Perceived Criminality, Criminal Background Checks and the Racial Hiring Preferences of Employers Harry J. Holzer Georgetown University Steven Raphael UC Berkeley Michael A. Stoll UCLA

Collateral Consequences of Imprisonment Individual  Employment  Public Assistance, Voting, Public Housing, Driver’s Licenses, Adoptive and Foster Parenting, Student Loans Community  Neighborhoods, families, health, state budgets  Groups with High Incarceration Levels

Why Are Employers Adverse to Hiring Ex-Offenders?  Reluctant to hire ex-offenders  May steal or harm customers  Imperfect monitoring of employees-premium on trustworthiness  Certain occupations are legally closed to applicants with prior felony convictions  Protect against lawsuits  Legally liable for criminal actions of employees - theory of negligent hiring

Correlates of Employer Aversion to Ex-Offenders Smaller establishments Service and FIRE sectors (Manufacturing open to hiring) Customer Contact Use Informal Recruiting Methods Unwilling to hire other “disadvantaged groups”

Potential Mechanisms to Act on Aversion  Use of Criminal Background Checks  Statistical discrimination

Do employers have access to criminal records?  Records of arrests, convictions, and time served are housed in state central repositories.  In general, states are more likely to give out information on conviction than arrest.  The U.S. DOJ recently concluded that criminal history record information is becoming more available to non-criminal justice users.  Several firms advertise on the internet, offering nationwide criminal background checks for as little as $15.

Use of Criminal Background Checks  larger firms  industries with more customer contact (retail trade, service and FIRE)  increasing over time  mostly from private sources

Effect of Checks on Black Hiring Ambiguous  Checking employers more likely to eliminate Black applicants since they are more likely to have criminal history records  Non-checking employers may infer likelihood of past conviction based on race (perceived criminality)

Description of the data Multi-City Study of Urban Inequality  Conducted between June 1992 and May 1994 in Atlanta, Boston, Detroit, and Los Angeles  Sample of firms generated from two sources: (1) a concurrent household survey, and (2) a sample of firms purchased from Survey Samples Incorporated (SSI).  SSI list was stratified by establishment size and sampled according to the distribution of employment across size categories.  Telephone surveys were conducted with the person at the firm in charge of hiring for firms that have hired into a position not requiring a college degree in the last three years.  The response rate for successfully screened firms was 67 percent.

Other Major Findings  Effects stronger for firms unwilling to hire ex-offenders and for smaller firms  Pattern not explained by application patterns  Similar effect for those with spotty work history

Conclusions  Employers who use checks more likely to hire black applicants than employers who do not.  Implies that adverse consequences of checks on those with criminal histories is more than offset by positive effects of eliminating statistical discrimination.  More true for firms unwilling to hire ex-offenders

What to Do to Raise Employment?  Supports for Reentry  Reverse Bans on Financial Aid and Public Assistance  Employment Bans Based on Content of Criminal History, Not Blanket Use  Conviction Not Arrest Records  Ensure Accuracy of Records  Incentivise Desistance-Expunge Certain Records After Fixed Time Period  Indemnify Employers – Bonds, Not in Blanket Fashion  Re-examine Federal, State and Local Employment/Licensing Restrictions  Child Support