Minimum Wages, EITC, and Prison Recidivism

Frankfurt      Professor Fred Brooks of Georgia State University shared with me a dense academic paper by Amanda Agan and Michael Makowsky, economics professors at the universities of Rutgers and Clemson respectively.  The title of the paper was “Minimum Wage, EITC, and Criminal Recidivism,” which is not normally the kind of thing that comes into your email inbox and is greeted with an “Oh, boy!”  Upon closer reading though, maybe that’s the wrong way to think about finding such a paper, because the professors did some heavy data lifting to allow them to postulate interestingly on the impact of raising the minimum wage, especially, whether it would reduce the incidence of former prisoners finding themselves back behind bars because of the what they term the “unemployment effect” and the calculation of the costs and benefits of working lower waged jobs versus the likely income from illegal activity.

They looked at six-million records of prisoner release in more than a dozen states in a relatively short period up to 2014.  They compared the release data with records of return and the impact of minimum wage increases in the same areas up to a maximum hourly wage at the time of $9.50 per hour.  What they seem to have found is that the recidivism rate was a little under 3% less for every fifty-cent increase in the minimum wage in a locality for both men and women former prisoners.  They found a significant decrease for women when there was an increase in Earned Income Tax Credits, though they could not find the same for men.  All of that is very, very interesting.  They hesitate to speculate on the policy impacts, but of course that’s not a problem for me.

When they look at the different impacts of EITC for women they speculate that it has to do with the fact that many are single women heading households with children.  They seem not to factor in the additional childcare credit that EITC provides households with children that might provide significantly more appreciable benefits to women in such situations that single men ex-prisoners trying to navigate the highly discriminatory job market for ex-cons.

They don’t decry the impact of frozen minimum wages federally and in many of these states, but of course I can, since the marginal impact of a fifty-cent increase might yield much lower rates of recidivism in states where we won one-dollar an hour increases or, as they point out in the future, any areas where a significant improvement up to $15 an hour is achieved.  They also don’t condemn the short-sightedness of conservative, Republican legislatures attempting to refuse to allow cities to increase minimum wages within their boundaries in Alabama, Florida, Louisiana, Texas and elsewhere even though proportionately the incident of prison population is more minority and more urban and the releases are also coming into cities.  Allowed to have higher minimum wages, as many areas have approved at the ballot box, could drastically reduce crime rates as well as lower the percentages of those returning to jail.

The mind boggles at the potential policy impacts that this study hints might be possible with fair wages and equitable wage distribution.  Is anyone listening out there?

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