Pew Economic Mobility Project: Incarceration’s Effects on Economic Mobility

I think the gigantic increase in the United States’ prison population and sentencing norms over the past 30 years is one of the largest drivers of inequality and stagnating wages that doesn’t get discussed in the generic inequality story.

So it is great to see the Economic Mobility Project, an Initiative of the Pew Charitable Trusts, release a report: Collateral Costs: Incarceration’s Effect on Economic Mobility (full pdf here). It’s written by Bruce Western and Becky Pettit. I’m a big fan of Western’s Punishment and Inequality in America, and this report expands on many of those arguments and updates the data.

It’s interesting to think of the massive increase in our prison population, to numbers over 1 in 100 and by far the largest in the world as a percent (and in terms of actual population larger than the top 35 European countries combined) as a type of exogenous change, equivalent to discovering computers. This change didn’t happen by accident but instead by changing sentencing laws, the War on Drugs and legal decisions on who goes to prison and for how long. It accounts for roughly 25% of the reduction in crime, a blunt, expensive way of tackling this problem.

Did I mention expensive: “The direct cost of this imprisonment boom, in dollars, has been staggering: state correctional costs quadrupled over the past two decades and now top $50 billion a year, consuming 1 in every 15 general fund dollars.”

Statistics are very hard to do on this, but the report finds that incarceration itself (as opposed to the arrest and conviction) reduces earnings and hours worked significantly. How? The likely mechanisms is detachment from the labor force and society at large, the social networks the person is likely to build are criminally active, the subsequent supervision sending people back as well as child support arrearages and other court payments that add up while out of the labor force.

They also mention that the formerly incarcerated “bear the indelible stigma of incarceration that ranks them low on any list of job candidates, and face a number of laws barring them from working in certain occupations. Finally, while some employers might be inclined to hire a former inmate, many are dissuaded from doing so by potential legal and financial liabilities”, something we discussed here with Illinois state licensing preventing former inmates from making inroads to basic service industry careers.

If we are concerned about stagnating wages, mobility and inequality then finding better ways of dealing with criminal justice and alternatives to incarceration is a connected and urgent part of the problem. Look at the demographics hit by increasing incarceration and then think about the demographics that have stagnant wages. I wish the labor economists would pay more attention to this.

The paper continues to discuss the impact on intergenerational mobility and earnings based on incarceration. I learned this disturbing fact: “1 in every 28 children in the United States—
more than 3.6 percent—now has a parent in jail or prison. Just 25 years ago, the figure was only 1 in 125. For black children, incarceration is an especially common family circumstance. More than 1 in 9 black children has a parent in prison or jail, a rate that has more than quadrupled in the past 25 years.” The obvious results are heartbreaking and speaks to a growing divide in our country based on things like a senseless and pointless “war” on drugs.

On Reintegrating Into the Labor Force

The paper also deals with something I’m thinking a lot about these days: how to reintegrate people back into the labor force. For them, it’s about those leaving prison. For me, it’s about those who have become permanently detached from the labor force and those who have ended up out of the labor force as a result of the Great Recession.

The authors provide a review of transitional work programs as well as limits on garnishments and creative ways to go about repaying debts to society and others (a huge factor in our balance sheet recession for out of the labor force workers).  This was something new I learned: “A report by the Council of State Governments Justice Center, for example, found that 12 percent of probation revocations—returns to incarceration for violations—were due in part to a probationer’s failure to make required payments.”  The same could be the de facto result of the credit card safety net, the bankruptcy reform bill and the underwater consumer balance sheet.   There has to be a better way.

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6 Responses to Pew Economic Mobility Project: Incarceration’s Effects on Economic Mobility

  1. Ted K says:

    This is a nice post, and I think it shows you are a very contemplative person, and compassionate. But I think many people would say of the many problems America has this ranks somewhere at the bottom of the list. I have mixed feelings on it myself.

    Mike, hope you can give me a short answer on this—where is China on the graph?? They don’t keep stats at all?? Or the stats are unreliable, or what??? I have a distinct feeling they would rank somewhere at the top. I have been on the outside fence of one of the prisons in northeast China, and it’s an eery feeling, although that might have been my imagination as much as anything.

  2. Ted K says:

    OK, maybe I should have read more carefully, but I certainly don’t consider Georgia or Russia as part of Europe, so I guess it didn’t register. Even Ukraine is a bit of a stretch in my mind…. but anyway….

  3. I think one of the biggest points is that there’s no cheap, easy way.

    So much prevention is a fantastic high return investment, but then you have Republicans calling it wasteful spending — that we can’t afford. I love that saying “that we can’t afford”, yes we can afford to spend trillions per year on ever bigger mansions, six and seven figure cars, four and five figure hotel rooms, and other largely positional/context/prestige, zero sum game consumption of little intrinsic utility, but we can’t afford so many high return investments that cost a fraction as much, and are well proven in economics to be grossly underprovided and/or inefficiently provided by the pure free market.

    And in any case, not spending on high return prevention activities ends up costing far more in prison and security costs, and loss of human production.

    But there’s another big point, how many economic models of unemployment and wages include the costs of increased crime and prisons — from unemployment and low and unsecure wages? How many freshwater or libertarian economists consider this in their prescriptions for dealing with unemployment, inequality, economic security, and the subsidization of education?

    Here’s a great article to start with to see how important and sadly neglected these things are, especially by freshwater economists who usually just assume them away:

  4. Interesting question:

    Already many countries are very close to our GDP per person, or per hour worked, or ahead, thanks to a generation of Republican dominance. But sadly, security spending is ADDED to GDP, when it’s actually a cost of production.

    You wonder if crime, security, and prison costs were taken out of GDP, how many countries would be ahead of the US in GDP per person, or hour worked.

  5. Pingback: Prisoners’ Dilemmas « The Enterprise Blog

  6. Pingback: Martin Luther King, Jr. Would Speak Out on Our Incarceration Crisis » New Deal 2.0

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