After serving time in prison, many people, especially Black men who’ve been incarcerated, are more likely to start their own businesses. This is because they often face discrimination when looking for traditional jobs.
A recent study by Wharton found that those who’ve been in jail are 5% more likely to become entrepreneurs compared to others. For Black men specifically, starting their own business means they can earn more money than if they were to find a regular job, and they’re also less likely to end up back in prison.
The researchers behind the study believe this should make employers think twice about automatically dismissing job applicants with a criminal record. And policymakers should consider investing more resources in helping people in prison become entrepreneurs, as it could be a powerful way to help them reintegrate into society and succeed economically.
“The set of stereotypes we have about people who have been incarcerated works against the goal of having a strong workforce,” the researchers explain. “Given that almost a third of adults have some form of criminal record, the health of the economy and public safety is improved when you provide employment opportunities for these citizens.”
A fair chance
The researchers looked at information from the U.S. Longitudinal Survey of Youth and data from the National Employment Law Project, which focuses on policies like the Fair Chance Act. This act, also known as ban-the-box policies, stops employers from doing criminal background checks until later in the job application process.
In places where these policies are in effect, previously incarcerated Black men were the only group less inclined to start their own businesses. This aligns with the notion that Black men face more discrimination in the job market, especially considering they’re imprisoned at much higher rates than any other demographic group.
The researchers recognize that employers might have valid worries about hiring individuals with a criminal record, including potential public relations issues. However, they argue that there’s a strong business rationale for not disregarding this talent pool and instead providing opportunities for them to contribute value to their employers.
They suggest that the study highlights the necessity for better education and support for returning citizens who aim to start their own businesses. This could involve assistance in crafting solid business plans or improving their access to funding. Additionally, it prompts companies to reconsider their procurement practices and contemplate engaging vendors and contractors who have previously been incarcerated.
Another significant discovery from the paper pertains to recidivism: Individuals who have been incarcerated and venture into entrepreneurship are markedly less prone to re-offend, even when compared to their counterparts in conventional employment. While the research doesn’t pinpoint the exact reasons behind this phenomenon, the researchers speculate that it could be attributed to improved wages, heightened stability, and a sense of communal pride associated with entrepreneurship.
“Some of that, we believe, is about the dignity of work,” the researchers explain. “I do think there are distinct advantages associated with entrepreneurship, especially for a population that is stigmatized. But it’s not just an entrepreneurship story — it’s an employment story.”
