A new source of talent: Strengthening economy and society through second chance hiring

We all make mistakes, but for most of us, those mistakes do not follow us for the rest of our lives. For those with a criminal record, they often do.

Each year, more than 600,000 people are released from prison and re-enter society in the U.S. alone. One in four people – 80 million Americans – have a criminal record. People with criminal records face enormous barriers to employment, but we cannot afford to exclude one fourth of our workforce from the economy. Studies show by excluding these workers, the economy is missing out on $78- 87 billion a year in lost GDP.

This challenge is not unique to America. While the U.S. has nearly 10 million open jobs, studies predict that by 2030, there will be an estimated 85 million open jobs across the globe, which would create about $8.5 trillion in unrealized annual revenue.

Are ex-offenders the missing talent needed to fill these roles? Some employers believe so.

Beyond economics and behind those statistics are people. Creating equitable economies means improving equality of opportunity and equitable outcomes for all. It means ensuring those who want to participate in the economy have meaningful access to opportunities and the dignity of work. A criminal record reduces the chance of a second interview by 50%, and nearly 75% of formerly incarcerated people face unemployment one year after being released from prison.

Poverty and unemployment often lead to recidivism. A job provides economic stability, and without access to jobs, many return to criminal behavior. Bills like rent and legal fees do not wait until a paycheck comes in.

A way to reduce recidivism rates is to ensure there are pathways to jobs for recently released citizens. Studies show that individuals who participated in correctional education were 43% less likely to be incarcerated within three years.

Correctional education programs are educational opportunities for incarcerated individuals that can range from workshops to certifications and accredited degree programs. These programs improve the odds of employment after release and reduce recidivism.

Initiatives such as Ban the Box, a movement to prohibit employers from asking job candidates about their criminal history on hiring applications, are advocated by some, but formerly incarcerated workers still face great challenges. Legal and regulatory restrictions are barriers not only to employment, but also to accessing housing, education, and business licensing.

Employers could also be overlooking a massive pool of talent. With the right recruiting strategies and risk mitigation practices, businesses can fill open jobs, boost the economy, help marginalized workers develop life-changing skills, and reduce societal recidivism rates. While this approach may not work for everyone, it’s certainly something to consider.

Sometimes a second chance can make all the difference. If there’s one thing businesses are committed to, it’s making sure they have a skilled, competitive workforce. Hiring returning citizens deliver for businesses and for people. That’s why we took a look at how some employers are approaching second chance hiring.

Turning Inmates Into Software Engineers
“Today, our hiring needs for skilled talent are increasing every year. The complication is that unemployment rates are low and job vacancy rates are high. So how do we take this complication and really address our hiring needs? It’s been an opportunity to really rethink our hiring strategies and our approach — in particular, trying to think about how we can find talent in overlooked populations such as individuals with criminal backgrounds,” says Kerry Casey, global head of university recruiting, talent branding, and diversity at PayPal.

With a need to keep up with demand for talent, PayPal has partnered with Next Chapter, a program that trains formerly incarcerated workers to become software engineers.

“Everyone has different needs,” says Casey. “This cookie cutter approach just does not cut it anymore. It really doesn’t work.”

In Next Chapter’s model, applicants must complete one year of coding training and education, whether formal or self-directed, before they can apply and interview for the program. After a technical screening or assessment to test their skills, applicants attend a rigorous 12-week immersive bootcamp with Hack Reactor for a more formal training process. Kerry notes that this is a rigorous program – not a guaranteed placement. There are people who dropout of the bootcamp, but those who complete the bootcamp are matched with Next Chapter’s corporate hiring partners, including PayPal, for a five-month apprenticeships.

This apprenticeship model boasts a zero percent recidivism rate, a 92% full-time employee conversion rate, an average $100,000 base compensation, and a 93% retention rate.

Gabrielle Rabinovitch, acting chief financial officer and senior vice president of investor relations and treasury notes that while the partnership is new, PayPal has high hopes for it.

“We hope to make it the cornerstone of a program centered around the hiring of individuals with a criminal background, as well as individuals from other similarly disadvantaged and often-overlooked populations. Our value of inclusion has guided us in this decision, but it’s the business case that will make it an enduring one.”

Supporting Workers on the Job and Beyond
One of the first companies to start working in this space, Nehemiah Manufacturing started hiring returning citizens in 2011. Co-founder and CEO Dan Meyer wanted to bring manufacturing jobs back to Cincinnati. After learning how a criminal record becomes a barrier to workforce re-entry and a request from a local nonprofit, Meyer created a Second Chance program at his newly formed manufacturing company. With a workforce of about 180, they currently have over 130 second chance hires.

“We didn’t start out planning to do this,” says Meyer, and it wasn’t as easy as they initially thought it would be. The organization came to the realization that a job by itself was not enough. There were barriers preventing employees from staying meaningfully employed and showing up to work every day.

Returning citizens face barriers other than difficulty finding work. Many face problems finding affordable housing or transportation, addiction issues, or mental illness.

The company realized they needed to do more to support their workers, and decided to hire a social worker to help ease the transition into full-time employment and handle any other challenges that they might face. This includes help to stay sober, access to affordable housing, free transportation, education, groceries, and even holiday gifts for their children.

In one case, an employee who had lost his license due to outstanding tickets prior to his incarceration was relying on his father for transportation. The Nehemiah team gave the employee a grant to clear the fines and obtain his license, which removed the transportation barrier for the employee – a significant and frequent challenge for many returning citizens. When individuals must rely on friends or family for transportation or childcare – or must incur the expense of hired transportation – employment opportunities can be very limited, especially when it comes to extra shifts or overtime to make more money.

This approach has been extremely successful for Nehemiah Manufacturing, and they know have a team of three social workers and providing legal counsel to employees as well. Every new hire meets with a social worker to learn what obstacles or other challenges the employer might face, as well as their goals.

As the company continues to grow, its turnover rate has stayed around 15%, which is less than half of the industry’s 40% norm. With the money saved on talent recruitment, the company has money to spend on these support programs.

While the company does test for illegal substances, they have a special policy for failed tests. They work with the employee to acknowledge the problem, and if the employee agrees to seek addiction treatment paid for by the company, their job will be waiting for them when they are ready to return to work.

Meyer and his team are committed to seeing their employees succeed and giving them chances to fix their mistakes or missteps. “We operate with a lot of grace. We don’t give up on them unless they do.”

Creating Change
While the private sector and their non-profit partners are leading this work, government agencies and policy makers are increasingly acknowledging the need and potential economic benefits as well. Last year, the United States declared April as Second Chance Hiring Month. The government is also acknowledging the impact of training programs in reducing recidivism and increasing the odds of employment upon release. The Department of Justice and the Department of Labor have committed $145 million for job training and re-entry services to create employment pathways.

More and more businesses and organizations are creating pathways to employment and eliminating the barriers that continue to marginalize returning citizens – and they are able to learn from these first movers and their partners. Our economies and societies are more dynamic when everyone is provided a chance to participate, grow, and prosper. Second chance hiring, or fair chance hiring, creates a more diverse workforce and a talent ecosystem where everyone can achieve their full potential, and economies and communities thrive.