Finding employment after incarceration presents exceptional challenges that extend beyond the difficulties faced by the general population during job searches. People returning from carceral settings face substantial obstacles including gaps in labor force participation, technological literacy deficits due to access restrictions during incarceration, and discrimination by employers. Additionally, individuals with incarceration histories are less likely to have maintained steady employment prior to their arrest, further complicating their post-release job prospects.

The economic impact of these challenges reaches far beyond the individuals directly affected. Researchers estimate that the annual loss to the U.S. economy due to the under- or unemployment of individuals with carceral histories falls between $57 and $65 billion. This substantial economic burden emphasizes the importance of investing in effective strategies to improve employment outcomes for those re-entering society after incarceration.

Employment plays a crucial role in successful re-entry, contributing to financial stability, longer periods of crime-free behavior, development of prosocial networks, and the construction of prosocial identities. While much research confirms these benefits, there is less consensus about which mechanisms most effectively improve employment prospects for those with past incarceration.

Professors Tristan Nighswander and Ariel Roddy at Northern Arizona University have conducted research which examines employment training programs, investigating whether and how two Economic theories, human capital theory and signaling theory, explain employment outcomes for individuals with carceral histories who participate in such training.

According to human capital theory, investments in training increase a worker’s human capital – defined as the economic value of their skills, experience, and knowledge. This makes them more valuable to employers. For example, both an engineer learning a new programming language and a fast-food employee mastering the cash register have increased their human capital by acquiring skills that make them more productive in their positions.

In contrast, signaling theory suggests that the value of training isn’t primarily in the skills gained but in what program completion signals to potential employers about a job candidate. When employers hire, they rely on observable characteristics that indicate ability, perseverance, ability to learn new skills and motivation. For training to function effectively as a signal, it must involve some cost for the worker, with this cost being higher for low-ability individuals than for high-ability individuals. This cost differential creates what economists call a “separating equilibrium,” where a higher proportion of high-ability workers participate in training because it’s less costly for them to do so.

To test these theories, Nighswander and Roddy analyzed data from the National Longitudinal Survey of Youth, focusing on the period between 2000 and 2010. This panel dataset follows individuals who were between 15 and 21 years old in 2000, capturing them through their early adult years when many begin working and when delinquency typically peaks.

The study’s findings revealed striking differences in how employment training affects those with and without incarceration histories. For the general population, completing employment training resulted in a significant increase of approximately $78 per week in earnings. However, the interaction between training and incarceration history showed that previously incarcerated individuals received a much smaller benefit of approximately $20 per week.

When focusing exclusively on the previously incarcerated population, the researchers found no statistically significant relationship between training completion and improved earnings. In fact, their fixed effects regression model, which controls for unobserved individual-specific factors, suggested a slight negative effect (about $8 less per week), though this wasn’t statistically significant.

Even more surprising was their finding regarding high-ability individuals with incarceration histories. While high-ability individuals without incarceration histories saw the greatest benefits from training (about $54 more per week than low-ability individuals), high-ability individuals with incarceration histories actually experienced a reduction in earnings of approximately $63 per week following training completion. This outcome contradicts both human capital theory, which would predict greater benefits for high-ability trainees, and signaling theory, which would predict equal benefits across ability levels.

The researchers also found evidence supporting one aspect of signaling theory: in both the general population and among those with incarceration histories, high-ability individuals were more likely to complete training than low-ability individuals. This suggests that training does function as a signal, with high-ability individuals more frequently choosing to participate.

So, what explains these counterintuitive results? The researchers suggest that training programs may not be properly oriented toward improving outcomes for high-ability individuals with incarceration histories because program designers and potential employers often assume all justice-involved individuals are low-skilled. This perception appears throughout academic literature and policy discussions about re-entry employment. For instance, publications addressing employment for people with criminal records frequently focus exclusively on challenges in the low-skilled labor market without acknowledging the existence of high-ability workers within this population.

If high-ability individuals with carceral histories are uniformly directed toward training for low-ability jobs that don’t match their capabilities, training would not provide them with skills that improve their performance relative to untrained high-ability individuals with similar histories. While the researchers couldn’t conclusively establish this pathway, they suggest it’s a fruitful area for future research.

These findings have important implications for employment programs targeting justice-involved populations. The research indicates that training is not universally beneficial and can be less helpful to individuals with incarceration histories compared to the general population. Programs that have shown success tend to establish long-term relationships with employers and provide permanent rather than transitional employment opportunities.

For example, Minnesota’s EMPLOY program, which paired re-entrants with job development specialists who facilitated long-term employment connections, increased participants’ odds of gaining post-release employment by 72%. Similarly, the Post-Release Employment Project, which incorporated apprenticeships before permanent job placement, led to a 14% increase in employment likelihood. In contrast, programs offering only temporary employment opportunities, such as the Community Restitution Apprenticeship-Focused Training and the Transitional Jobs Reentry Demonstration, showed little to no lasting impact on employment outcomes.

Based on these findings, the researchers recommend increased investment in programs that provide apprenticeships, internships, or other forms of on-the-job training that allow employers to directly observe justice-involved employees’ capabilities before offering permanent positions. This approach may be particularly important for high-ability individuals with incarceration histories, who appear to be especially disadvantaged by traditional training programs.

Like any research project, Nighswander and Roddy’s study has limitations. First, the National Longitudinal Survey of Youth data are self-reported, creating potential for bias. Additionally, only a small portion of respondents had experienced incarceration and these were disproportionately from disadvantaged groups. The research also used binary measures of incarceration and ability, which simplifies complex relationships with the justice system and treats those with multiple incarcerations the same as those with just one. Lastly, the study investigated employment training generally, without distinguishing between different types of training.

Nevertheless, Nighswander and Roddy’s work offers valuable insights into the challenges of employment after incarceration, highlighting how traditional approaches to improving job prospects may not work, and might even backfire, for previously incarcerated individuals. Their findings underscore the need for more nuanced, individualized approaches to employment support for justice-involved populations, particularly those with higher abilities who are often overlooked in re-entry programming. By developing programs that allow employers to observe re-entrants’ capabilities firsthand, we may begin to address the substantial economic and social costs of post-incarceration unemployment more effectively.