Small Business

5 Reasons to Consider Hiring Ex-Offenders at Your Small Business

Small business owners are responsible for the bulk of new job creation, but there’s a large candidate pool that tends to get overlooked. Consider hiring ex-offenders — it can be great for your community, and your bottom line.

With almost 1.5 million Americans behind bars, there’s a good chance someone in your social circle knows someone who’s been to jail — or has even been incarcerated themselves. But ex-inmates still face a struggle once they’ve been released, especially when it comes to finding a job.

According to research done by the Prison Policy Initiative, the unemployment rate among formerly incarcerated people hovers over 27%. That’s higher than the overall American unemployment rate has ever been, even during the Great Depression when it rose to 25%.

Meanwhile, evidence suggests that smooth re-entry, including employment, is one of the best ways to thwart recidivism In one study, prisoners who were given enhanced job-readiness training showed significantly less likelihood of rearrest than those who did not.

As a small business owner or someone interested in starting a business, you want to make decisions that will maximize your bottom line — and create the kind of company culture that matches your values. Hiring ex-offenders can help you achieve both aims. Here’s how.

1. You can help someone get back on their feet

Although ex-prisoners face staggering unemployment rates, it’s not because they’re not looking for work. Rather, it’s often due to discriminatory hiring practices that keep them from getting the jobs they need to get their lives back in order.

In a survey of hiring managers, researchers at Arizona State University found that a criminal record was one of the most deeply negative factors a job applicant could have — worse than partial or total unemployment or being a welfare recipient. In many cases, a conviction disclosure amounts to an immediate disqualification, an injustice that’s given rise to the Ban the Box campaign, which seeks to do away with the tick-mark application question.

By hiring an ex-offender, you have the chance to make a difference in someone’s life and help them overcome the systemic obstacles that create these statistics. And since ex-convicts are so badly in need of employment opportunities (and grateful to get them), they often make diligent workers once they’re hired.

Which brings us to the second item on our list:

2. Ex-offenders have a lot to give

In writing this story, we talked to several small business owners who’d taken a chance on hiring an ex-convict. Not one of them had anything but glowing reviews of the experience.

Matthew Ross, COO and co-founder of The Slumber Yard, said that the ex-felon he and his partner hired turned out to be one of their best employees: respectful, hard-working and dedicated. “He's usually one of the first to arrive and the last to leave,” Ross said. He thinks his employee’s devotion is at least partially due to the sense of gratitude he feels for the hard-to-come-by opportunity.

But gratitude aside, the fact is, people with prison records are just that: people. They have a host of skills, talents and aptitudes that can benefit your business.

Bob B. Trapp, publisher of the Rio Grande Sun, a newspaper out of Española, N.M., has hired several ex-felons over the course of his career. When asked why he chose to do so, he replied simply: “I don’t take that into consideration.”

“I hire by qualifications and skills,” Trapp went on, noting that all three ex-convicts he brought on board had been stellar reporters. “They were good with people,” he said. “People would talk to them. That’s such a big deal in this business.”

Obviously, the skills you need to help your business succeed will depend on your industry. But former prisoners come from all walks of life and all levels of education, and if you dismiss a candidate based on conviction alone, you could be missing out on great talent.

3. You can get a tax break

If the touchy-feely side of hiring ex-offenders doesn’t speak to you, dollar signs might. And thanks to the Work Opportunity Tax Credit, or WOTC, there’s a monetary incentive for taking a chance on an applicant who’s been to prison.

The WOTC rewards employers who hire candidates from a variety of target groups that struggle to find employment, including ex-felons. The IRS defines a qualified ex-felon as anyone who is hired within one year of being convicted of a felony or released from prison after serving a sentence for a felony. If the employee works at least 120 hours, you can claim a tax credit of up to 25% of their first year’s wages; if they work over 400, you can claim up to 40%.

Along with this federal-level tax credit, certain states and municipalities also offer financial incentives to small business owners willing to hire ex-offenders. For instance, Philadelphia runs the Fair Chance Hiring Initiative, which offers cash reimbursements for hiring (and scheduling) employees who’ve recently been incarcerated. The incentive is based around the number of hours the ex-convict works, and could put up to $5,000 per year into the business owner’s pocket.

It’s worth checking to see if something like this exists in your area, particularly if you’re on the fence about a potential hire. Besides offering financing, the Small Business Administration is a also a great place to find local resources across the country, including development centers and local organizations that can help you learn more about your options.

4. If you’re worried, you can seek out protection — or give ex-felons a trial run

It makes sense that employers may be worried about an ex-convict’s future behavior. After all, they went to jail for a reason — at least in theory.

But the U.S. Department of Labor offers an incentive program that can help allay your fears. It’s called the Federal Bonding Program, and it works like a kind of insurance: Small business owners who hire bond-covered ex-convicts can have employee-related losses incurred during the first six months of employment of up to $5,000 reimbursed to them, at no cost and with no deductible.

Even if you don’t want to go through the trouble of filing Federal Bonding paperwork, you might still be able to put your mind at ease.

Khalil Osiris, who spent 20 years in prison, credits that transformational experience for his present-day success as an author and motivational speaker. But when he was first released, work opportunities were hard to come by. So he found a company he believed in and offered up his services as a volunteer instead.

“When I went to volunteer, I was treated very differently than I was when I went seeking a job,” he said. And when his potential employers saw his grit and determination on a pro bono basis, they were happy to offer him a paid position.

So if you’re reticent, Osiris suggests opening volunteer opportunities to ex-felons before you make anything official. “Get a chance to observe them. See what their work ethic is like. But at least open the door,” he said.

5. You’ll strengthen your community

Small businesses are hugely influential to the U.S. workforce and American culture as a whole. In fact, more than half of Americans either own or work for a small business, and small businesses are responsible for the bulk of new job creation.

That means that as a small business owner, you have a lot of power. By hiring an ex-convict, you’re putting otherwise idle hands to work, which could keep new crimes from happening and make for safer, more functional communities.

Plus, hiring ex-convicts and other stigmatized applicants injects humanity into corporate policy and brings kindness back into business. And doesn’t a kinder world sound like a better, brighter place to live?

Jamie Cattanach

Jamie Cattanach’s work has been featured at Fodor’s, Yahoo, SELF, The Huffington Post, The Motley Fool, Roads & Kingdoms and other outlets.