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.
Meanwhile, studies predict an estimated 2.1 million manufacturing jobs will remain unfilled by 2030 due to a shortage of skilled labor, with
estimated economic losses of $1 trillion. Bridging an opportunity to link 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;
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. When this population is left out of overall workforce participation, the U.S. loses up to $87 billion annually in
unrealized GDP;
As people of color are disproportionately incarcerated, pursuing fair chance employment can also advance company diversity goals. In its
2022 Report, A.O. Smith describes that “diversity has been empirically shown to promote creativity and innovation and is a priority within
[the] company.” Yet the percentage of women in its global workforce has declined 10% over 3 years, and the percentage of
racially/ethnically diverse US employees declined 1% over 1 year. In the proponent’s opinion, this suggests that current diversity efforts
are inadequate; Excluding qualified individuals intentionally or unintentionally 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.