January 20th, 2018

Potato House

PERVERSE CONSEQUENCES

Does banning the box increase hiring discrimination?

“Our results support the concern that BTB [Ban the Box] policies encourage racial discrimination: the black-white gap in callbacks grew dramatically at companies that removed the box after the policy went into effect. Before BTB, white applicants to employers with the box received 7% more callbacks than similar black applicants, but BTB increased this gap to 43%. We believe that the best interpretation of these results is that employers are relying on exaggerated impressions of real-world racial differences in felony conviction rates.”

Newly published by AMANDA AGAN and SONJA STARR, in line with their previous work on the same topic, available here.

  • These results bolster longstanding concerns about perverse consequences arising from ban the box legislation. (Similar studies include this one from 2006, and this one from 2016.) A 2008 paper provides a theoretical accompaniment to these worries, arguing that a privacy tradeoff is required to ensure race is not being used as a proxy for criminal history: “By increasing the availability of information about individuals, we can reduce decisionmakers’ reliance on information about groups.… reducing privacy protections will reduce the prevalence of statistical discrimination.” Link.
  • In a three part series from 2016, Noah Zatz at On Labor took on the perverse consequences argument and its policy implications, levelling three broad criticisms: “it places blame in the wrong place, it relies upon the wrong definition of racial equality, and it ignores cumulative effects.” Link.
  • A 2017 study of ban the box that focussed on the public sector—where anti-discrimination enforcement is more robust—found an increase in the probability of hiring for individuals with convictions and “no evidence of statistical discrimination against young low-skilled minority males.” Link.
  • California’s Fair Chance Act went into effect January 1, 2018, joining a growing list of fair hiring regulations in many other states and counties by extending ban the box reforms to the private sector. The law provides that employers can only conduct criminal background checks after a conditional offer of employment has been made. More on the bill can be found here.
  • Two posts on the California case, again by Zatz at On Labor, discuss several rich policy design questions raised by the “bright line” standards included in this legislation, and how they may interact with the prima facie standard of disparate impact discrimination: “Advocates fear, however, that bright lines would validate the exclusion of people on the wrong side of the line, despite individualized circumstances that vindicate them. But of course, the opposite could also be the case.” Link.
  • Tangentially related, Ben Casselman reports in the New York Times that a tightening labor market may be encouraging some employers to hire beyond the box—without legislative guidance. Link.
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January 13th, 2018

Landing Place

THE WAGE EFFECT

Higher minimum wages and the EITC may reduce recidivism

“Using administrative prison release records from nearly six million offenders released between 2000 and 2014, we use a difference-in-differences strategy to identify the effect of over two hundred state and federal minimum wage increases, as well as 21 state EITC programs, on recidivism. We find that the average minimum wage increase of 8% reduces the probability that men and women return to prison within 1 year by 2%. This implies that on average the wage effect, drawing at least some ex-offenders into the legal labor market, dominates any reduced employment in this population due to the minimum wage.”

Full paper by AMANDA Y. AGAN and MICHAEL D. MAKOWSKY here.

  • Jennifer Doleac responds, “The results in this new paper…definitely surprised me—my prior was that raising the min wage would increase recidivism.” She explains: “Those coming out of prison are very likely to be on the margin of employment (last hired, first fired). Given some disemployment effects, marginal workers are the ones who are going to be hurt. Amanda and Mike find that the positive effects of pulling some (higher-skilled?) offenders into the legal labor market outweigh those negative effects.” Link to Doleac’s Twitter thread.
  • One of the co-authors, Makowsky, adds, “The EITC, dollar for household dollar, generates larger effects [than minimum wage increases], but is hampered by its contingency on dependent children. This is one more reason to remove the contingency, extending it to everyone.” Link to Makowsky’s Twitter thread.
  • Another piece sourced from Makowsky’s thread: “The Impact of Living-Wage Ordinances on Urban Crime.” “Using data on annual crime rates for large cities in the United States, we find that living-wage ordinances are associated with notable reductions in property-related crime and no discernable impact on nonproperty crimes.” Link.
  • Noah Smith rounds up recent studies on increasing the minimum wage, many of which come to contradictory conclusions. "At this point, anyone following the research debate will be tempted to throw up their hands. What can we learn from a bunch of contradictory studies, each with its own potential weaknesses and flaws?" Link.
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