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Hiring Formerly Incarcerated Employees Helps Your Bottom Line Reintegrating the formerly incarcerated into society isn't just right. It's good for the economy, too.

By Damien Dwin

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

Chanin Wardkhian | Getty Images

As black history month unfolds, and we pause to reflect on the difficult legacy of racism in America, there's one conversation that's especially pertinent to entrepreneurs: Why to hire formerly incarcerated people. Not only is it a principled stand to create job opportunities for the formerly incarcerated. It's also smart business.

My personal understanding of this issue is derived from my upbringing as a black boy in Washington DC during the 1980s. It was a sad era marred by excessive sentencing that disproportionately affected black Americans—something that most of the country agrees about now. We have the largest criminal justice system in the world, with three thousand prisons and jails housing 2.2 million people at an annual cost of $250 billion. Fractured and driven by private interests, our prison system is astronomically expensive, and ineffective.

Prison reform is just the beginning

The wheels of change are starting to turn, albeit slowly. The Trump administration's 2018 First Step Act, as well as state reforms across the country, aim to reduce prison sentences and reform the bail system. But the name of Trump's bill is accurate: It's only the first step, and we need to think many steps ahead. As more and more people are released from jail and prison, they need a fair shot at integrating back into society. Formerly incarcerated people need housing, healthcare, and most importantly, jobs. And as an entrepreneur overseeing a credit platform that manages billions of dollars, I've seen the economic benefits for investors and corporate borrowers who increase employment opportunities for marginalized citizens. There is simply no business case for ignoring the swell of human capital emerging from a system operated at unsustainably high costs to taxpayers.

Related: Unlocked Potential: From Incarceration to Entrepreneurship

The economy needs formerly incarcerated workers

The truth is, our country produces too few skilled workers to meet the demands of modern industry. I hear this daily from CEOs and I see it in my portfolio companies. Bureau of Labor and Statistics data found 2 million job vacancies went unfilled in 2019. But six hundred thousand people were released from American prisons and jails in 2019 alone.

CEOs like Ron Bergamini of the waste collection business Action Carting are catching on. Bergamini's business employs 1,300 people. He uses a variety of recruiting methods, but after having a number of positive experiences with formerly incarcerated employees, he began accepting applications from job placement organizations focused on criminal justice reform. "I have never met a business leader who believes finding good people is easy," he told me. "The folks we meet through second chance programs are eager to learn and work. We offer middle class wages for professions in short supply nationwide—commercial truck drivers and mechanics. Any initial reluctance on our part to hire these folks is long gone. Some second chance workers have been with us nearly a decade."

Workforce training needs to happen inside and outside of prisons

Citizens returning home from incarceration should receive a warm welcome from employers, not a life sentence of exclusionary hiring practices. Now is the time to confront fears and prejudices in the workplace about people who have served time. But in addition to company recruiting practices, prisons should offer expanded human resource programs that prepare returning citizens for the workplace in advance. Investing in job training and skill development programs in local prisons and jails makes economic sense. Our domestic workforce is aging and living longer, so expanding the universe of job candidates provides a hedge against America's demographic erosion. And data shows that higher education in prisons reduces the rates of recidivism. A bipartisan bill working its way through Congress now, called the Restoring Education and Learning Act (REAL Act), would allow incarcerated individuals to use Pell Grants to fund their college education while in prison, reversing a 1994 ban against Pell Grants for incarcerated people.

Related: What Budding Entrepreneurs Can Learn From a Nonprofit Helping ...

The government, the education system, and the business sector all have a role to play

Successful in-prison education efforts so far include the Bard Prison Initiative, which provides college courses, and the National Restaurant Association, which offers food and beverage industry training. And once incarcerated individuals get out, there are a number of socially conscious business ventures—the Society of Human Resource Management, Dave Killer Bread Foundation and Morgan Stanley—actively working to help companies develop best practices and roadmaps for accessing and developing returning citizens.

I am fortunate to be involved in the Georgetown University Pivot Program, an innovative partnership between the DC government and the Georgetown School of Business. Returning citizens enter a year-long program offering professional skills training and college-level coursework in business and entrepreneurship, along with an internship and an assigned mentor. Of the first graduating class, not a single participant has re-offended and virtually all are employed. The business sector, the government, and the higher education system should work together. The results will benefit the government, taxpayers, and the economy.

Preparing people to leave the criminal justice system before release and contemplating their re-entry to society befits a system intent on reform, not punishment. Helping shrink the system by hiring returning citizens is an act of patriotism. It acknowledges the long shadow cast by mass incarceration on the economy and society, and instead of shrinking away, moves forward to build a better future for all of us.

Related: How to Employ the Formerly Incarcerated to Help Grow Your Business

Damien Dwin

Chair of Vera Institute of Justice and co-CEO of Brightwood Capital

Damien Dwin is Chairman of Vera Institute of Justice and co-CEO of Brightwood Capital, a New York-based investment firm with $5 billion in assets under management.

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