Poverty Incarceration and the Labor Market in America

Poverty is a relevant social issue in the United States. According to the United States Census Bureau, in 2017, our nation’s poverty rate was 12.3 percent. That means that 39.7 million people were in poverty, based on income. Between 2016 and 2017, the poverty rate dropped 0.4 percentage points, however this is not keeping pace with the real household median income which increased 1.8 percentage points in the same time period. Interestingly, the Census Bureau does not include or determine poverty status for those in institutional group sectors, including prisons.

This brings forth a relevant question with respect to how much incarceration affects poverty, and how it effects the labor market. How does age, race, education and geography affect employment after release from prison? What is the labor markets response to those with a criminal record? Are there other factors that may have impacted incarcerated persons abilities in the labor market long before they were imprisoned?

There is also a need to consider the labor market itself. There is an ongoing "jobs problem" in which there are both not enough jobs for lower-skill workers, and those that are available are not guaranteed to lift a worker and his family out of poverty based upon the wages and hours offered. Are formerly incarcerated persons in an even worse position for these types of jobs?

The Prison Factor

In 2018, according to the Prison Policy Initiative, 2.3 million people are held within the American criminal justice system between 1,821state and federal prisons, 3,163 local jails, 1,852 juvenile correction facilities, 80 Indian Country jails and other prisons, detention and commitment centers. This translates to a nationwide incarceration rate of 860 for every 100,000 adults over the age of 18. While this is a downward trend (according to the Bureau of Justice Statistics the rate peaked at 1,000 per 100,0000 between 2006 and 2008), according to the World Prison Brief the United States has the highest incarceration rate in the world, as well as the most people behind bars. Over 620,000 people are released annually from prison, and statistics show that approximately one third will return to prison during their lives.

In a recent study, Looney and Turner (2018) looked at 30-year old men in the United States who were not working. They discovered that approximately one third are either incarcerated or are unemployed former prisoners. Of the former prisoners, nearly half reported no earnings in the first few years after they were released. Of those who found a job, half were earning less than a full-time job would pay at minimum wage, or $10,090. This same study finds that these former prisoners were struggling long before their incarceration, as many had grown up in deep poverty and were either not working or earning very little before they were incarcerated. There was also a large share that grew up in areas of high child poverty rates and racial segregation. Most of these men also grew up in families where their parents were unmarried. The consideration of all of these factors makes clear that race, poverty and incarceration are all connected.

Education plays a large part as well. 40 percent of state and federal prisoners do not have a high school diploma or a GED. Inequities in class, race, age and gender have resulted in exceptionally high incarceration rates among young African American males with little schooling. In 1980, young African American men who had dropped out of high school had a 10% incarceration rate. By 2008, that rate had increased to 37%, which compared to the average incarceration rate by population was .76 of 1 percent at the time is an incredible increase. As a comparison, white dropouts incarceration rates increased during the same time from about 3% to around 12%.

After Release, Jobs?

According to Bruce Western of Princeton University (2002), occupations analysis has shown that stable employment is the greatest factor for earnings mobility, and incarceration reduces access to the earnings growth types of steady jobs. There has been found to be a 10 to 30 percent loss of earnings associated with imprisonment, and that young people detained in correctional facilities before they turn 20 have both higher unemployment rates and lower earning even a decade after their release (Western, 2002). A number of reasons exist that go towards an explanation of why slow wage growth is linked to jail time, but predominantly, there are three: stigmatization, job skill erosion, and social contacts erosion.

First, there is a stigma attached to a criminal conviction, and there exists the potential signal to employers that because of a conviction, a person might not be trustworthy. As a result, if there are other candidates for a position with no criminal record, employers are more likely to hire the other candidate. This is especially true of career or high-status jobs.

Second, incarceration and the time out of the workforce also prevents an individual from gaining skills through work experience. This also has an impact on wage mobility, in that most employers are unlikely to make an investment in firm-specific skills for those with a criminal record. As a result, prior offenders end up in positions where there is little opportunity for earnings growth.

Third, being incarcerated results in eroding the types of social contacts that would otherwise provide information on job opportunities. Many jobs as well as trade and public sector employment entrance depend on referral networks. There is also the potential for individuals to become involved with or attached to other types of groups, such as gangs, that would not be beneficial from a job seeking perspective (Samson and Laub, 1993).

A dissenting opinion to this shows that the length of incarceration also plays a factor as far as job opportunities after the fact. A study by Jung in 2011 showed that longer serving prisoners had more positive post-incarceration earnings and employment, versus those with a short time served. The reason for this seems to be the prison rehabilitation programs, which longer inmates are much more likely to be exposed to. They are also more likely to take part in work release jobs during their incarceration and potentially learn new skills. Jung’s findings were that as far as labor market outcomes are concerned, it is not harder for a person with a longer prison sentence to find a job.

What this means to society. There are a number of obstacles for prisoners reentering the labor market and reentering society upon release. Finding a stable source of employment, determining public assistance and finding social support are all key, even without additional common issues such as mental health and substance use. Not finding employment increases the risk for criminal behavior, and within three years, more than 40% of those released return to prison.

More often than not, there is a need for these individuals to pair public benefits with social support in order to make ends meet as employment they are able to find cannot sustain them. SSI, housing assistance, TANF and food stamps are all programs that are regularly utilized by this group.

Conclusion

Poverty, race and incarceration are interconnected. We know from research that ex-prisoners do not fare well in the labor market. We also know from a labor market perspective; these prisoners also did not do well before they were incarcerated. This can be as a result of growing up in poverty, which dramatically increases the probability that one will be incarcerated. It may also be a result of where the prisoners grew up. When you factor in thirty-three percent of men at age 30 without annual earnings are either in prison or are unemployed former prisoners, there is much work to be done.
In order to effectuate change, we must turn attention to the issues that exist long before incarceration. Potentially, focused policies that make an investment in children, target racial discrimination, and assess areas where poverty is concentrated geographically could all help. If we address the challenges that exist for children born into poverty, it stands that we could reduce incarceration rates and improve labor market outcomes.

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