Criminal Justice System Deepens Economic Inequality: Study

For more than four decades, economic inequality in America has risen “inexorably,” leaving millions of individuals with criminal records in an even more vulnerable situation. 

The cost of conviction and imprisonment doesn’t end for a formerly incarcerated individual after release. An individual who suffers an encounter with the criminal justice system — even a brief one — is likely to experience depressed wages for the entirety of their working life, according to a new study from The Brennan Center for Justice at the NYU School of Law. 

The study’s authors, Terry-Ann Craigie, Ames Grawert,  Cameron Kimble of the Brennan Center’s Justice Program, and economist Joseph E. Stiglitz, conclude that involvement with the criminal justice system creates a cyclical effect that deepens inequality. 

Those with criminal records are frequently overlooked by employers, leading to a struggle for financial stability, where those experiencing poverty are more likely to be imprisoned. 

Because of this, the authors note the first step in making a change to this system is understanding what’s at stake and putting the data into perspective. 

The researchers analyzed publicly available data on people released from prison for the years 1965 through 2017, which was obtained from the U.S. Department of Justice’s Bureau of Justice Statistics (BJS). They then cross-referenced it with national survey data regarding earnings of those who have been involved with the justice system. 

They found that the total amount of money lost each year by Americans who have a criminal conviction or spent time in prison is $372.3 billion. 

To put this into perspective, the authors note, “That’s enough money to close New York City’s poverty gap 60 times over.”

Furthermore, the researchers found staggering differences in lifetime earnings lost for Black and Latinx people compared to any other race after encounters with the criminal justice system.  

Loss of Earnings

The Brennan Center for Justice estimates that at least seven million people living in the U.S. have spent some time in prison. After release, “they face up to a 51.7 percent loss in annual earnings compared to people who have not spent time in prison,” — a total loss of $55.2 billion in annual earnings for that population, the authors found. 

Moreover, “people who were imprisoned early in their lives earn about half as much annually as socioeconomically similar people untouched by the criminal justice system,” the authors found. 

These lost earnings are on top of economic barriers in the form of hiring discrimination and lost job and licensing opportunities that former prisoners miss out on, the authors explain. 

Because of these system-wide inequality drivers, the authors note that macroeconomic consequences must be addressed by the public, advocates, and lawmakers alike. 

Racial Inequality

Following their broad loss of earnings analysis, the researchers isolated the data to look at the intersection of race.

They concluded that “Black and Latino people face steeper reductions in income due to a criminal conviction or prison sentence than white people.” When crunching the numbers, formerly imprisoned white people had an average lifetime earnings loss of $267,000.

However, Black individuals had a calculated average lifetime earnings loss of $358,900, while Latinx individuals saw an average loss of $511,500, according to their analysis. 

The researchers also found that in general, Black people with no criminal record earn roughly $10,000 less than white people with a record in similar socioeconomic standing. 

This, the authors note, should sound the alarm on the intersection of racism and poverty that has been anecdotally known, but never-before proven with data. Now that concrete statistics can be referenced in this injustice, change must take place, the authors argue. 


The authors conclude their report with a detailed list of policy interventions that can help break the cycle of conviction and incarceration. If implemented they say these can affect “transformative change.” 

Recommendations include:

      • States should reduce penalties while reclassifying some felonies and misdemeanors. Other crimes should be decriminalized altogether; 
      • Jurisdictions should invest in diversion paths away from arrest and prosecution, and expand alternatives to incarceration, and
      • Eliminate employment barriers like licensing opportunities

The authors also make note of other reentry barriers that, when compounded with employment and economic inequality, can severely negatively impact someone’s life. Other reentry barriers that must be addressed include landlord and housing discrimination, public housing authority rule relaxation, and health-care inequality, the authors note.  

Another method for reform: stopping the problem at its source — mass incarceration. 

“There is much that has to be done if our society is to fully come to terms with our long history of racial injustice,” Stiglitz wrote concluding the report. 

“Stopping mass incarceration is an easy place to begin.”

Terry-Ann Craigie is the economics Fellow in the Brennan Center’s Justice program, and she is also an associate professor of economics at Connecticut College. 

Ames Grawert is senior counsel and John L. Neu Justice Counsel in the Brennan Center’s Justice Program. He leads the program’s quantitative research team, while advocating for reform at the federal level.

Cameron Kimble is a research and program associate in the Brennan Center’s Justice Program where his work centers around researching the relationship between mass incarceration, wages, and economic inequality.

Joseph E. Stiglitz, who authored the forward of the report, is a Nobel laureate in economics and University Professor at Columbia University, is Chief Economist at the Roosevelt Institute and a former senior vice president and chief economist of the World Bank. 

The full report can be accessed here. 

Additional Reading: Illinois, California Lead 50-State Ranking of Reentry Progress

Andrea Cipriano is a staff writer for The Crime Report