Do Prisons Make Us Safer?: The Benefits and Costs of the Prison Boom

8. Collateral Costs: Effects of Incarceration on Employment and Earnings Among Young Workers

Harry J. Holzer Collateral Costs: Effects of Incarceration on Employment and Earnings 8 Among Young Workers The enormous increases in incarceration that have occurred in the United States over the past few decades have no doubt generated major benefits and costs to society. On the one hand, they have likely reduced crime, at least to some extent, which generates a large benefit to society. On the other hand, it has cost enormous public sums to build and operate prisons in the United States (Donohue, chapter 9, this volume). In addition, there are a range of “collateral” benefits and costs to the individuals who are incarcerated, their families and communities, and others that need to be considered as well. For instance, the experience of incarceration could potentially have either positive or negative effects on the employment and earnings of offenders after their release. Incarceration might have a range of other effects on individuals as well, including their civic participation, voting behavior, access to public benefits, and the like. These, too, could have implications for their families and communities as well as themselves. This chapter reviews what we know about the collateral costs and benefits of incarceration on earnings and employment. It does so partly because these benefits and costs have been the subject of much more research to date than the collateral effects along other dimensions. But another reason to focus on employment is that these effects are extremely important. For one thing, the employment of ex-offenders is quite negatively correlated with their tendency to reoffend and recidivate; at least to some extent, this effect appears to be causal (Raphael and Weiman, 2007). Indeed, of the roughly 650,000 inmates who are released from jail or prison each year, a majority recidivate within three to five years (Travis 2004); for those who do not “reenter” successfully, the costs to the individuals , their families, and society are very large.1 Even among those who do not recidivate, employment outcomes are correlated with (and perhaps causally related to) health and other measures of their own well-being. Employment prospects and outcomes after incarceration thus appear to be major determinants of whether or not exprisoners “reenter” civil society successfully and of the myriad costs to the individual and to society when reentry is unsuccessful. This chapter presents the potential effects of incarceration on both the demand for labor (by employers) and its supply (among potential workers ). These effects can, in theory, be either positive or negative. Exploring the different studies on this topic, this chapter focuses on the data sources and empirical methods used, and on the magnitudes of the effects generated . In doing so, it seeks to reconcile conflicting results and generate a useful summary of what is known. The studies based on workers include those using individual data, either from surveys or from administrative sources, as well as more aggregated data. While the credible empirical evidence is quite mixed, the preponderance of it points to negative effects of incarceration on the subsequent employment and earnings of offenders. By reducing their employment prospects, these effects likely raise recidivism rates of released offenders, which imposes further costs on society (in the form of both crime and incarceration expenditures). Policies designed to reduce these collateral costs, either through direct reductions in incarceration rates or in their negative effects on subsequent earnings, might therefore generate positive benefits to the individuals in question and to society more broadly. EFFECTS OF INCARCERATION ON SUBSEQUENT EARNINGS: THEORETICAL CONSIDERATIONS When individuals are incarcerated and subsequently released, why should we expect their incarceration to potentially impact their employment and earnings? (For further discussion, see Sampson and Laub 1993; Western 2006.) Table 8.1 presents a range of possible effects, both positive and negative. These effects could operate through the employment and earnings of the incarcerated individuals themselves—whether before, during, or especially after incarceration—and also on the employment outcomes of certain nonprisoners as well. Furthermore, they could operate through the attitudes and hiring behaviors of employers, on the demand side of the labor market, as well as through those of potential job applicants and workers on the supply side of that market. A number of important considerations appear in table 8.1. Any positive effects that incarceration might have on employment would operate primarily through their deterrence effects on criminal behavior, primarily 240 Do Prisons Make Us Safer? after incarceration for those who engage in crime and...