Criminal background and job performance

If you were an employer, would a criminal record factor into your decision to hire a candidate? New research published in the IZA Journal Of Labor Policy explores the relationship between criminal backgrounds and job performance, seeking to understand the reasons employers use criminal records and the assumptions that are held about them.

This post was crossposted from the SpringerOpen blog.

Over 650,000 individuals are released from U.S prison each year, with many others receiving criminal sentences than do not result in prison. Employers are reluctant to hire job applicants with criminal records, and criminal background checks are a common part of job applications.

Six months or so after release, 50 to 80 percent of the formerly incarcerated are not employed in the legitimate labor market. Over half of released prisoners are reconvicted within three years, and a failure to obtain legitimate employment is one of the strongest correlates of criminal recidivism.

Little is known about exactly why employers use criminal records, and still less is known about whether this use is based on accurate assumptions. Are employers primarily concerned with potential workplace misconduct or are they using a criminal record as a proxy for the personality characteristics associated with job instability or poor performance? Is either fear founded on an accurate view of how individuals with a criminal record behave on the job if they are hired?

How do individuals with a criminal record behave in their jobs?

Our paper is the first to use civilian workforce data to shed light on these issues. The data was drawn from the client firms of a hiring consultancy. The jobs examined were low-skill white-collar positions, primarily at call centers.

This finding suggests that individuals with a criminal record represent an untapped productivity pool.

In these occupations, where turnover is a major labor cost determinant, we find that workers in all jobs with criminal records have a longer tenure and are less likely to quit their jobs voluntarily than other workers. This finding suggests that individuals with a criminal background represent an untapped productivity pool.

However, we find that in some jobs, employees with a criminal record do appear more likely to leave for reasons of misconduct. In our data, the high-risk job is sales.

The higher misconduct rates of people with records in sales compared with those in other jobs such as customer services appears to result in part from differences in the type of people with records who enter sales jobs, and in part from differences in the personality characteristics required for sales jobs. Noting that sales jobs have a higher misconduct rate for all workers, regardless of criminal background, we conjecture that whatever factors create this overall high misconduct rate may have an even greater effect on employees with criminal records.

What is misconduct and how much does it cost?

The precise cost of this excess misconduct risk is highly speculative: the term “misconduct” encompasses behavior ranging from excessive absenteeism to a variety of criminal conduct. Surveys suggest that employers are primarily concerned about large negligent hiring judgments for violent acts, but no systematic evidence supports this concern.

The primary employer losses from misconduct are probably more pedestrian, such as absenteeism and petty theft. With this in mind, we make a rough estimate of the cost-benefit calculation facing an employer. An employer who hired a worker with a criminal record for a sales job rather than a worker without a record increased its expected theft-related costs by about $43. The same employer saved about $746 in turnover costs on that worker.

Our findings are not simple, and neither are their policy implications. Finding gainful employment for individuals with a criminal record is an important public priority: without such employment, recidivism is almost inevitable, at great cost to both the individual and the community.

These findings suggest that, at least with regard to customer service positions and possibly more broadly, there are unexploited opportunities to expand marginally the hiring toward applicants with a criminal background in a way that makes sense both on efficiency and on moral grounds. At the same time, employers are concerned that employing individuals with a criminal record may carry risks, and our study does not entirely dispel those fears.

These findings are a cautionary tale of the risks of drawing broad conclusions based on one type of position or industry, which in turn has implications for public policy. Ban the Box laws have come to dominate the policy discussion of how to improve the employment prospects of people with criminal records. These laws apply uniform rules to all employees and employers. Yet a clear takeaway from our study is that not all workforces are the same.

Employers should be encouraged to re-examine their assumptions about applicants with criminal records by studying their own workforce. A wide variety of measures could promote this self-examination. The current Work Opportunity Tax Credit in the U.S is a step towards encouraging this self-examination, but is at present only available to employers who hire individuals with felony convictions within one year after their conviction or release from prison.

However, employers appear to discriminate against individuals with a criminal record long after release or conviction and some employers apply a hiring penalty to those with a misdemeanor or even arrest record.

Alternative approaches would improve the system of employer liability insurance. At present, employees with criminal records are essentially uninsurable. Currently, the Federal Bonding Program provides only the most limited insurance, and the insurable amounts as well as the misconduct covered might be increased. A wide variety of policy options are available to reintegrate individuals with a criminal record, but each must be carefully designed, and should consider the variety of job applicants; of jobs; and of employer motivation.

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