Why Jamie Dimon, Walmart and McDonald’s Want to Hire Ex-Convicts
(Bloomberg Opinion) -- JPMorgan Chase & Co. CEO Jamie Dimon has been preaching the benefits of hiring people with criminal records for years. But with the whiplash effect of the Covid-19 pandemic spawning complaints of labor shortages across the U.S. economy, more companies are buying into the idea.
Dimon is teaming up with Craig Arnold, the chief executive officer of electrical-equipment manufacturer Eaton Corp., to co-chair an initiative that aims to foster employment opportunities for Americans with criminal records and provide a forum for member companies to share resources and advice. Other corporate participants in the Second Chance Business Coalition announced on Monday include railroad Union Pacific Corp., Best Buy Co., Microsoft Corp., General Motors Co., Bank of America Corp., McDonald’s Corp. and Walmart Inc. It's a who’s who of corporate America, and that makes this commitment incredibly striking. In total, the nearly 30 publicly traded members have a combined market value of $6.8 trillion — more than enough to make a real difference in how former convicts are treated in the hiring process.
The population of Americans with a criminal record is pegged at 70 million to 100 million — or about one in three U.S. adults, according to the nonprofit Sentencing Project. Federal Bureau of Investigation databases aren’t always up to date and include incidents where arrests didn’t lead to a conviction, but employers will routinely scan those records when making hiring decisions and a red flag (regardless of the ultimate explanation or outcome) can stymie a candidate’s chances. “A felony conviction may as well be a life sentence when it comes to reentering the workforce,” Eaton’s Arnold said in a video announcing the Second Chance initiative. “Another hard truth is that the criminal justice system in the U.S. disproportionately affects people of color,” added Arnold, who is Black. A 2009 study published in the Annals of the American Academy of Political and Social Science found that a criminal record reduces the likelihood of a callback or job offer by almost 50%, with Black candidates twice as likely to be penalized for past infractions.
This isn’t new ground for Dimon or JPMorgan. The bank announced in 2019 that it had “banned the box,” meaning it had removed the questions about criminal backgrounds from job applications. Since 2018, JPMorgan says its share of new hires with a criminal history has been steady at about 10%. The bank has invested $100,000 in Nashville to help knock down barriers to jobs for former convicts. It announced this week that it's collaborating with nonprofits in Columbus, Ohio, to promote similar efforts. All told, JPMorgan has pledged $30 billion to advance racial equity through a laundry list of measures ranging from financing affordable rental units to making loans to small businesses in minority communities and opening branches in areas that are underbanked. But it’s far from the only company talking a big game these days about diversifying its workforce. As companies jockey for positioning in a reopening economy and simultaneously strive to bolster their environmental, social and governance credentials, more of them seem to be realizing this is a pool of candidates they can’t afford to keep overlooking.
While the U.S. unemployment rate has declined to 6% from as high as 14.8% during the worst of the pandemic, some underlying trends are rightfully raising alarms at the highest levels, including at the Federal Reserve. For example, the labor force participation rate among prime-working-age people (between ages 25 and 54) fell below 80% last year for the first time since the early 1980s. Now at 81.3%, it’s still well below the 83% rate at the start of 2020. Meanwhile, those older than 55 are steadily dropping out of the labor force, leaving employers with few options to fill job openings that are close to the highest level in at least 20 years, according to Labor Department data. The overall labor force participation rate hasn’t yet come anywhere close to a full recovery.
Retailers, hotels, landscapers and restaurants were among those citing difficulty hiring workers in the Fed’s latest Beige Book survey of business conditions. The Institute for Supply Management’s March gauge of factory activity brought similar complaints from machinery, transportation-equipment and fabricated-metal producers. A Florida McDonald’s franchise offered people $50 just to show up for a job interview, and even that didn’t incentivize as many applicants as hoped. Some companies blame the hiring lull on enhanced unemployment benefits that are proving more lucrative for some workers than low-wage jobs. Others point to fear of catching Covid or a need to take care of children amid school closings. The famine-to-feast impact of the pandemic and recovery on certain industries has also created a frenzy of competition as companies that cut costs to survive during the downturn all try to lure back workers at the same time. One Fed business contact in the Philadelphia region, for example, noted a bidding war for housekeepers at a resort. Pandemic beneficiaries such as package-delivery companies are still hiring rapidly as well.
It’s an untenable situation, and giving candidates with criminal records another look could be one way of addressing it. The coalition pointed to a study by the Society for Human Resource Management and the Charles Koch Institute that found 82% of managers feel that the quality of workers with criminal records is as high or higher than that of those without that blemish on their resumes. “In this hypercompetitive global economy, we simply cannot afford to leave more than 70 million Americans on the sidelines,” Dimon said. It seems the heavyweights of corporate America now agree with him.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.
Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.
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