The Labor Market Case for Fair Chance Hiring in the Future of Work

Today, high levels of inflation, supply chain issues, and an unprecedented labor shortage plague Americans and American businesses.

The US Chamber of Commerce reports 11.2 million open jobs in the US and only 6 million unemployed workers. If every unemployed person in the country found a job, we would still have over 5 million open jobs—a gap whose magnitude is unmatched in US history.

And while employers added upwards of 3.8 million jobs to the economy in 2021, over 3 million fewer Americans participate in the labor force today compared to February 2020.

There are many reasons for the shortage of labor, including the over 3 million Americans who retired early because of the COVID-19 crisis. The estimate, calculated by St. Louis Federal Reserve economist Miguel Faria-e-Castro, also suggests that the boom in early retirements shows no sign of abating.

While we are all hopeful that the economy will recover and resume growth and the imbalance between worker supply and demand will equalize itself in time—this hopefulness, unfortunately, does not reflect what looms on the horizon. In fact, there is an even steeper economic crisis to contend with.

For many years now, the US (and much of the developed world) has faced a birth rate decline. As of 2020, the US birth rate has dropped by almost 20 percent since 2007.

Many economists argue the steady fertility rate decline presents a trend that will persist and lead to a smaller workforce. In the US, we can expect labor deficits well into the future. And if left unchecked, the lack of labor will lead to higher inflation, lower per capita income growth, soaring taxes, and a limited economy that will hurt not just businesses, but all Americans.

If we want the economy to expand, we need to look at non-traditional talent pools from this increasingly shrinking labor force and expand the way we’ve practiced inclusivity if we are to attempt to close ever-growing job gaps.

The current state of the labor market has—and will continue to—force businesses to alter the way they identify and cultivate talent. According to census population projections in 2018, the nation will become “minority white” in 2045, another clear indicator that businesses need to prioritize building diverse and representative workforces.

We must broaden how we perceive and source talent if we are to maximize potential as we  build the future of work. This requires innovation and creativity in tandem with intention to deconstruct outdated processes and outmoded philosophies around hiring, and look to new talent pools to grow the American workforce.

Solving the nationwide problem of labor scarcity requires more than just one solution. To obtain and retain talent and overcome workforce shortages, we must hire folks from all backgrounds and lived experiences, especially those that have been systematically marginalized. To do this effectively requires us to recalibrate our approach.  We must reset the table stakes with holistic inclusion as the minimum buy in for sourcing and developing talent. To be certain, this will require courage, fresh perspectives, and baking in a top down company ethos and culture that centers true diversity and employee value.

A great place to start is the 77M Americans that suffer from some type of criminal record and who often face tremendous barriers or are outright denied access to the labor market and the middle class economy.

Jeffrey Korzenik, economist and author of Untapped Talent: How Second Chance Hiring Works for Your Business and the Community, has been in the investment business for over 37 years. As a lifelong student of the economy, he recognized the macroeconomic impact of marginalized groups being left out of the workforce, a problem whose solution, “We all have a huge stake in trying to address,” he said.

While Jeffrey agrees there is no one solution to the labor crisis, through extensive research and conversations with successful employers, he found the simplest solution—the single largest most overlooked population, filled with talent—people excluded from the labor force because of a criminal record. Jeffrey said, “If you had to pick one area to focus on, this is the one that will reap the most rewards for the US economy.”

From challenging degree requirements to implementing a fair chance hiring program—organizations large and small can strengthen their workforce, fill hiring gaps, and increase employee retention, setting themselves up to overcome what looks to be a long-lasting labor shortage.

Employers, and we as a society, must move on from the archaic practice of civil death and embrace the conclusion that once someone has suffered a criminal conviction and paid their proverbial “debt to society”, they should not be subject to a life sentence of collateral consequences and unemployment. The data shows that 95% of people who are arrested and incarcerated will return to the community.  This large swath of the American population deserves the opportunity to move on from their mistakes and rebuild their lives. In fact, these Americans deserve to earn a living and participate in the economy to strengthen our businesses and communities in the same way as any other member of the community.

When we do not provide these opportunities to people who have been adversely impacted by the justice system, economists estimate that the Gross Domestic Product (GDP) loses around $78 billion - $87 billion dollars annually.

When executed properly, fair chance hiring can be transformative to an organization, opening the doors to innovative approaches to sourcing and developing talent, sustainability, and ultimately productivity.  Opportunities forward-thinking companies cannot afford to overlook.

Consider Larry Miller, the brand visionary who catapulted the Jordan Brand at Nike to unprecedented heights and served as president of the Portland Trail Blazers. A man who spent his formative years and early 20s in juvenile detention and prison facilities. Or Shelley Winner, who has established an auspicious career as international keynote speaker and top-performer at one of the world’s most successful companies, Microsoft. A woman who once served 4-years in a federal prison. Amazing success stories and remarkable examples of the value of people when given the opportunity to thrive. And there are countless more.

Here at Checkr, we’ve implemented fair chance hiring practices that provide opportunity for the future Larrys and Shelleys, closing 2021 with 5.9% of our employees representing fair chance talent. Providing this employee demographic a fair chance has paid off in spades, consistently showing lower attrition, higher rates of promotion, and overall success.

The most innovative teams who maintain a competitive edge are the ones discovering alternative means to source talent while blending social impact—viewing this effort not as a cost, but as an investment.

“People who have been tested and rebuilt their lives bring so much to the table, not just as employees but as friends too,”  said Jeffrey.  He continued, “Determination and resilience is a powerful combination.”

As a country, we face unrivaled economic uncertainty. And singular times call for exceptional solutions. To deal with the labor shortage, we need to augment traditional talent sourcing strategies to expand our labor pools.

It is in this spirit that I call upon leaders in technology, manufacturing, retail, entrepreneurs, and owners from small and large businesses alike to join us at Checkr.org to take on bolder and more innovative responsibilities and build a fairer future of work, one job at a time.

If you would like to partner with Checkr.org to learn how you can become a fair chance employer, contact me at ken.oliver@checkr.com for more information.