June 4, 2015
Sonia Kowal, President
The percentage of the U.S. population with a criminal record has risen from 13% in 1991 to 22% in 2012 — meaning nearly one in four Americans has a criminal record. A criminal record follows anyone who has been arrested, even if their case was dismissed or they were found not guilty. Many companies won’t hire anyone with a criminal record, regardless of whether the candidate stole a traffic sign in college, was arrested in a protest or was convicted of a violent crime. And given the disparate racial impact of the criminal justice system, corporate bans on hiring people with records disproportionately affects communities of color. The cycle widens the inequality gap and needs to be broken. Employing low-risk, qualified people with records presents an opportunity to address some of our economic and labor challenges while still protecting vulnerable populations.
We are interested in this issue not only from a social justice and public safety perspective, but also from an economic and workforce development standpoint. Our economy is less efficient because a large and growing cross-section of society is left idle and unemployed as a result of discrimination against historic or irrelevant offenses. At the same time, we have massive skills shortages all around the country.
To do our part, we are urging companies to instigate a more thoughtful review of their hiring practices while recognizing that there are legitimate concerns about the risk of hiring workers with criminal histories. We have been working with local and national non-profits to identify best-practice criminal background check policies that companies can use to improve their hiring procedures while protecting their employees, their customers and the public. These include considering changes such as omitting questions about criminal history on an initial application form, only considering convictions and pending cases, considering the nature and age of an offense, and giving the applicant the ability to contest the accuracy and relevance of the offense. We have asked companies for their policies and shown them how these policies compare to best practices. We have found a wide dispersion in how companies approach criminal background checks, although most haven’t considered this issue thoroughly. We have also been working with local legislators to tighten regulations about how criminal background information is obtained and used. However, any reforms such as “Ban the Box” – a campaign that is aimed at persuading employers to remove from their hiring applications the check box that asks if applicants have a criminal record – will, in our view, only have a marginal impact on improving the employment prospects of people with records, unless companies themselves initiate a more thoughtful review of their hiring processes.
Our goal is to remove barriers to employment for qualified applicants who do not pose a threat to other employees, customers, or the general public. Part of our analysis of potential investments in sustainable businesses focuses on the ability of companies to recruit and retain the best workers. Because the number of people with criminal records is so high, companies who automatically disqualify anyone with a record from their applicant pool are artificially limiting their access to the best employees. As investors, we call on companies to adopt fair criminal background check policies as a part of a broader commitment to acting as socially responsible employers. We are working on an investor letter on this topic to be sent to S&P 500 company CEOs to get the issue on their radar screens. This will help raise awareness about this issue with companies who can fairly easily start making a difference in the lives of millions of people by giving them a chance at good employment.