepresented among the incarcerated relative to their respective shares of the general US population. People with a criminal record also are more likely to face additional barriers in the US labor market, and have notably lower employment rates in the formal economy, with only 40 percent being employed according to a recent estimate.

Overall, labor market conditions are a key determinant of wages. This matters even more given the relationship between economic conditions faced by formerly incarcerated individuals, including recidivism, parole revocation, and the societal costs associated with incarceration. Furthermore, incarceration places an additional racial barrier to employment because the US labor market is racially segmented.

In her study, “Local Labor Markets and Criminal Recidivism,” Harvard Law School professor Crystal S. Yang examines whether local labor market conditions at the time when people are released from prison have an impact on their likelihood of being reincarcerated. Using administrative data from the US Bureau of Justice Statistics under its National Corrections Reporting Program on prisoner admissions and releases, this 2017 paper examines the patterns of being convicted and reincarcerated for people released from state prisons from 2000 to 2013 across 43 states, relative to their first observed record of imprisonment in the dataset.

Using employment and earnings data from the US Census Bureau’s Quarterly Workforce Indicators, the study focuses on the average wages of noncollege-educated men as an indicator of local labor market conditions in a “proportional hazard model.” This model is used to estimate time-to-event outcomes, along with variables about the demographic characteristics and incarceration history of a given offender.

Yang conducts a number of sensitivity tests to decipher whether the results are driven by the model’s specifications and key variables of choice. She also estimates the differences in impact across a few different industries. The “hazard” rate in this study estimates the probability of returning to prison in a given quarter after being previously released from prison.

The study finds notable effects of local market conditions at the time of prisoners’ release on the likelihood of them returning to prison. Overall, Yang finds that a 1 percent increase in the wages of noncollege-educated men is associated with a 0.46 percent reduction in the probability of being reincarcerated within three years of release. To give a sense of magnitude, the paper estimates that across the whole sample, the overall probability of returning to prison within three years is 26.8 percent.

The estimated reduction is sharper among certain groups, such as Black and older formerly incarcerated people and those with no prior felony incarceration. In addition, the effects are stronger in response to wage increases in industries most likely to hire people with a criminal record, such as construction and manufacturing. With 90 percent of the sample being men without a college education, the wages of noncollege-educated men are of key interest as a relevant indicator of the labor market conditions facing this group.

Key findings
  • The estimated risk of formerly incarcerated individuals being reincarcerated is highest the first year after being released and declines sharply after three years of being released.
  • The main result of a 0.46 percent reduction in the probability of reincarceration for a 1 percent increase in the wages of noncollege-educated men is in the context of an overall estimated risk of reincarceration of 26.8 percent within three years. And to give a sense of scale, it is estimated from elsewhere that 610,000 people are released from state and federal prison each year.
  • Although improvements in local market conditions are associated with reductions in the risk of reincarceration for all, the size of that impact differs by race. The estimated reduction in the likelihood of being reincarcerated for Black formerly incarcerated people was 0.54 percent for every 1 percent increase in the wages of noncollege-educated men, compared to a 0.36 percent reduction for their white counterparts.
  • Older people show higher responsiveness to wage increases: a 1 percent increase in wages of noncollege-educated men is associated with a decrease in the likelihood of reincarceration of formerly incarcerated people ages 25 to 40 by 0.43 percent, compared to by 0.50 percent for those ages 40 and older.
  • Increases in wages in some industries that are more likely to hire formerly incarcerated people, namely construction, manufacturing, and transportation, are estimated to decrease the risk of reincarnation even further.
  • The estimated size of the reduction in being sent back to prison specifically for committing a new offense is larger than it is for being reincarcerated for any reason, which includes, for example, parole violations.
Policy and practice implications

WorkRise has identified the following implications for policy and/or practice:

  • Policymakers and practitioners should prioritize policies that address the additional barriers that formerly incarcerated people face in seeking and attaining employment, such as “banning the box” in combination with policy and enforcement efforts to combat racial discrimination in hiring and ensuring against legal bias. Doing so should focus on expanding access into industries across the US economy so formerly incarcerated people are not concentrated to a few sectors when they do manage to secure employment, given the issues associated with such sectors as formerly incarcerated people make up a bigger share of their workforce among other factors, including harsh working conditions, low wages, and low bargaining power.
  • Policymakers should be concerned with achieving and maintaining strong labor demand and wage growth that holds across racial groups. Before the start of the COVID-19 pandemic in early 2020 in the United States, wages for low-wage workers stagnated for four decades. This is particularly pressing for formerly incarcerated people given the range of issues discussed above. Ensuring a strong economy for all will disproportionately benefit them, helping to reduce the risk of reincarceration. The federal response to the early stages of the COVID-19 pandemic showcased the types of multipronged policies that prevented the collapse of the US labor market, delivered wage growth, and provided safeguards against the type of economic distress this work implies, which could have significantly increased the risk of reincarceration.
  • Addressing racial disparities in labor market conditions, and ensuring effects are reached at the local level, are key to harnessing the potential impacts of economic conditions on reincarceration given the longstanding racialized trends of both incarceration and experiences in the labor market. These include prioritizing fiscal and monetary policies that support full employment and addressing racial disparities in labor market outcomes for an overall robust economy, such as:
    • Ensuring worker rights and protection through securing workers’ ability to organize and collectively bargain
    • Raising the federal minimum wage, which has been stagnant since 2009 and has eroded in its real value for decades, to establish a floor for low-wage workers across the country
    • Bolstering worker support programs, such as unemployment insurance and paid leave

The employment conditions faced by formerly incarcerated people reflect a combination of both circumstances they faced before incarceration and the added barriers that a conviction history bring upon their release from prison. For economic conditions through the labor market channel to make a dent on reincarceration, these challenges must be addressed.

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