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How higher minimum wages could keep people out of prison

If people secure a job that pays well when they return from prison, the chance that they recommit the crime that got them there drops.

How higher minimum wages could keep people out of prison
[Photo: Giulio Napolitano/Bloomberg/Getty Images]

One of the most common pushbacks to state and local minimum wage hikes, like those enacted in Seattle and New York state, is that requiring companies to pay people more might result in fewer jobs, or fewer shifts for people who work them. While research has been mixed, most studies find that higher minimum wages tend not to impact job availability, and generally increase quality of life for workers.

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In a new paper, a pair of researchers added another dimension to the minimum wage researchers now has added another dimension to the minimum wage debate–one that’s too often left out of the discussion around employment opportunities. Economics professors Amanda Agan of Rutgers University and Michael Makowsky of Clemson University examine the effect of minimum wage increases on people who were formerly incarcerated, and found that on the whole, a minimum wage increase of $.50 an hour reduced the chance that a person would end up back in prison within a year by 2.8%.

Every year, over 600,000 people are released from prison in the U.S. The likelihood that they will return is in no small part determined by the available jobs in the market into which they re-enter, and how well they pay. “There’s a lot of literature in economics about how being released from prison into a good labor market–when there are a lot of available jobs and higher wages—reduced the probability of people returning to prison,” Agan says. In speaking with Makowsky, the duo became interested in examining the effects of local minimum wage laws on recidivism, precisely because of that common critique that a higher minimum wage may constrain the presence of available jobs.

Largely, what Agan and Makowsky found is that the benefits of a higher local minimum wage for returning prisoners outweighed any constraints in job availability that the minimum wage produced–mirroring trends in the overall positive effects of a higher minimum wage. The study mapped prison release data from the nearly 6 million men and women released from prison between 2000 and 2014 against state and federal minimum wage data. It was a source of frustration to Agan that more granular data, like into which county a formerly incarcerated person moved after being released, or where, or if, they were employed, was not available; for their study, Agan and Makowsky mainly had to work off data about prison entry and release at the state level, and track that alongside various minimum wage lifts. The lack of data, while frustrating to Agan, was not surprising. The Prison Policy Initiative released the first nationally representative estimate of employment among formerly incarcerated people this summer, but “there’s almost no data we can access on the individual level linking people’s criminal record to their employment outcomes,” Agan says.

What was pretty clear to Agan, though, was that for people returning from prison, the prospect of higher wages is especially crucial. The majority of reductions in recidivism that she and Makowsky tracked were across potentially revenue-generating crime categories like drug and property-related offenses. If a lack of adequate income is what causes someone to participate in illegal activity in the first place, it stands to reason that paying people more would alleviate some of that pressure.

That’s not to say, though, that a higher minimum wage is an automatic fix for the issue of rebuilding a life after prison. Of the 5 million formerly incarcerated people in the U.S., around 27% are unemployed, and often lack the resources or social support to receive job placement or training services. Without more coordinated re-entry programs in place, people with a history of incarceration will continue to fall through the cracks.

And there’s a role for employers to play, too. “A number of studies show that employers have no particular desire to hire people with a criminal record,” Again says. “And a higher minimum wage could serve as cause for an employer to substitute toward a different labor pool.” Often, employers will hire people recently out of prison for reduced wages, using the fact that many other employers may not hire them at all as leverage for lower pay. But if a local minimum wage mandates that employers pay their workers equitably regardless of their background, they might not offer formerly incarcerated people work.

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There are various efforts to combat such employee-level discrimination against formerly incarcerated people: The “ban the box” movement encourages employers to ditch the question about criminal record from job applications, and other, more progressive movements like open hiring–pioneered by the Yonkers, New York-based social enterprise Greyston Bakery–advocate for hiring without drug tests, background checks, or questions about criminal records, all of which often prevent people from securing jobs. As more localities enact minimum wage laws, and as companies, most notably Amazon, which recently announced a $15 hourly wage floor for all workers, do the same, it should be beholden on them to ensure that higher wages don’t equate with a loss of opportunity for people who need it most, like those returning home from prison. Localities could enact laws against discrimination on the basis of incarceration history, and companies could be more rigorous about adopting open-minded hiring practices.

Ultimately, Agan and Makowsky’s research adds to the growing body of studies that show that the most effective strategy for supporting people’s livelihoods are higher and more consistent wages. The positive effect on reducing recidivism rates show that this is especially meaningful for people returning from prison–and should serve as evidence that minimum-wage and criminal-justice-reform advocates have broad common ground from which they can advocate for both.

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About the author

Eillie Anzilotti is an assistant editor for Fast Company's Ideas section, covering sustainability, social good, and alternative economies. Previously, she wrote for CityLab.

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