Formerly Incarcerated Individuals Likely to Pursue Entrepreneurship


Formerly incarcerated individuals are more likely than the general public to start their own businesses.

This finding comes from a recent study by researchers at Columbia University, available from SSRN, which found that those who have been incarcerated are 5 percent more likely than others to start businesses. Entrepreneurship rates were especially high among formerly incarcerated Black men, which also face the highest rates of incarceration.

Part of the draw of entrepreneurship for this group is that it allows them to earn an income without relying on others for traditional employment. Formerly incarcerated individuals often face discrimination and other hardships when attempting to return to the workforce. There are certainly some businesses with legitimate safety, logistical, or public relations concerns that come with hiring from this group. But those returning to the workforce often face barriers even beyond those issues.

Damon J. Phillips, one of the study’s authors, said when speaking with the University of Pennsylvania’s Wharton School of Business, “The set of stereotypes we have about people who have been incarcerated works against the goal of having a strong workforce. Given that almost a third of adults have some form of criminal record, the health of the economy and public safety is improved when you provide employment opportunities for these citizens.”

However, the ability to earn an income isn’t the only benefit of entrepreneurship for those who have been incarcerated. The study suggests that starting businesses may also provide a sense of purpose, ultimately helping some avoid future legal issues. In fact, those returning to the workforce who start their own business were less likely than others to return to prison, according to the study.

Of course, starting a business is not easy. Though there are certainly people who thrive in this role, there are also others who may struggle, especially if they choose business ownership as a last resort.

Phillips added, “In a better world, people with criminal records have better job opportunities, education and training so that if they start a business, they are starting them because they really want to. Until we get to that better world, we owe it to them – and society – to help them start businesses when it is the best option for them.”

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Annie Pilon Annie Pilon is a Senior Staff Writer for Small Business Trends and has been a member of the team for 12 years. Annie covers feature stories, community news and in-depth, expert-based guides. She has a bachelor’s degree from Columbia College Chicago in Journalism and Marketing Communications.