Employers looking to fill critical job vacancies may want to turn to a largely untapped pool of willing workers: people with criminal records.
Employers are often wary of hiring workers with past convictions, leading to double-digit unemployment rates for formerly incarcerated people. That reluctance has hit Black Americans particularly hard since they have seen historically higher arrest rates, often fueled by racial discrimination, research shows.
But it might be a good time to rethink those hiring practices and the biases underpinning them, suggests new research by Harvard Business School Assistant Professor Zoë Cullen. After all, the COVID-19 pandemic continues to create challenges for companies attempting to fill job openings as record numbers of people quit their jobs in search of new opportunities in a hot labor market.
Cullen’s research shows employers are ready and willing to hire workers with a criminal history, especially if crime and safety insurance is available, or if the worker can provide past work performance reviews.
The findings were included in a working paper, Increasing the Demand for Workers with a Criminal Record, which was recently published by the National Bureau of Economic Research. The paper was written by Cullen, Will Dobbie of Harvard Kennedy School, and Mitchell Hoffman of the University of Toronto.
“There are a lot of companies willing to give workers with criminal pasts a second chance under the right conditions,” Cullen says. “Many of those conditions are being met now, or could be met with low-cost policies.”
Do ‘Ban the Box’ laws backfire?
In recent years, 35 states and 150 cities and counties have adopted so-called “Ban the Box” laws that restrict or delay employers from making criminal background checks on applicants seeking jobs, according to the paper. The goal of such laws is to boost hiring of those with past criminal records.
But Cullen and colleagues questioned if such “Ban the Box” laws actually address the potential underlying reasons businesses conduct criminal background checks when making hires. They also wondered if restricting background checks might backfire, especially if employers resort to racial stereotypes to guess who might have a criminal record—and avoid hiring those people.
So the researchers conducted field experiments involving the hiring decisions of nearly 1,000 businesses to test several approaches to increasing demand for workers with criminal records. The experiments asked hiring managers to make hiring decisions under different randomized “incentive-compatible” conditions.
The researchers partnered with Wonolo, an on-demand job marketplace that connects businesses that need workers on a temporary or seasonal basis with hundreds of thousands of people searching for jobs. Wonolo was co-founded in 2014 by Yong Kim, a 2007 graduate of Harvard Business School.
Reassurance and incentives open doors
The researchers initially found that 39 percent of businesses were willing to work with those who had a criminal history without additional incentives or conditions. The level of demand was even higher for jobs that didn’t involve customer interactions or high-value inventory, and those that were difficult to fill.
Then, the researchers started randomly offering extra hiring incentives to companies, including some that cost nothing to provide, and found that appetite for these workers increased substantially.
In particular, providing objective performance information about workers with a criminal record overall increased demand by 13 percentage points, the study found. Offering crime and safety insurance covering damages up to $5,000 increased the level of demand for those with criminal records by 12 percentage points. Limiting the pool of job applicants to those who maintained a clean record for at least one year raised willingness to hire by 22 percentage points.
Overall, with these assurances, more than 50 percent of companies were willing to hire workers with criminal histories.
“They feel more comfortable about who they’re hiring,” Cullen says.
The incentives might be cost effective, too. The team found that hiring incentives offered to businesses were less expensive than wage-subsidy programs backed by the federal government that were designed to address the same concern.
“I was surprised by how effective modest, low-cost incentives can be when it comes to increasing the hiring of disadvantaged workers,” says Cullen.
12,000 job offers
Reassuring employers ultimately benefits society and business simultaneously, says Cullen. “It’s helping to close the racial gap in hiring in the US,” she says.
Meanwhile, businesses gain by filling critical job vacancies, particularly during labor shortages. In all, the field experiments led to businesses offering 12,000 jobs to workers who applied for employment via Wonolo’s on-demand job marketplace, the study reports.
“The bottom line is that there’s a much bigger pool of talent out there waiting to be tapped,” says Cullen.
Kim of Wonolo says Cullen’s study validates what his company has observed in the marketplace: Businesses will hire workers with criminal records if they have the right incentives and information. “We believe anyone who has the will to work should be granted an opportunity to do so,” he says.