Banks are the leading industry when it comes to fair chance disclosure, with five companies disclosing a policy for hiring formerly incarcerated individuals.
JUST Capital polling finds that the American public continues to want corporate leaders to prioritize their workers. And our research suggests that companies that do tend to outperform their peers. One group of workers that companies are often less attentive to, however, is formerly incarcerated individuals.
Data from the Bureau of Justice Statistics and Federal Bureau of Investigations estimates that over 70 million Americans have a criminal record. Some estimates suggest that up to one in three Americans could have a record, and that can be for issues as minor as an arrest without conviction. The unemployment rate for formerly incarcerated workers is 27%, significantly higher than the overall unemployment rate (approximately 3.5% at the time this article was published). And while the unemployment rate captures just those who are actively seeking employment, the jobless rate for formerly incarcerated individuals is even greater, estimated at 60%. There remain, however, about 9.6 million job openings in the U.S. as of the end of June, according to Bureau of Labor Statistics data.
Companies can lead on fair chance by publicly disclosing policies and programs that attempt to compensate for racial inequities by committing to fair chance hiring practices, especially in high-wage industries, and removing barriers for people with criminal histories.
As companies strategize how to find talent in a tight labor market, fair chance hiring broadens the pool of workers who can fill a variety of roles. Fair chance hiring provides employment opportunities to individuals, regardless of their criminal history. Employers may be hesitant to implement these practices, concerned about the risk of negligent hiring liability, a term to describe hires that could lead to future legal repercussions. However, a new study demonstrates that this risk is largely imaginary, is most common in a specific number of jobs with obvious risks, and further proposes five steps to enable a fair chance workforce while protecting your company.
Other research has shown that hiring formerly incarcerated individuals benefits businesses through cost savings as a result of increased retention, decreased turnover, and higher employee loyalty. The federal government has begun moving on its Alternatives, Rehabilitation, and Reentry Strategic Plan to provide these opportunities at the federal level. Companies have much to gain by following in the government’s footsteps.
At JUST Capital, we recently evaluated how Russell 1000 companies perform on fair chance policy disclosure. In our 2021 and 2022 Corporate Racial Equity Trackers, we examined fair chance policies among the largest 100 U.S. employers. (Black and Native Americans are most disproportionately impacted by the U.S. criminal justice system. The NAACP reports, for example, that while 5% of illicit drug users are Black, they make up 29% of people arrested and 33% of people incarcerated for drug offenses. Native women, especially, are overrepresented among incarcerated people. Per every 100,000 Native women within the population, 349 are in prison or jail. That compares to 285 for Black women, 115 for Hispanics, and 108 for whites, out of every 100,000 women for each of those demographic groups, the Prison Policy Initiative reports.) This new analysis, however, marks the first time we’ve taken a holistic look across the Russell 1000. Here’s what we found.
For our annual Rankings of America’s Most JUST Companies, we consider a fair chance policy to be a re-entry program that focuses on hiring people with criminal records, or a policy of eliminating barriers for those with a criminal record. Of the 951 companies we analyzed, we found that only 38 companies (less than 5%) disclose a fair chance hiring policy. It is interesting to note that nearly half of them are in the JUST 100, which means that JUST 100 companies are almost seven times more likely to disclose a fair chance program (17%) than non-JUST-100 companies (2.5%).
Looking at the industry breakdown, we found that over 50% of industries (or 19 of 36) do not have a single company disclosing a fair chance hiring policy. Banks have the highest number of companies that disclose, including East West Bancorp, Capital One, Bank of America, Truist, and JPMorgan Chase.
CEO of JPMorgan Chase Jamie Dimon endorsed second chance legislation and worked with the Bipartisan Second Chance Task Force to host a roundtable discussing the benefits and impacts of fair chance employment practices. He also co-chairs the Second Chance Business Coalition, a group of companies committed to advancing fair chance hiring and learning from each other’s approaches. “[…] we hired approximately 2,100 people with a criminal background in 2020 — roughly 10 percent of our new hires in the United States that year,” he wrote in a New York Times editorial in 2021.
Fair chance policies help companies build stronger workforces. And by providing high-wage, skill-building opportunities, companies have a better chance at lowering recidivism rates among formerly incarcerated individuals.
With four companies disclosing, Utilities follow as the industry with the second-highest number of disclosures, which may be unsurprising considering the federal bills passed that spur growth in the energy sector, like the bipartisan infrastructure bill.
Three industries are tied at having three companies disclosing: Food, Beverage, & Tobacco; Food & Drug retailers; and Software industry. Software has the largest number of companies of any industry in our model, and it may be that some of the STEM-focused fair chance initiatives are paying off.
Slack-founded initiative Next Chapter is an apprenticeship that provides formerly incarcerated individuals with software engineering skills through mentorship, coding training, and job placement. Funded by sponsor companies and our shared foundation partner the W.K. Kellogg Foundation, Next Chapter aims to normalize fair chance employment practices, particularly in high-wage employment industries.
Salesforce, which acquired Slack in 2021, invested $2.5 million into the program in late 2022. Partnering companies also join a network of fair chance employers, which includes, among others, DropBox, PayPal (JUST Capital’s program partner in the Worker Financial Wellness Initiative), and Zoom. PayPal also publicly disclosed its partnership with Next Chapter in its most recent ESG Report. Initiatives like this provide STEM skills that would be relevant in other industries growing from federal bills like the Inflation Reduction Act and the CHIPS Act especially.
Research from the Prison Policy Initiative finds that higher wages and better work safety play a role in reducing recidivism. Companies can demonstrate leadership by publicly disclosing their fair chance policies and programs. Removing barriers for people with criminal records opens up a new talent pool that can help solve for existing labor shortages with workers ready to learn and exercise new skills. To have the biggest impact, programs should focus on skill building and be in high-wage industries with reliable work and on-the-job safety. This will attract talent, reduce recidivism, and create a more inclusive future of work while also reducing labor shortages. For more information about fair chance hiring policies, read our previous research on the subject or reach out to us at firstname.lastname@example.org.
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