Why America Inc is openingup to ex-convicts as recruits | Mint

Why America Inc is openingup to ex-convicts as recruits

America’s labour crunch is seeing old taboos fall by the waysidereuters
America’s labour crunch is seeing old taboos fall by the waysidereuters


What began as a social justice idea is now a workforce imperative

JP Morgan Chase chief Jamie Dimon has been preaching the benefits of hiring people with criminal records for years. But with the whiplash effect of the pandemic spawning complaints of labour shortages across the US, more companies are buying into the idea. Dimon is teaming up with Craig Arnold, the chief executive officer of Eaton Corp, to co-chair an initiative that aims to foster employment opportunities for Americans with criminal records and offer a forum for member firms to share resources and advice. Other participants in the Second Chance Business Coalition include Union Pacific Corp, Best Buy, Microsoft, General Motors, Bank of America, McDonald’s and Walmart. It’s a who’s who of Corporate America. In total, the nearly 30 publicly traded members have a combined market value of $6.8 trillion—enough to make a real difference.

The population of Americans with criminal records is pegged at 70-100 million, according to Sentencing Project. Federal Bureau of Investigation databases aren’t always up to date and include incidents where arrests didn’t lead to a conviction, but employers routinely scan those records when making hiring decisions and a red flag can stymie a candidate’s chances. “A felony conviction may as well be a life sentence when it comes to re-entering the workforce," Eaton’s Arnold said in a video announcing the Second Chance initiative. “Another hard truth is that the criminal justice system in the US disproportionately affects people of colour," added Arnold. A 2009 study published in the Annals of the American Academy of Political and Social Science found that a criminal record reduces the likelihood of a call-back or job offer by almost 50%, with African-American candidates twice as likely to suffer it.

This isn’t new ground for JP Morgan. The bank announced in 2019 that it had “banned the box", meaning it had removed questions on crime records from job applications. Since 2018, it says its share of new hires with a criminal history has been steady at about 10%. The bank has invested $100,000 in Nashville to help knock down barriers to jobs for former convicts. It announced this week that it’s collaborating with non-profits in Columbus, Ohio, to promote similar efforts. All told, JP Morgan has pledged $30 billion to advance racial equity through measures ranging from financing affordable rental units to making loans to small businesses in minority communities and opening branches in underbanked areas. But it’s not the only company talking about diversifying its workforce. As companies strive to bolster their environmental, social and governance credentials, more seem to be realizing this is a pool of candidates they can’t keep overlooking.

While the US unemployment rate has declined to 6% from as high as 14.8% during the worst of the pandemic, some underlying trends are raising alarms at the highest levels, including at the Federal Reserve. For example, the labour force participation rate among prime-working-age people (between ages 25 and 54) fell below 80% last year for the first time since the early 1980s. Now at 81.3%, it’s still well below the 83% rate at the start of 2020. Meanwhile, those older than 55 are steadily dropping out of the labour force. The overall labour force participation rate hasn’t yet come anywhere close to a full recovery.

Retailers, hotels, landscapers and restaurants were among those citing difficulty hiring workers in the Fed’s latest Beige Book survey of business conditions. There are similar complaints from machinery, transportation-equipment and fabricated-metal producers. A Florida McDonald’s franchise offered people $50 just to show up for a job interview, and even that didn’t incentivize as many applicants as hoped.

Some companies blame the hiring lull on enhanced unemployment benefits that are proving more lucrative for some workers than low-wage jobs. Others point to covid fear or a need to take care of children amid school closings. The famine-to-feast impact of the pandemic and recovery on certain industries has also created a frenzy of competition as companies that had crushed costs in 2020 try to lure workers. Pandemic beneficiaries such as package-delivery companies are also hiring rapidly.

It’s an untenable situation, and giving candidates with criminal records another look could be one way of addressing it. The coalition pointed to a study by the Society for Human Resource Management and the Charles Koch Institute that found 82% of managers feel that the quality of workers with criminal records is as high or higher than that of those without that blemish on their resumes. “In this hypercompetitive global economy, we simply cannot afford to leave more than 70 million Americans on the sidelines," Dimon said. It seems the heavyweights of America Inc now agree with him.

Brooke Sutherland & Brian Chappatta are Bloomberg Opinion columnists covering, respectively, deals and industrial companies, and debt markets.


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