Direct incentives can increase the willingness of hiring managers to hire people with criminal records

Millions of people in the United States have a criminal record and are looking for work. Yet most employers are hesitant to hire people with criminal records, especially those with criminal records, a disproportionate number of whom are people of color. In a new study, researchers set out to find out whether government incentives could reduce employers’ reluctance to hire people with criminal records. They found that a tax credit and loss insurance increased hiring managers’ willingness to hire applicants with criminal records.

The study by researchers at RAND and the University at Albany appears in Criminology and public order.

“Although it benefits society when people with criminal records work, employers are often reluctant to hire them,” explains Shawn Bushway, a senior policy researcher at RAND and a professor at the University at Albany (SUNY) who led the study. “We tested whether this reluctance can be reduced through direct incentives that reduce the cost of hiring people with criminal records or compensate employers for the risk involved.”

In the United States, background checks have changed when hiring workers. Thirty-seven states and more than 150 cities have adopted what’s known as a ban-the-box hiring process. Employers must remove questions about criminal records from application forms and conduct background checks later in the hiring process. Yet even with this change, people with criminal records tend not to be hired as often as those without. Governments can compensate employers for the costs of hiring people with criminal records through wage subsidies, insurance for small losses from theft, or protection from negligent hiring lawsuits.

In this study, researchers conducted two experiments with a professionally and geographically diverse group of 1,000 hiring managers making decisions about 14,000 hypothetical applicants. In one experiment, called traditional hiring, applicants’ criminal history was available at the start, while in the other experiment, which reflected a ban-the-box hiring, this information was not available.

In both experiments, direct incentives increased participants’ willingness to hire applicants with criminal records. The most effective incentives were a $2,400 tax credit and $25,000 insurance against losses resulting from employee dishonesty. Protection against lawsuits for negligent hiring was less effective.

The incentives worked regardless of whether applicants had been convicted of a misdemeanor or a felony. They worked not by changing perceptions of those with criminal records’ performance as employees but by compensating employers for hiring such applicants, the study found.

The use of rehabilitation certificates, which provide employers with information about a potential applicant’s risk of reoffending, also increased participants’ willingness to hire applicants with criminal records, partly by providing a better assessment of these applicants’ performance as employees.

Limitations of the study, cited by the authors, include that while their experiments involved real hiring managers, the applicants were hypothetical. Additionally, the participants were not a random sample of U.S. hiring managers, so the study’s results may not be representative of U.S. employers. Additionally, in large companies with formal background check policies, hiring decisions may be made at higher levels and include less information about individual applicants, so the study’s results may be more useful for smaller companies that do not have a centralized human resources department.

“Two of the policies we tested are modeled after two current federal policies – the Work Opportunity Tax Credit and the Federal Bonding Program – but neither is widely used,” notes Justin Pickett, a criminal justice professor at the University at Albany who co-authored the study. “Based on our results, a policy that combines rehabilitation certificates with modest direct incentives can positively affect employment rates for people with criminal records, even with the implementation of Ban-the-Box.”