Conviction, Imprisonment, and Lost Earnings: How Involvement with the Criminal Justice System Deepens Inequality

America is approaching a breaking point. For more than four decades, economic inequality has risen inexorably, stunting productivity, weakening our democracy, and leaving tens of millions struggling to get by in the world’s most prosperous country. The crises that have rocked the United States since the spring — the coronavirus pandemic, the resulting mass unemployment, and a nationwide uprising for racial justice — have made the inequities plaguing American society more glaring than ever.

This year’s intertwined emergencies have also driven home a reality that some would rather ignore: that the growing gap between rich and poor is a result not just of the market’s invisible hand but of a set of deeply misguided policy choices. Among them, this groundbreaking report reveals, is our entrenched system of mass incarceration. Mass incarceration reflects and exacerbates so many dimensions of this country’s divides — in income and health, in voice and power, in access to justice, and most importantly, over race.

The number of people incarcerated in America today is more than four times larger than it was in 1980, when wages began to stagnate and the social safety net began to be rolled back. We’ve long known that people involved in the criminal justice system — a group that’s disproportionately poor and Black — face economic barriers in the form of hiring discrimination and lost job opportunities, among other factors. This report demonstrates that more people than previously believed have been caught up in the system, and it quantifies the enormous financial loss they sustain as a result; those who spend time in prison miss out on more than half the future income they might otherwise have earned.

Ascertaining through careful statistical analyses just how costly the mass incarceration system has been to the people ensnared by it is a major achievement. These findings reframe our understanding of the issue: As a perpetual drag on the earning potential of tens of millions of Americans, these costs are not only borne by individuals, their families, and their communities. They are also system-wide drivers of inequality and are so large as to have macroeconomic consequences.

That insight is vital today. The unprecedented economic contraction triggered by the pandemic, and the federal government’s botched response, appears to be falling hardest on those who were already struggling, just like in past slumps. When employers cut back, employees with criminal records are all too often the first to be furloughed and the last to be rehired. And while major corporations get billions of dollars in relief, millions of the jobless are being largely left in the cold.

These costs come on top of other enormous costs imposed on society by our mass incarceration system. Some states have spent as much on prisons as on universities. The pandemic will make public funds even scarcer. More money spent on incarcerating more people will weaken our future, while the same money spent on expanding our universities will lead to a stronger 21st century economy.

Mass incarceration has been a key instrument in voter suppression, because people with criminal records are deprived of the right to vote in some states, and in many states former prisoners are responsible for re-registering once they are released. This undermines democracy: since poor and Black people suffer from mass incarceration disproportionately, they will be underrepresented in our electorate.

Meanwhile, a nationwide reckoning over deep-rooted racial injustice is forcing our country to come to terms with the ways in which these injustices have been perpetuated in the century and a half since the end of slavery. For the past four decades, mass incarceration — with the deprivation of political voice and economic opportunity that is so often associated with it — has been at the center. It renders economic mobility for so many Black Americans nearly impossible.

And yet this moment also brings a historic opportunity. By laying bare the grotesque inequities that undergird our society, the upheavals of 2020 have given us the needed room to profoundly change our course. An ambitious, democratically driven movement to create a fundamentally fairer and more resilient economy, based on a renewed and strengthened social contract, is at last gaining traction. But true progress will not occur until economic mobility is possible for our most marginalized and most vulnerable citizens. The urgent policies advocated here are a step toward ending that injustice and building a more prosperous and equal society. This report shows what needs to be done to stop mass incarceration. Equally important, it shows how to deal with its legacy: the large number of American citizens with criminal records. It was wrong that they lost so many of their formative years, often for minor infractions. It is doubly wrong that they suffer for the rest of their lives from the stigma associated with imprisonment. For them, and for our entire society, we need to minimize the consequences of that stigma.

There is much that has to be done if our society is to fully come to terms with our long history of racial injustice. Stopping mass incarceration is an easy place to begin. This report makes a compelling case for the enormous economic benefits to be derived from doing so.

Joseph E. Stiglitz
University Professor
Columbia University

America’s 400-year history of racial injustice continues to produce profound economic inequalities — a reality our society must no longer ignore. The net worth of a typical white family, for example, is 10 times that of a typical Black family. ¹ Shockingly, despite the successes of the civil rights movement, this racial wealth gap has barely changed in the last half century. ²

At the same time, as we are all too aware, the criminal justice system subjects Americans to profoundly unequal treatment. A century ago, a Black man was four times as likely as a white man to be incarcerated. In 1980, around the height of the “war on drugs,” he was 11 times as likely. ³ Black men and women are also jailed at more than triple the rate of white men and women. And nearly half of all people serving effective life sentences are Black. ⁴ Disparate enforcement is one reason; for example, the majority of people stopped in New York City’s controversial stop-and-frisk program were Black. ⁵  Perhaps most disturbingly, Black men and women are far more likely to be the victims of police use of force. ⁶ The protests that erupted in the spring of 2020, catalyzed by the Black Lives Matter movement, revealed and reinforced a growing public understanding of these systemic racial disparities in the criminal justice system. ⁷

Those two points are not unrelated. In fact, the staggering racial disparities in our criminal justice system flow directly into economic inequality. These consequences are magnified and reinforced throughout a lifetime of discrimination in employment and access to economic opportunity. ⁸ They are felt by individuals, of course, but also by families and communities. And they are felt in such large numbers, and in such a systemic way, that they constitute a major structural factor in economic inequality.

This report examines the long-term economic effects of conviction and imprisonment. It demonstrates that people involved in the criminal justice system tend to earn significantly less over the course of their lives than otherwise would be the case. Among other factors, missed opportunities, inadequate reentry services, and social stigma contribute to this link between imprisonment and poverty. The consequences, at both an individual and a systemic level, are dire.

To reach these conclusions, the report starts by identifying how many of the more than 70 million people with criminal records have become involved with the criminal justice system in each of three discrete ways: through imprisonment, conviction of a felony without subsequent imprisonment, and conviction of a misdemeanor.

Then it assesses how each interaction depresses individuals’ earnings. Last, the report uses an innovative method to illustrate how the reduction in earnings persists over a lifetime, deepening poverty — particularly for Black and Latino people.

Specifically, this report finds the following:

• Conviction and imprisonment affect more people, in more serious ways, than was previously realized. Using data through 2017, this report concludes that about 7.7 million living Americans have at some point been imprisoned, about 12.1 million have been convicted of a felony without being imprisoned for it, and about 45 million have been convicted of at least one misdemeanor. (Due to data limitations, some overlap may exist between these categories.)
• Conviction and imprisonment experienced early in life lower individuals’ annual earnings.
  • People who have spent time in prison suffer the greatest losses, with their subsequent annual earnings reduced by an average of 52 percent.
  • People convicted of a felony but not imprisoned for it see their annual earnings reduced by an average of 22 percent.
  • People convicted of a misdemeanor see their annual earnings reduced by an average of 16 percent.
• These earnings losses entrench poverty. The reduced earnings compound over the course of a lifetime. On average, formerly imprisoned people earn nearly half a million dollars less over their careers than they might have otherwise. These losses are borne disproportionately by people already living in poverty, and they help perpetuate it.
• These earnings losses worsen economic disparities between Black, Latino, and white communities. White people who have a prison record see their earnings trend upwards, while formerly imprisoned Black and Latino people experience a relatively flat earnings trajectory. Because Black and Latino people are also overrepresented in the criminal justice system, these economic effects are concentrated in their communities and exacerbate the racial wealth gap.

Throughout this report, estimates of the effects of criminal justice involvement were produced by comparing people who have experienced imprisonment, felony conviction without prison, or misdemeanor conviction with people who have had no such experience but otherwise closely resemble them. Members of these comparison groups are referred to intermittently as “similarly situated people” or “peers” of justice-involved people.

Table 1 summarizes this report’s quantitative findings. The average annual wage loss experienced by each group is multiplied by the size of its population to demonstrate the aggregate effect of conviction and imprisonment.

As this table shows, the losses reach into the hundreds of billions of dollars, but even that likely underestimates the true economic impact of the criminal justice system, for two reasons. First, this report does not study the effect of jail on earnings. Reliable information on the jail population is hard to find, but the jail system’s sprawling size makes the issue an important area for future research. Second, this report does not quantify the secondary costs of involvement in the criminal justice system, such as the earnings lost to a family when a parent must leave a job to care for a child during a partner’s incarceration, transportation costs to visit loved ones in prison, money sent to commissary accounts or spent on phone and video calls during a loved one’s incarceration, money spent on court costs and criminal justice debt, or the cost of a private attorney, to name just a few. (A full cost-benefit analysis of current criminal justice policies is beyond the scope of this report.)

Given the devastating financial consequences of contact with the criminal justice system, policymakers should, first and foremost, shrink its overall size and reduce the use of conviction and imprisonment. For those who are subjected to either sanction, steps to counter discrimination and bolster the social safety net can mitigate subsequent harm to their livelihoods.

Specifically, the authors recommend the following policy changes to confront the devastating and inequitable consequences of conviction and incarceration:

• Jurisdictions should reclassify some felonies as misdemeanors and decriminalize other offenses. This step would reduce the prevalence of all three criminal sanctions explored in this report.
• Policymakers should invest in paths away from arrest and prosecution, such as programs that provide people at risk of arrest with drug or mental health treatment. Similar programs could allow criminal charges that have already been filed to be dismissed and sealed upon completion. Aside from reducing convictions, these changes could reduce the risk of violent interactions with police.
• States and the federal government should invest in alternatives to incarceration. Probation, community service, or other sanctions are more appropriate than prison in many cases and would reduce the harms experienced by people with convictions.
• Policymakers should expand opportunities for justice-involved people to secure well-paying jobs. First, they should reduce barriers to employment, such as occupational licensing rules that exclude people with criminal records. Second, jurisdictions that have yet to do so should adopt “ban-the-box” rules for job applications. These rules, which defer inquiries about a criminal record in the hiring process, expand employment opportunities and reduce the long-term consequences of a criminal record. The private sector can also help: Businesses should expand their hiring of people with criminal records by, among other things, limiting the scope of criminal background checks.
• Jurisdictions should prevent employment and housing discrimination based on criminal history. People returning from prison often find themselves turned away from jobs and housing without a second look. While criminal records may be relevant to some inquiries, they need not operate as automatic disqualifications. 
• Policymakers should strengthen the social safety net to help keep people with a criminal record out of poverty, despair, and recidivism. For one thing, cities should remove barriers to public housing and help families living in such communities reunite after a family member’s incarceration. Relatedly, the federal government should repeal barriers to government benefits. Until Congress does so, states can act on their own to blunt the impact of these punitive rules. And finally, correctional administrators should connect people leaving incarceration with government benefits. This can help prevent hunger and recidivism in the first days after release.

This analysis starts by estimating the number of people who have been affected by the criminal justice system in each of three distinct ways: previous imprisonment, conviction of a felony that did not result in imprisonment, and conviction of a misdemeanor. Each of these sanctions is highly likely to reduce earnings, making it important to understand how widespread they are.

There are many other ways that people can encounter the criminal justice system. According to the FBI, more than 70 million people in the United States have a criminal record of some kind, meaning they have at least been arrested. ¹ Millions of people cycle through American jails annually. And tens of millions of people have a family member who has been involved in the criminal justice system in some way. ² All of these interactions may disrupt earnings and result in other long-lasting, serious harms. This report’s focus on conviction and imprisonment should not be read as trivializing or ignoring the costs of these other types of criminal justice involvement.

Previous analyses have studied the impact of incarceration on subsequent earnings but have examined the effect of conviction only rarely. Few analyses have attempted to disaggregate the effect of conviction from the effect of incarceration, or the impact of being convicted of a felony from that of a misdemeanor conviction. This report aims to fill those research gaps.

A. Formerly Imprisoned People
Estimate: 7.7 million

Since no government source tracks the number of formerly imprisoned people, the authors devised a model to calculate an estimate. The authors started by entering (or interpolating, where necessary to bridge data gaps) the number of people released from prison in each year in the study period. Next, these totals were adjusted for recidivism rates to ensure that the model did not double count people who, according to the dataset, later returned to prison. Last, the data was adjusted for mortality rates to remove the number of formerly imprisoned people who likely have not survived to the present day. This process broadly conforms to the structure of previous research but includes more recent data.

According to this process, an estimated 7.7 million people alive today — a little less than the population of Virginia — have been to prison at some point in their lives. ⁸ Interestingly, more than 75 percent of these people were released in 2000 or later, meaning their prison terms likely began in the late 1990s. ⁹ Therefore, while it may be tempting to attribute the size of the formerly imprisoned population to archaic policies that have since been repealed, that does not appear to be entirely accurate.

This estimate is broadly consistent with prior research. Some smaller estimates cover just the working-age population or are now out of date. ¹⁰ More recent research has estimated that in 2010 there were roughly 7.3 million currently or formerly imprisoned people in the United States. ¹¹ Because this report’s estimate uses data from 1965 through 2017 — sufficient data on 2018 was not yet available at the time of publication — a higher estimate is to be expected here. This report’s estimate would be even higher but for the relatively high mortality estimates used here. ¹²

As shown in table 2, men vastly outnumber women among the formerly imprisoned population. Black and Latino people also make up a majority of the formerly imprisoned population, with formerly imprisoned Black men and women outnumbering their white peers.

As depicted in figure 1, that is wildly out of proportion with the general population. But the disproportionate representation of Black and Latino people in the formerly imprisoned population should not be surprising, given the well-documented, continued existence of racial disparities in prison populations. ¹³ Indeed, according to the most recently available data, the number of Black men and women behind bars continues to exceed the number of imprisoned white men and women. ¹⁴ It would be surprising if these persistent disparities were not reflected in the formerly imprisoned population.

B. People with a Felony Conviction Not Sentenced to Imprisonment
Estimate: 12.1 million

While imprisonment is a serious sanction, formerly imprisoned people represent just a small slice of the justice-involved population. Those who have been to prison or are currently imprisoned — around 10 million people in total — compose just 15 percent of the estimated 70 million Americans with a criminal record of some kind. ¹⁵

Felony convictions are on their own a serious sanction likely to impact earning potential. Understanding their prevalence and effect is vital to developing a full picture of the economic impact of the criminal justice system. However, isolating the number of people with felony records who have not been sentenced to imprisonment is difficult, as many people convicted of felonies do spend time in prison.¹⁶

Most people convicted of felonies are sentenced to prison, probation (a form of supervised release generally imposed as an alternative to incarceration), or a split sentence combining the two. ¹⁷ To estimate the number of people who have been convicted of a felony but not sentenced to prison, then, this report starts with data on the annual number of people entering probation every year.

As in the last section, this data was then adjusted to account for recidivism and mortality. Recidivism data was drawn from reports on people put on probation in the federal system. ¹⁸ For mortality estimates, the authors assumed that people convicted of felonies but not sentenced to prison face mortality risks higher than the general population’s but lower than the formerly imprisoned population’s. The authors also added other variables to ensure, to the extent possible, that the model captured only people who were sentenced to probation without having also been imprisoned. The total number of probationers was then reduced by half because, according to BJS data, half of people sentenced to probation receive that sentence for a misdemeanor conviction. ¹⁹

Repeating this process for each year’s cohort of people entering probation, the authors estimate that approximately 12.1 million people alive today have been convicted of a felony offense without being imprisoned for it. Unfortunately, BJS does not track the racial breakdown of people entering or exiting probation. ²⁰ As a result, it is not possible to estimate the demographic makeup of this population.

There is a risk that this figure is an overestimate, since it may include some people who have spent time in prison. For example, someone who entered prison for a separate offense after probation was terminated would be counted in both groups. The patchwork nature of criminal justice data makes it impossible to fully eliminate such a risk.

However, two additional limitations suggest that this model might produce an underestimate. First, the data necessary for this method goes back only as far as 1980, so this model covers a shorter period than the model for the formerly imprisoned population. Second, many people convicted of felonies are sentenced to incarceration in local jails, a population that neither this model nor the previous section’s analysis captures. ²¹ As a rough estimate, though, this method helps develop a broader understanding of the justice-involved population.

C. People with a Misdemeanor Conviction
Estimate: 45 million

Though less severe than felonies, misdemeanors also have a long-term impact on earning potential. Convictions for these generally lower-level crimes may show up on background checks, disqualify someone from holding a professional license, or come with other burdensome conditions. Any estimate of the prevalence of a criminal conviction and its effects must reckon with the sprawling misdemeanor justice system.

Most Americans are familiar from popular culture with the classic model of the criminal case: refereed by a judge, the prosecutor and defense attorney present evidence and examine and cross-examine witnesses, with guilt or innocence decided by an impartial jury. But this model describes only a vanishingly small percentage of cases. ²² It fails to capture the reality of the misdemeanor system. People accused of such crimes face a streamlined and, in many cases, stripped-down form of justice. ²³

While this field of study is an evolving one, researchers have documented more than 13 million annual misdemeanor cases in recent years. ²⁴ However, estimating the number of people with a misdemeanor conviction is a difficult task. Conviction rates and even the meaning of a misdemeanor conviction vary from state to state. Some lower-level offenses will qualify as a misdemeanor in some states but not in others. ²⁵

To estimate annual misdemeanor convictions, then, this report employs a novel method that starts with FBI arrest data and then calculates how many of those arrests ended in conviction, using conviction rates estimated from a longitudinal survey.

Next, to avoid double counting people, the authors sought to estimate misdemeanor recidivism. But recidivism poses its own challenge: unlike felony sentences and prison terms, people routinely receive multiple misdemeanor convictions within a single year. ²⁶ To solve this problem, repeat jail admissions were used as a proxy for intra-year misdemeanor recidivism. ²⁷ That figure — suggesting that the average person admitted to a major-city jail is admitted roughly 1.4 times per year — was then used to estimate how many unique people were convicted of a misdemeanor in a given year. As in the preceding sections, estimated inter-year recidivism and mortality rates were then applied. Following this method, the authors estimate that nearly 46.8 million currently living people — one in seven Americans — have a misdemeanor conviction and, therefore, a nontrivial criminal record.

This estimate comes with some limitations. For one thing, it likely includes people already counted in previous sections. That is, some of the 46.8 million people identified using this model may have also spent time in prison, or been convicted of a felony, before or after incurring their misdemeanor conviction. This double counting risk is unavoidable. This model’s recidivism metrics theoretically guard against double counting people who have been convicted of two misdemeanors but cannot, given the limits of existing data, eliminate people who have recidivated in other ways. Furthermore, the authors were able to obtain enough data to run this model over only 23 years, from 1995 through 2017. Rates of actual intra-year recidivism may also be higher than indicated by the limited research that was available to build this model.

These limitations cannot be overcome given the significant gaps in data on the criminal justice system. Extensive original research, including large-scale data collection, would be necessary to develop a more precise understanding of the number of people who have been convicted of a misdemeanor. Given these limitations, it might be better to understand the total offered in this report as a rough estimate, rather than a precise one: around 45 million people, rather than precisely 46.8 million people, have been convicted of a misdemeanor.

That said, none of these caveats undercut this central finding: a surprisingly large number of Americans have a misdemeanor conviction, with (as this report will show) serious consequences. Even if the misdemeanor population were half as high as is estimated here — in the 20 million range, for example, due to a higher than expected rate of intra-year recidivism — the total would remain shocking, and the policy implications would be unchanged. Research on the misdemeanor system is in its earliest phases. Hopefully, this estimate will lead people to undertake the data collection efforts needed to support further research and will be refined in future studies.

This analysis offers a way of understanding the scale of mass incarceration in the United States that is more detailed than past research. Of the more than 70 million people with a criminal record today, tens of millions have experienced some of the most severe sanctions known to the criminal justice system — imprisonment or conviction of a felony. And tens of millions more must contend with the stigma of a misdemeanor conviction, which, while less severe, still harms one’s ability to find a stable job.

This report now evaluates how the earnings of these three populations are affected by involvement with the criminal justice system. Drawing on survey data, it finds that misdemeanor convictions are associated with a small earnings reduction, felony convictions are associated with a moderate reduction, and imprisonment is associated with a severe one. ¹

Many researchers have studied the effect of incarceration on earnings. This report adds to that understanding by also estimating the effect of felony and misdemeanor convictions. First, this section estimates the effect of conviction and imprisonment on annual earnings. The next section explores how these effects add up over a lifetime.

A. Formerly Imprisoned People
Estimate: 52 percent reduction

This report estimates that formerly imprisoned people earn around $6,700 annually, while their peers earn around $13,800. The latter figure is slightly less than what a full-time worker earning the federal minimum wage would earn over the course of a year. ⁴ The disparity between the two groups translates to an annual income reduction of around 52 percent.

B. People with a Felony Conviction Not Sentenced to Imprisonment
Estimate: 22 percent reduction

Felony convictions imply serious crimes and have a significant effect on earning potential. But without imprisonment, the effect may be very different from the one felt by people returning home from prison. Therefore, this report presents a new model to estimate how a felony conviction, even without imprisonment, affects earnings.

Here the authors used the NLSY97, which specifically asked participants whether they had been convicted of a felony. ⁵ Studying this group of people using the PSM method (described in appendix B) suggests that felony convictions without imprisonment also have a significant effect on annual earnings: about a 22 percent reduction.

The large effect identified here is consistent with theories about how a criminal record affects earning capacity. People convicted of felonies may also be more likely to have spent time in pretrial detention. As a result, it is possible that the 22 percent estimate described here includes the effect of pretrial detention, which has also been linked to reduced earnings. ⁶

C. People with a Misdemeanor Conviction
Estimate: 16 percent reduction

Based on the same methodology, a non-felony conviction — assumed for the purposes of this analysis to be a misdemeanor conviction — reduces annual earnings by about 16 percent. As in the previous section, time spent in pretrial detention may partially account for this effect.

It may seem surprising that a misdemeanor conviction would have such a significant impact on earnings. But research suggests that even misdemeanor arrests may lead to reduced employment. ⁷ Misdemeanor charges often entail pretrial detention. Misdemeanor prosecutions also increase the risk of future conviction and justice involvement, even when they do not end in conviction. According to one scholar, even when a case ends in dismissal it allows prosecutors to begin building a file that will inform future interactions with law enforcement. Thus, being charged with a misdemeanor, even if it does not end with conviction, may single someone out — or “mark” them — for closer scrutiny during subsequent prosecutions, potentially increasing the risk of conviction and, by extension, lowering earnings. ⁸ Taken together, these factors make it unsurprising that a misdemeanor conviction has some effect on earnings.

The nebulous nature of the misdemeanor category means that the misdemeanor effect likely varies significantly from person to person and from charge to charge. For example, a conviction for driving while intoxicated likely affects someone’s earnings differently from a conviction for simple assault — even though both are misdemeanors under New York State law. ⁹ But the average effect described here helps develop our understanding of the effects of lower-level criminal justice involvement.

D. Aggregate Annual Effects

Each of the estimates above describes annual earnings lost by an average member of each group. These effects are keenly felt by formerly imprisoned or convicted people, their families, and their communities. As the next section will demonstrate, these effects do not fade with time. They are experienced by people at all phases of their lives and careers.

Even in a single year, these lost earnings, in the aggregate, constitute an enormous sum of money. To quantify that loss, table 3 presents each annual earnings loss estimate from the preceding section, in dollars, and multiplies it by the size of the group, as identified in section I.

For example, the average formerly imprisoned person will earn 52 percent less than a similarly situated person who was never imprisoned. From the previous section, we know there are at least 7.7 million formerly imprisoned people in the United States. Applying the average earnings penalty to this entire group suggests that, in the aggregate, formerly imprisoned people lose out on an estimated $55.2 billion annually.

Assuming that people are not counted twice in separate categories, then underemployment related to imprisonment or conviction reduces people’s wages by as much as $372.3 billion annually. Because incarceration and criminal justice involvement already disproportionately ensnare poor communities, this sum represents money that largely goes unearned and uninvested in communities that need it most. For context, consider what $372.3 billion would be enough to do:

• close New York City’s poverty gap 60 times over; ¹⁰
• give every homeless person in the United States a house worth $500,000, outright, with money to spare; ¹¹
• fund NASA for roughly 15 years at the level NASA believes would put it on track to return to the moon by 2024; ¹² or
• fund the Justice Department’s Office of Community Oriented Policing Services — which supports community policing initiatives — at FY 2020 levels for more than 1,000 years. ¹³

The losses described in this report are, first and foremost, felt by impacted individuals and their communities. But given the scale of these losses, there are macroeconomic implications as well. Indeed, other researchers, using different methods and studying different metrics, have argued that mass incarceration has a broad economic impact. For example, according to sociologists Bruce Western and Becky Pettit, much of the damage caused by overincarceration “is invisible in standard data sources” because “prison and jail inmates have no status in official employment statistics.” In a 2000 study, they attempted to correct this omission and found that accounting for incarcerated persons reduced the employment-to-population ratio of Black men more than white men. ¹⁴ Building on their findings, in 2016 the Washington Post reported that, after accounting for incarceration, the unemployment rate for Black working-age men in 2014 was 7.2 percentage points higher than officially reported. ¹⁵ This report adds to the evidence of mass incarceration’s society-wide collateral costs.

The findings here suggest that imprisonment remains a major driver of economic loss, severely depressing the earnings of those affected by it. But it is not the only factor. Roughly two-thirds of the aggregate $372.3 billion loss identified here is the result of misdemeanor convictions. The repercussions of even a relatively minor criminal record represent a serious drain on earnings, and top-to-bottom reform is necessary to blunt this effect.

Annual lost earnings are a helpful metric for analyzing the macroeconomic impact of mass incarceration. But for people living through the effects of a criminal conviction or incarceration, these losses are most notable for how they compound annually.

Building on the last section’s analysis of annual lost earnings, this section presents a lifetime analysis, showing that formerly imprisoned people earn less than half of what their peers earn over their careers. As shown in figure 2, the value of these lost earnings for formerly imprisoned people approaches half a million dollars per person, an amount that could easily make the difference between escapable and inescapable poverty.

PSM was again used to produce these findings. People with involvement in the justice system were again matched with highly similar people who had no such experience.

This section’s analysis defines the cohort’s prime working years as running from their twenties to fifties, because earnings growth is typically most stable over this period. For simplicity, when describing results, this 30-year period is divided into three stages, based on the average age of NLSY participants in the sample in each stage: early career (ages 25–34), mid career (35–44), and late career (45+). Due to data limitations, this section does not distinguish between misdemeanor and felony convictions. ¹

The damage done by conviction alone is significant. Over the course of a lifetime, cumulative earnings losses reach nearly $100,000 for the average person with a conviction. These results pale in comparison to the effect of imprisonment, however. By the end of a career, someone who was imprisoned as a young adult — regardless of what offense led to incarceration — suffers an average of about $484,400 in lost earnings.

A. Consequences for Poverty and Income Inequality

Some researchers have argued that the effects of a criminal record are “eternal,” due to the prevalence of law enforcement and screening databases. ² This report’s findings provide strong support for that claim. Over the long term, the effect of incarceration on earnings appears to grow as justice-involved people miss out on the wage growth their peers benefit from — a surprising and troubling conclusion. As shown in figure 3, average formerly imprisoned people will start their careers earning roughly $7,100 less than their peers annually, and end them trailing their peers by more than $20,000 annually.

Socioeconomic disadvantage tends to compound itself, and that principle appears to be at work here. ³ Generally, as people progress in their career and gain experience, they make more money, peaking in their late forties or early fifties. ⁴ Several mechanisms likely impede that growth for formerly imprisoned people. For one, a criminal history may make their career prospects more fragile. Jobs available to them will often provide fewer opportunities for earnings growth and career advancement; they may also be more vulnerable to layoffs. Opportunities for licensure or credentialing (and the higher income both can bring) are also limited and may provide weaker returns on investment. Some professional licenses and credentials are off-limits to people who have spent time in prison; in other cases, since jobs in general are harder to come by for formerly justice-involved people, those credentials do not always translate to higher pay.

Previous research provides strong evidence that these mechanisms are at work. First, 45 percent of formerly imprisoned people are unemployed during the entire year following their release. ⁵ Unemployment becomes a spiral, depriving people of opportunities to develop skills and weakening their connections to potential employers. ⁶ Additionally, when work is secured, it is often temporary, part-time, and low paying; in one study of people released from Indiana prisons, about half of those who did find post-release employment had an annual income of less than $5,000. ⁷ Such low-wage jobs tend to be characterized by less upward mobility and a higher risk of future unemployment. ⁸ Criminal records, in other words, trap formerly imprisoned people in low-paying work, which in turn places them on a lower income-growth trajectory.

Notably, these findings suggest that earnings losses among the formerly imprisoned population may not be due entirely to the prison experience itself or the time spent removed from the workforce. Instead, at least part of the earnings gap can be ascribed to the shadow that imprisonment casts over subsequent economic opportunities. This distinction has serious consequences for policymakers, which are discussed in section IV.

This report’s results are also consistent with research on intractable “deep poverty,” a chronic form of poverty that tends to persist generation after generation. ⁹ As shown in figure 3, above, the average early-career wages of formerly imprisoned people hover at around half of the federal poverty threshold for a family of two. Indeed, they never exceed it. ¹⁰

The lifetime effects of this earnings loss are staggering. The roughly half-million dollars lost by the average formerly imprisoned person is more than the entire lifetime earnings of someone who spends his or her life at the poverty line ($382,000). ¹¹ And this loss does not account for missed opportunities for additional wealth generation, from Social Security benefits to accrued interest on retirement accounts to forgone investment opportunities. These factors, taken together, demonstrate that imprisonment sets up people who are already disadvantaged for a profound loss of wealth and closes off pathways to upward economic mobility.

B. Consequences for Racial Inequality

This report has already shown that Black and Latino people are overrepresented in the formerly imprisoned population. It appears that their long-term earning potential is also more deeply affected by imprisonment. As shown in figure 4, white people who have experienced prison earn significantly more annually than Black or Latino people with similar histories.

Formerly imprisoned Black and Latino people suffer greater lifetime earnings losses — $358,900 and $511,500, respectively — than their white counterparts, whose losses amount to $267,000. Given the overrepresentation of Black and Latino people among the formerly imprisoned population, these findings suggest that the American prison system has a profoundly negative impact on Black and Latino wealth. Of course, there is already a vast racial wealth gap that has persisted with little change over the past 50 years. ¹² In 2016, the median wealth of white families ($171,000) exceeded the median wealth of Black families ($17,409) and Latino families ($20,920) by factors of around 10 and 8, respectively. ¹³ Continued disparities in yearly earning power — like the ones identified in this report — likely exacerbate that gap. ¹⁴ Other research suggests that low wealth is itself associated with an increase in imprisonment, potentially setting up a vicious cycle in which criminal justice involvement perpetuates wealth disparity, which in turn raises the risk of imprisonment. ¹⁵

Last, this report’s estimates suggest that, for those who are otherwise socioeconomically similar, Black men and women with no history of conviction or imprisonment earn less than white men and women with a conviction record. By the end of a career, as shown in figure 5, white men and women with a conviction earn about $49,000 a year on average, eclipsing the $39,000 a year that Black people with no conviction earn over the same period. These findings corroborate conclusions first drawn by sociologist Devah Pager. As she wrote, “race continues to play a dominant role in shaping employment opportunities, equal to or greater than the impact of a criminal record.” ¹⁶

Apart from the effects of justice involvement, racial discrimination in general continues to contribute to earnings disparities. While ending mass incarceration is critically important to rectifying these disparities, it cannot by itself resolve them.

This report demonstrates that the effects of conviction and imprisonment persist for decades, entrenching inequality and perpetuating poverty. Even people convicted of minor offenses see their earning potential reduced. Because poor people are more likely to become involved in the criminal justice system in the first place, conviction and incarceration can all too easily become poverty traps. Policy interventions are needed to help break that cycle — and to effect transformative change.

A. States should reduce penalties, reclassify some felonies as misdemeanors, and decriminalize other offenses altogether.

Even minor convictions appear to entail long-term economic harm. Confronting this problem requires shrinking every aspect of the criminal justice system — from prisons to misdemeanor courts. Some states have made progress toward this goal through felony reclassification, reducing some felony crimes to misdemeanors. ¹ Other offenses can be safely decriminalized entirely, meaning that they would be handled (if at all) outside the criminal justice system. ² The Covid-19 public health crisis has already inspired many police departments to temporarily rethink who is arrested and why. ³ Looking beyond the pandemic, broader decriminalization efforts — targeting misdemeanors and infractions for resolution outside the criminal justice system or, at a minimum, eliminating arrests and jail time for them — can preserve public safety while reducing the collateral costs this report identifies. ⁴

B. Jurisdictions should invest in paths away from arrest and prosecution.

Providing early off-ramps from the criminal justice system can spare people the effects of incarceration and conviction and shrink the size of the justice system. Pre-arrest diversion programs accomplish these goals by identifying people who might be arrested and intervening in other ways, such as by connecting them with drug or mental health treatment. ⁵ Some such programs embed social workers or clinicians with police so that these professionals can respond immediately where necessary. ⁶ Other diversion programs work by identifying people who may be charged with certain types of crimes, offering alternative resolution options and dismissing criminal charges upon their successful completion. ⁷ Expanding these programs would help reduce the number of people with conviction records of any type. Critically, policymakers should also ensure that successfully completing a diversion program seals or expunges all record of the interaction, since even dismissed cases can, in some circumstances, remain a part of someone’s court records and encourage prosecutors and judges to be less lenient in future cases. ⁸

C. Policymakers should expand the use of alternatives to incarceration.

Imprisonment creates and deepens economic disadvantage. Judges and prosecutors should be given tools that allow them to impose noncarceral sanctions that better meet the needs of people who enter their courtrooms. Probation, drug treatment, community service, counseling, and even fines tailored to a person’s ability to pay are more appropriate than prison in many situations and allow people to avoid the long-term consequences of imprisonment. ⁹ But all such alternatives to incarceration (ATIs) must be implemented with care. Some diversion programs come with a price tag, trapping defendants who are unable to pay in the very cycle of poverty and incarceration that ATIs are designed to prevent. ¹⁰ Furthermore, people sentenced to an ATI generally still exit the courtroom with a criminal conviction, a serious sanction that will still depress their earning potential.

D. States should eliminate unnecessary barriers to employment.

Nearly 30 percent of workers need a state license to practice their occupations. These policies hinder job growth and limit opportunities for people with criminal records. ¹¹ States have imposed at least 12,000 licensing restrictions on individuals with a felony record, and 6,000 on people with a misdemeanor record. ¹² By removing these barriers, occupational licensing reform would open up a broader array of jobs to people with criminal records. First, blanket bans — automatic disqualification for individuals with a criminal record — should be repealed. ¹³ Second, policymakers and licensing bodies should remove vague and overbroad standards, such as “good moral character,” from qualification lists. ¹⁴ And third, regulators should provide clear guides to applicants about potential barriers to licensure. ¹⁵

E. The private and public sectors should expand opportunities for people returning to the workforce after conviction.

Job applications frequently ask about an applicant’s criminal record up front, allowing employers to screen out people with a record without meeting them or considering their qualifications. Ban-the-box policies require employers to remove such conviction inquiries from initial job applications. Records are disclosed later in the hiring process — before a final decision is made, but after applicants have had a chance to advocate for themselves and explain their past.

These policies encourage hiring managers to look at someone’s application holistically. Many companies — including some of the country’s largest employers — have banned the box on their own initiative. ¹⁶ Cities, states, and the federal government have adopted similar policies for their own hiring and in some cases require it of the private sector as well. ¹⁷ Early evidence is promising, showing, for example, increased hiring in high-crime neighborhoods and increased public-sector hiring of people with criminal records. Other jurisdictions should adopt or expand ban-the-box policies. ¹⁸

F. Cities and states should prevent landlords and employers from discriminating against people with criminal records.

Even in ban-the-box jurisdictions, some employers will automatically reject applicants once they learn of a criminal record. States should repeal laws that permit the blanket denial of jobs to people with a criminal record. ¹⁹ They should also consider adopting rules, like those in New York State, that make it illegal for employers to turn away job applicants based solely on their criminal record. ²⁰ Under New York’s law, employers may still consider criminal history, but only as part of a holistic inquiry, and they may only reject an applicant on the basis of a conviction for a specific, enumerated reason — such as if the conviction has a direct relationship to the job, presents a licensing concern, or suggests a risk to the general public. ²¹

Some landlords will also automatically deny a lease to people with a criminal record, contributing to an increased risk of homelessness among formerly justice-involved people. ²² As with employment, states and municipalities should pass laws to prohibit such discrimination. Seattle’s Fair Chance Housing legislation of 2017, for example, prevents landlords from unfairly rejecting applicants based on justice involvement and prohibits the use in advertising of language that categorically excludes formerly justice-involved individuals. ²³

G. Public housing authorities should relax or eliminate rules that exclude people with a criminal record.

Public housing is often the only affordable option for people returning from prison, but many public housing authorities (PHAs), taking a cue from federal laws, exclude people with a criminal record. These rules often separate families and make it impossible for people to return home. ²⁴

PHAs should relax these rules. Some have begun doing so, with promising results. Following a pilot program that saw low recidivism and a majority of participants successfully reaching other milestones, the New York City Housing Authority now partners with reentry organizations to help people with conviction records transition into housing. ²⁵ Similarly, due to a recent policy change, a criminal conviction is no longer an automatic disqualification for public housing in New Orleans. ²⁶

H. Corrections authorities should proactively connect people to health-care benefits.

Justice-involved people experience chronic health conditions, including substance-use disorders and mental illness, at higher rates than the general population. ²⁷ Poor health increases the risk of job loss and unemployment — effects surely felt by the justice-involved population. ²⁸ Therefore, corrections officials should ensure that people being released from jail or prison understand how to make use of services available to them, including federal benefits and state-sponsored health insurance. ²⁹ Before their release, individuals should be provided with all the documentation necessary to access health-care benefits. ³⁰

I. State and federal policymakers should expand the social safety net.

Government assistance programs are proven and effective means of reducing poverty. ³¹ They may also reduce recidivism by keeping people out of poverty and despair. ³² A 1990s federal welfare reform law permits states to deny important food and cash assistance benefits to people convicted of some drug offenses. ³³ This provision is an outdated and unnecessarily punitive relic of the “war on drugs,” and Congress should repeal it outright.

Until Congress is poised to act, states should, as a stopgap measure, exercise their statutory right to opt out of the exclusion. ³⁴ Many have already done so, but around half still exclude some formerly justice-involved people from benefits. ³⁵ All states should opt out of the provision in its entirety.

Correctional administrators should also work with all levels of government to ensure that people being released from incarceration are connected immediately with anti-poverty programs and benefits. As one example, New York City preemptively enrolls people in the Supplemental Nutritional Assistance Program (SNAP) as they approach their release from city jails, ensuring that they do not wait an unnecessarily long time for food benefits. More jurisdictions should do the same. ³⁶

More than 70 million Americans have a criminal record of some kind. This report is the first to demonstrate that more than half of them have at least one conviction for a misdemeanor or a more serious crime. Nearly 8 million of them have been imprisoned at some point in their lives, testament to the sprawling reach of incarceration.

This exposure to the criminal justice system, however long or however brief, carries consequences that extend far beyond a guilty plea, trial verdict, or release from prison. People who have been convicted of a crime can expect to earn at least 16 percent less, on average, than their peers. And those who have been to prison will lose around half of their earning potential. Over the course of a lifetime, that loss, on average, approaches half a million dollars — easily the difference between escapable and inescapable poverty.

These lost wages, in aggregate, cost people touched by the criminal justice system more than $372 billion annually. And this loss is not evenly distributed. It is felt most keenly by Black and Latino communities, which disproportionately lose their members and their wealth to incarceration and its effects.

Taken together, these findings demonstrate that ending mass incarceration is an economic imperative as much as a moral one. It is a vital step toward restoring prosperity to underserved communities across the country, and toward closing the racial wealth gap.

Terry-Ann Craigie is the economics fellow in the Brennan Center’s Justice Program, where she works to document the economic and social costs of mass incarceration. Craigie is also an associate professor of economics at Connecticut College, where her research examines the collateral consequences of mass incarceration and the impact of ban-the-box policies on the employment of those with criminal records. Prior to joining the Brennan Center, she was a visiting fellow at the Urban Institute and a postdoctoral research associate at Princeton University. She was selected as a Self-Sufficiency Research Clearinghouse Emerging Scholar in 2013. Craigie has published in journals such as Eastern Economic Journal, Future of Children, Journal of Ethnicity in Criminal Justice, Oxford Development Studies, and Review of Black Political Economy. She has presented her research at numerous conferences and seminars, most notably at the White House. She holds a BA magna cum laude in economics from Stockton University and an MA and a PhD in economics from Michigan State University.

Ames Grawert is senior counsel and John Neu Justice Counsel in the Brennan Center’s Justice Program. He leads the program’s quantitative research team, focusing on trends in crime and policing and the collateral costs of mass incarceration. Additionally, he advocates for criminal justice reform policies at the federal level. Previously, Grawert served as an assistant district attorney in the Appeals Bureau of the Nassau County District Attorney’s Office, where he reviewed and litigated claims of actual innocence in addition to his appellate work. Before entering public service, he was an associate at Mayer Brown LLP, where he represented criminal defendants pro bono in post-conviction litigation.

Cameron Kimble is a senior research and program associate in the Brennan Center’s Justice Program. As a member of the program’s law and economics research team, he supports the organization’s work to end mass incarceration and researches the relationship between mass incarceration, wages, and economic inequality. Prior to joining the Brennan Center, he worked as a quantitative analyst at Progressive Insurance, where he was tasked with evaluating and forecasting auto insurance industry and consumer trends. Kimble holds a BA in economics from Miami University.

Jamaal Barber is a creative, imaginative soul who was born in Virginia and raised in Littleton, North Carolina. At a young age he was fascinated by the aesthetic images and vivid illustrations in children’s books and comic books. He soon started creating images of his own on the backs of his elementary school textbooks and on any other material that he could find. He finally answered the call to become an artist after reading about the legacy and life of Romare Bearden in high school. In 2013, after seeing a screen-printing demo at a local art store, Barber started experimenting with printmaking and made it his primary focus. His fine art can be seen on display in Atlanta at the ZuCot Gallery. Additionally, Barber has done work for Black Art in America, Emory University, Twitter, and Random House. He is currently finishing his MFA in printmaking at Georgia State University.

The Brennan Center acknowledges Arnold Ventures’ founders Laura and John Arnold, Jason Flom, and The Margaret and Daniel Loeb Foundation for their generous support of our work. This publication was made possible in part through the support of Robin Hood, for which we are grateful. This is an independent Brennan Center publication; the opinions expressed are those of the authors and do not necessarily reflect the views of our supporters.

The authors thank Steven Durlauf, Stan Veuger, and Bruce Western for reviewing a draft of this report and for their thoughtful feedback on its findings and methodology. The authors also thank Alexandra Natapoff for offering her thoughts on the report’s misdemeanor findings, and James Austin and John Pfaff for their time discussing the report’s population models.

This research was conducted with restricted access to Bureau of Labor Statistics (BLS) data. The views expressed here do not necessarily reflect the views of the BLS.

The authors thank Lauren-Brooke Eisen for her insightful comments on and careful revisions to the report; Michael Waldman and John Kowal for their support of this research; James Cullen for his extensive work on a previous draft of this report, which continues to underly several of the report’s conclusions; and Inimai Chettiar for her conception and early editing of this project. They also thank Peter Miller for his input on the report’s quantitative analysis; Adureh Onyekwere for her careful attention to detail in fact-checking the report; Ruth Sangree for her contributions to the policy recommendations section; and (in alphabetical order) Jessica Christy, Aliana Knoepfler, Safeena Mecklai, Lauren Seabrooks, Stacey Strand, Vienna Thompkins, and Julia Udell for their research and drafting support. The authors are grateful to Matthew Friedman, Oliver Roeder, Maria Barrera, and Anamika Das for their work on previous drafts of this report. Last, the authors are also grateful to Lisa Benenson, Jeanine Chirlin, Yuliya Bas, Matt Harwood, Zachary Laub, Jeanne Park, Alexandra Ringe, Derek Rosenfeld, and Alden Wallace for their thoughtful review of the report, communications assistance, and work ensuring the report’s successful launch.