WHEREAS: In recent decades, U.S. incarceration rates have increased rapidly, and people of color are disproportionately affected. For people who have been in prison, the unemployment rate is 27% – higher than the total U.S. unemployment rate during any historical period – while formerly incarcerated Black women experience an unemployment rate of 43.6%. At the same time, studies predict a skilled labor shortage by 2030 – linking an untapped talent pool with an increasingly critical corporate need, especially for a company like A.O. Smith that engineers and manufactures products;
Recruiting formerly incarcerated people (“fair chance hires”) widens the candidate pool for employers and benefits the economy at large. Case studies show that fair chance hires can have excellent attendance records and help decrease turnover (and associated expenses) while increasing productivity;
Fair chance employment best practices include:
● Resolving technical barriers in job applications;
● Creating internship and training programs with direct hire opportunities;
● Hosting job fairs targeting fair chance jobseekers;
● Removing blanket exclusions on specific crimes beyond legal requirements;
● Ensuring that criminal records reviewers use best practice standards for individualized reviews;
● Partnering with advocacy organizations that specialize in job preparation for incarcerated people;
● Destigmatizing the issue throughout the entire workforce;
● Creating employee support structures for justice-involved individuals;
● Examining anonymized data on fair chance hires to ensure racial and gender equity;
Fair chance employers are not blind to criminal records but commit to hiring practices that consider the effects of related stigma and bias. People with criminal records face thousands of collateral consequences after conviction that result in reduced employment opportunities and can lead to recidivism. The cost of recidivism on the U.S. economy is an estimated $65 billion annually;
Because people of color are disproportionately incarcerated, pursuing fair chance employment can also advance company diversity goals. In its 2022 Corporate Responsibility & Sustainability Report, A.O. Smith describes that “diversity has been empirically shown to promote creativity and innovation and is a priority within [the] company.” However, only 28% of U.S.-based employees identify as people of color which stands in contrast to the diversity levels of Milwaukee, where A.O. Smith is headquartered, where 66% of residents identify as people of color;
Excluding qualified individuals because of criminal records could harm the company’s competitive advantage and reputation. Shareholders believe that company value would be well-served by examining whether revisions to company practices related to recruiting formerly incarcerated individuals could decrease future risks related to discriminatory hiring.