Criminal background check laws and labor market inequality in the United States

• Published date: 01 May 2024
• Author: David McElhattan
• Date: 01 May 2024
• DOI: http://doi.org/10.1111/1745-9133.12662

DOI: 10.1111/1745-9133. 12662

ORIGINAL ARTICLE

Criminal background check laws and labor

market inequality in the United States

David McElhattan

Department of Sociology, Purdue

University, West Lafayette,Indiana, USA

Correspondence

David McElhattan, Purdue University,

Department of Sociology, 700W. State

Street, West Lafayette,IN 47907, USA.

Email: davidmcelhattan@purdue.edu

Abstract

Research summary: A growing literature documents

the effect of criminal justice contact on inequalities in

the labor market. While ample evidence indicates that

a criminal record itself imposes considerable disadvan-

tage, the formal legal mechanisms that may contribute

to criminal record-based exclusion have received less

empirical attention. The present study examines how

one such mechanism—legal requirements for employ-

ers and license boards to perform criminal background

checks—shapes labor market outcomes among formerly

incarcerated people. The study draws from novel longi-

tudinal data on the extensiveness of background check

requirements at the state level, as well as individual-level

data on incarceration, wages, and unemployment from

the Panel Study of Income Dynamics. Results show that

while the extensiveness of state-level background check

requirements does not significantly affect the likelihood

of unemployment, formerly incarcerated people resid-

ing in states where background check requirements are

extensive are estimated to earn significantly lower wages

than their counterparts in states with few screening

mandates.

This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits

use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or

adaptations are made.

© 2024 The Authors. Criminology & Public Policypublished by Wiley Periodicals LLC on behalf of American Society of Criminology.

Criminology & Public Policy. 2024;23:391–429. wileyonlinelibrary.com/journal/capp 391

392 MCELHATTAN

Policy implications: Criminal background check

requirements stand as significant policy barriers that

diminish the earning potential of formerly incarcerated

people. Policy makers seeking to mitigate the collateral

consequences of criminal convictions should narrow

the scope of these laws to target specific, highly sensitive

occupations, as opposed to broader workplace contexts.

Reforms should also address persistent data quality

issues in state criminal history record systems and shift

the burdens imposed by incomplete or erroneous rap

sheets. To minimize adverse self-selection, background

check procedures should clarify for applicants the role

that a criminal history record may play in clearance

decisions. Finally, future research should assess the

marginal benefit of criminal background checks com-

pared with other methods of screening prospective hires

and licensees.

KEYWORDS

collateral consequences, criminal background checks, criminal

records, labor market

A large body of research examines the penal system’s role as an inequality-making institution

that shapes life trajectories along multiple dimensions (Garland, 2001;Pager,2007;Wakefield&

Uggen, 2010; Western, 2006). A particularly extensive literature has emerged to study relation-

ships between criminal justice contact and labor market outcomes, where scholars have sought

to distinguish the independent, stigmatizing effect of a criminal record from the substantial labor

market disadvantages that former inmates faced prior to their incarceration (Pager, 2003, 2007;

Western, 2006). This line of researchhas yielded persuasive evidence that a criminal record nega-

tively affects a person’s employment and earnings potential, net of any skills deficits that predate

a term of incarceration. At the same time, existing research has given less attention to the spe-

cific policy mechanisms that may account for the difficulties that returning citizens face in the

labor market. Formerly incarcerated people in the United States can face vastly disparate crim-

inal record policy environments upon reentry, depending on the state jurisdiction where they

reside. Variation in these legal regimes may in turn moderate the impact of a criminal record on

a person’s ability to find stable work with decent pay.

Statutes that require employers and license boards to conduct criminal background checks are

one such policy-based obstacle that has proliferated at the state level in recent decades (McEl-

hattan, 2022a). Background check mandates may present a particularly formidable labor market

barrier, as they are unique in combining several exclusionary mechanisms, such as automatic

disqualification from jobs and licenses, adverse self-selection effects, and costly administrative

entanglements due to criminal record errors, that are imposed separately by the other formal and

informal obstacles that formerly incarcerated people face in the labor market. Background check

MCELHATTAN 393

mandates are further notable for their broad scope, targeting not only specified occupations but

also regulating access to workplace contexts more generally, especially in the rapidly growing

healthcare and social services industries.

The present study drawsupon the National Inventory of CollateralConsequences of Conviction

(NICCC) to develop novel longitudinal data on the adoption of 4766 laws that establish formal

background checks for employment and occupational licenses and examines their relationship

with labor market outcomes among people with incarcerationrecords. Using individual-level data

from the Panel Study of Income Dynamics’ (PSID) Transition into AdulthoodSupplement (TAS),

multiple regression analyses find a substantial negative relationship between the extensiveness of

formal background check requirements at the state-level and the hourly wages of formerly incar-

cerated people. Net of controls, formerly incarceratedpeople in a high-background check state are

estimated to earn 14.25% less per hour than their counterparts in a state with few requirements—

a penalty that grows larger for laws regulating non-white-collar occupations. While the wage

reduction associated with background checks is significant, the analyses also show that their

extensiveness does not increase the risk of unemployment among people with an incarceration

record. Taken together, the findings indicate that the impact of formal background checks is felt

primarily in relegating justice-involved people to lower-wagework, rather than blocking employ-

ment opportunities altogether. More broadly, the paper provides evidence that legally mandated

background screening serves as an important source of divergence in the labor market prospects

of returning citizens.

1 INCARCERATION AND THE LABOR MARKET

Prior research documents substantial labor market penalties associated with incarceration (West-

ern et al., 2001). Western (2006), for instance, finds that imprisonment reduces hourly wages by

an estimated 15% among young, crime-involved men born between 1965 and 1969. Incarceration

also has been found to increase the risk of unemployment and reduce the number of weeks a

person works each year (Apel & Sweeten, 2010; Harding et al., 2018; Pettit& Lyons, 2007; Western

& Beckett, 1999). Taken together, job instability and low wages are estimated to impose an annual

earnings penalty of between 30 and 40% for formerly incarcerated people (Western, 2006).

Scholars have theorized three mechanisms to account for the difficulties that returning citizens

face in the labor market: selection, transformation, and stigma (Pager,2007; Western, 2006). Selec-

tion refers to the fact that formerly incarcerated people arenot a random sample of the population;

instead, factors such as low educational attainment, addiction, and mental illness may explain

both selection into justice contact and difficulty securing or maintaining stable employment.

Yet, beyond selection, incarceration may impose additional barriers through the deterioration of

human and social capital (transformation), as well as the enduring stigma of a criminal record—a

“negative credential” that makes it hard to find work regardless of a person’s skills or qualifica-

tions (Pager,2003, 2007). Conceptually, stigma includes both informal aversion by employers and

other gatekeepers, as well as formal restrictions such as background check requirementsthat bar

people with criminal records from designated jobs and licenses.

Audit studies and survey experiments have been the primary tools for demonstrating the

independent role of criminal record stigma as a labor market obstacle (Pager, 2007; Uggen et al.,

2014). Using matched pairs of testers with otherwise identical resumes, Pager’s(2003, 2007) study

of entry-level positions in the Milwaukee area found that applicants with a prison record saw

significant reductions in employer call-backs of between 50 and 65%, compared to applicants with

a clean record. Uggen et al. (2014) use a similar approach tostudy the effect of a low-level criminal