Each year, more than 650,000 prisoners in the U.S. are set free. But many employers are unwilling to hire them—a trend with enormous social implications, since being employed increases an ex-offender’s chance of reintegrating into society and staying out of jail.

Employers often worry that people with criminal records will steal, behave unethically, harass coworkers, or become violent. Or these applicants may be perceived as less competent; if they have spent time behind bars, maybe they lack social and professional skills.

But how true are these assumptions?

A team of researchers at Kellogg and Northwestern University’s Pritzker School of Law wondered whether employers were right to be concerned. When they analyzed data on about a quarter of a million applicants for sales and customer service jobs in the U.S., they found that ex-offenders who did get hired were no more likely to be fired later than non-offenders. And they were less likely to quit — saving their firms a significant amount of money in employee turnover costs.

“For these companies, turnover is huge,” says coauthor Dylan Minor, an assistant professor of managerial economics and decision sciences at Kellogg. If an employer has thousands of workers, “at the end of the year, that’s going to be a big difference.”

The picture was not entirely rosy. The researchers found that in sales positions, people with criminal records were more likely to be fired for misconduct. So if a firm is filling a position where unethical or illegal behavior could dramatically affect the company, such as a financial job, the employer might be wise to avoid hiring an ex-offender, Minor says.

"There could be an opportunity to hire some people, give them a second chance, and even get a more loyal employee.”—Dylan Minor

For other types of work, though, companies that automatically blacklist applicants with criminal records might want to reconsider their policies.

Minor says he has heard employers say, “I’d never hire someone with a background.” But, he notes, “there could be an opportunity to hire some people, give them a second chance, and even get a more loyal employee.”

Hiring Ex-Offenders

A job is a crucial step in establishing a new life upon release from prison. Yet, one study found that eight months after getting out of jail, more than half of ex-offenders did not have current jobs. And being unemployed is strongly linked to a higher risk of committing another crime. In other words, many of these rejected applicants are likely to end up back in prison.

Minor and his colleagues Nicola Persico, a professor of managerial economics and decision sciences at Kellogg, and Deborah Weiss, director of the Workforce Science Project at Northwestern’s Pritzker School of Law, examined data from a hiring consultancy on more than 1 million job applicants from 2008 to 2014. The records covered 11 companies in the U.S., mainly for sales representatives in call centers and customer service positions. For about 264,000 candidates, information was available on whether or not the person was an ex-offender.

The researchers first investigated whether these companies were indeed more reluctant to hire candidates with criminal records. Looking at the overall data set, the researchers did not initially see a pattern suggesting that the employers were less likely to hire people with a criminal history.

Persico points out that while that may seem surprising, it is important to remember that those who apply for a job are a self-selected group.

“Applying is costly in terms of time, and so presumably only those who have a reasonable chance of being hired choose to apply,” he says. “With this self-selected group of applicants, those with a criminal record presumably have some other positive attribute that, while unobservable to us researchers, makes them optimistic that they can get hired despite their criminal record.”

But if the team analyzed specific positions and controlled for some aspects of education and work history, differences emerged. The hiring rate for ex-offenders was 3.7 percentage points lower than for non-offenders in sales positions and 1.7 percentage points lower in customer service positions.

Reducing Employee Turnover

What happens to ex-offenders that are hired?

Contrary to what employers might assume, the team saw no difference in firing rates between workers with and without criminal records. The data did not specify which crimes the employees had committed, so it is possible that the companies hired ex-offenders only if they had a less serious criminal history. That said, the ex-offenders whom the firms do hire appear to perform no worse than non-offenders, Minor says.

And when the team examined rates of voluntary quitting, ex-offenders actually did better. On average, employees stayed at their jobs for about five months. But workers with criminal records stuck around for an average of about three weeks longer than those without records. While that might not seem like much extra time, each turnover costs the firm about $4,000. So the researchers estimate that hiring ex-offenders could save companies about $1,000 per year per position.

Put another way, the turnover rate for employees with criminal records is about 13% lower. “They’re more loyal to the firm,” says Minor, who speculates that they might stay longer because they do not have as many options to work elsewhere.

Trouble in Sales

Employers’ concerns about ex-offenders are, however, partially justified. The team studied workers who had been fired specifically for misconduct, which could range from stealing to workplace violence. The researchers saw no difference in customer service jobs. But when they examined sales positions, they found that employees with criminal records had a 28% higher risk of being terminated for misconduct than coworkers without records.

It is not clear why this pattern would arise in sales. Perhaps people with a penchant for bad behavior are more attracted to sales positions. Or maybe the sales environment somehow encourages workers to act unethically.

The results suggest that employers should be cautious about hiring an ex-offender to perform, say, a job involving sensitive business information. “I would think twice before hiring someone with a record in that setting,” Minor says.

Ban the Box Laws

Policies have been implemented to help ex-offenders get jobs, but they may not always work as intended. In some areas, regulations known as “ban the box” laws prevent companies from asking candidates on their initial applications whether they have a criminal record. Instead, employers must wait to find out until later in the hiring process. But some studies suggest that in the absence of this information, employers may discriminate more strongly based on racial stereotypes instead.

This research cannot address whether “ban the box” policies should continue. The data covered only ex-offenders who applied for jobs, and it is possible that people with particularly bad criminal records did not even bother trying. If candidates were no longer required to disclose their backgrounds up front, perhaps the serious criminals would seek work more frequently, with different results.

However, the study does suggest that, at least for some occupations, ex-offenders can become valuable employees. Educating employers about these findings could open the door to more applicants with criminal records, Minor says. And that could keep more people out of jail.

“If these people don’t get a job, the chances are that they’re going right back,” he says. “It’s this vicious circle that’s really tough to get them out of.”