What to Know About Second Chance Hiring and Why It Could Help Solve Your Labor Problems

This story was originally published on CO— by U.S. Chamber of Commerce and was written by Emily Heaslip.

Second chance hiring, 70 million Americans, Walmart, Starbucks and Home Depot, recent op-ed, Second Chance Business Coalition, One in three, Work Opportunity Tax Credit, tax credit, Dave's Killer Bread Foundation, Skill assessments, Greyston Bakery, 70 Million Jobs

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Second chance hiring is the practice of hiring individuals with a criminal record. Second chance hiring is not only altruistic, but it also taps into a massive source of talent that many businesses can benefit from. There are an estimated 70 million Americans with arrest or conviction records that create significant barriers to reintegration into society.

The more-than-600,000 citizens who return from prison each year offer talent, loyalty and motivation that big enterprises have begun to discover. Brands like Walmart, Starbucks and Home Depot have updated their hiring practices to include people with criminal records. A recent op-ed by Jamie Dimon, chairman and chief executive of JPMorgan Chase & Company, recognized the value that this labor group has to offer.

For smaller merchants, investing in second chance hiring could be the solution to finding talented individuals in an extremely competitive job market. Here’s what to consider when exploring second chance hiring.

Benefits of second chance hiring

Second chance hiring is a win-win for employers and employees — and for society at large.

First, for employers, research shows that second chance employees are engaged, loyal and profitable. The Second Chance Business Coalition found that 85% of HR and 81% of business leaders say that individuals with criminal records perform the same as or better than employees without criminal records. “On balance, second chance hires are highly loyal and productive employees. Additionally, research shows that second chance hires have lower turnover rates, which saves companies money,” said the Coalition.

Second chance hiring also allows small business owners to advance their diversity and inclusion initiatives. One in three Black men have a felony conviction; when businesses commit to hiring former felons, they are investing in communities that are chronically underserved.

If your primary concern is financial, there are tax incentives for second chance hiring. The federal Work Opportunity Tax Credit gives employers who hire a qualified ex-felon a tax credit of up to 25% of their first year’s wages if the employee works at least 120 hours, and 40% if they work over 400.

The benefits for second chance employees are clear, too. “Without work, formerly incarcerated individuals can fall back into criminal behavior and are likely to end up on public assistance programs,” reported the ACLU. By giving someone a job, small business owners can help lower rates of recidivism and unemployment simultaneously.

The overall community benefits when individuals are given employment. Earning an income can help keep people from homelessness, lessening the burden on taxpayers. “The employment penalty imposed on people with criminal records results in a loss of somewhere between $78 and $87 billion in annual gross domestic product. This means millions of dollars in lost tax revenue for state and local jurisdictions,” said the ACLU.

Key considerations for second chance hiring

There may be some adjustments you need to make to create an inclusive workspace for second chance employees. Second chance hiring is likely to be unsuccessful if you’re doing it for marketing or PR reasons.

“It shouldn’t be done to be charitable or altruistic. It should be because your organization is committed to hiring the best person for a job,” Genevieve Martin, executive director of Dave’s Killer Bread Foundation, told SHRM.

One way to make sure someone is set up to succeed is to use a skills assessment as part of your hiring process. Skill assessments are shown to be one way to remove bias from recruitment and even the playing field for all candidates, regardless of their background.

Once you’ve started hiring second chance employees, provide training and mentoring to help improve retention and upskill your team members. Many employers, like Greyston Bakery, offer nontraditional benefits — such as rides to work or child support — to second chance employees to make sure they can do their best work.

How to get started

There are a number of resources for merchants who want to become second chance employers. Check out the Second Chance Business Coalition70 Million Jobs and SHRM Foundation’s Getting Talent Back to Work initiative for more information. You can also check out “The Business Case for Criminal Justice Reform: Second Chance Hiring,” a report from the U.S. Chamber of Commerce.

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