People who have been incarcerated are more likely to start their own businesses compared to the general population. A recent study from Columbia University, now available on SSRN, found that individuals who were formerly in prison are 5 percent more likely to become entrepreneurs. This trend is particularly noticeable among Black men who have faced high incarceration rates.
One major appeal of entrepreneurship for this group is the ability to earn an income without depending on traditional employment, which often comes with discrimination and various challenges when reintegrating into the workforce. While some businesses have valid concerns about hiring individuals with criminal records, such as safety or logistics, many formerly incarcerated people encounter barriers that extend beyond these issues.
Damon J. Phillips, one of the study’s authors, highlighted in a discussion with the University of Pennsylvania’s Wharton School of Business that stereotypes about formerly incarcerated individuals hinder efforts to maintain a robust workforce. With almost a third of adults having some form of criminal record, the economy and public safety both benefit when employment opportunities are available for these citizens.
Moreover, income generation isn’t the only advantage of entrepreneurship for those who have been incarcerated. The study indicates that starting a business can provide a sense of purpose, which helps some avoid future legal problems. In fact, those who start their own businesses are less likely to return to prison.
Naturally, starting a business is challenging. While some individuals excel in this role, others might struggle, especially if they see business ownership as a last resort. However, Phillips emphasized the need for better job opportunities, education, and training for people with criminal records. In an ideal world, they would start businesses out of genuine desire. Until that happens, society owes it to them to provide support in starting businesses when it is the best available option.
