Estimating the Earnings Loss Associated with a Criminal Record and Suspended Driver’s License
50 Pages Posted: 28 Mar 2022 Last revised: 18 Apr 2022
Date Written: March 24, 2022
As states pass reforms to reduce the size of their prison populations, the number of Americans physically incarcerated has declined. However, the number of people whose employment and related opportunities are limited due to their criminal records continues to grow. Another sanction is the loss of one's driver's licenses for reasons unrelated to driving. While many states have laws on the books to redress these harms, a growing body of research has documented large “second chance gaps” between eligibility and delivery of expungement and restored license relief due to their poor administration. This paper is a first attempt to measure the cost of these “paper prisons” of limited economic opportunity, in terms of annual lost earnings. Analyzing the literature, we estimate the annual earnings loss associated with misdemeanor and felony convictions to be $5,100 and $6,400, respectively, and that of a suspended license to be $12,700.
We use Texas as a case study for comparing the cost of “paper prisons” with the cost of physical prisons. In Texas, individuals with criminal convictions may seal their records after a waiting period and people that have lost driver’s licenses may get restored occupational driver’s licenses to drive to work or school. Analyzing administrative data, this paper finds that approximately 5% of people eligible for relief have had their records sealed. The 670K people in the second chance sealing gap translates to an annual earnings loss of about $3.5 billion annually. Using a similar approach, we find that about 20% of the people that appear eligible for occupational drivers’ licenses (ODLs) in Texas have received them, leaving about 430,000 people who could have them without licenses; an earnings loss of about $5.5 billion. Based on these figures, we find the cumulative annual earnings loss associated with Texas’s “paper prisons” to be comparable with, and likely more than, the yearly cost to Texas of managing its physical prisons, of around $3.6 billion.
Keywords: criminal records, second chances, drivers license, cost-benefit analysis, uptake analysis, computational policy
JEL Classification: K14, K4
Suggested Citation: Suggested Citation