The Importance of Entrepreneurial Training for Convicts in Narrowing the Racial Wealth Gap

Recidivism (when an ex-convict relapses back into criminal behavior after receiving sanctions or undergoing intervention for a previous crime) is a common problem. 67.8 percent of formerly-incarcerated state prisoners are rearrested within three years, and 76.6 percent are rearrested within five years, magnifying the already high cost associated with imprisonment. Ultimately 59 percent of convicts are people of color, and 53 percent of all individuals that serve prison sentences are parents to minors—both of which are significant reasons why the racial wealth gap is so wide in the United States.

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Consider first the direct effects of incarceration to the community as a whole. If an individual is incarcerated especially if he or she is a parent, a community immediately has a weakened ability to create an environment of economic opportunity and wealth due to the loss of available workers, family providers, resources, and human capital. The family unit itself becomes destabilized due to the loss of income (family income decreases by an average of 22 percent), housing instability, and trauma. Further, due to the negative stigma associated with being an ex-convict, there are very real barriers preventing an individual to be legally employed or to find a job which pays enough to support him/herself and his/her family. Without the ability to obtain a fruitful career, live in a healthy community, or raise a child in a two parent household, in addition to the immediate loss of income during incarceration, it is not realistically feasible for an ex-convict to be in a position to build his/her financial assets. Considering a disproportionate number of persons of color are being incarcerated, the racial wealth gap will not realistically be reduced without a drastic systemic change.

Fortunately, as highlighted in a recent brief by the Asset Funders Network, a movement towards entrepreneurship training for incarcerated inmates and recently released ex-convicts has been proving to be an effective method to prevent recidivism by directing ex-convicts towards legal alternatives to support themselves and their family. Although these entrepreneurship trainings are focused on teaching inmates and ex-convicts how to start their own businesses and microenterprises, they also provide critical soft skills, such as organizational skills, time management, and communication skills necessary to be a valuable employee. Further, successful entrepreneurial training programs incorporate a broad set of program activities necessary for an ex-convict to successfully integrate as a productive member of society by teaching topics ranging from parenting skills to financial management, to business etiquette. The value of networking and building one’s social capital is also emphasized through a strong mentorship program with a focus on peer engagement. Finally, successful entrepreneurial programs often provide financial products on an individual basis in order to help build credit and obtain access to credit.

Examples of successful entrepreneurial programs include the Prison Entrepreneurship Program (PEP), Mercy Corps Northwest’s Lifelong Information for Entrepreneurship (LIFE), and Defy Ventures. PEP in Cleveland, Texas has a 100 percent employment rate for over 1,300 graduates within the first three months, and it has a 380 percent greater reduction in recidivism compared to the average of other similar programs.  As of 2015, PEP graduates have started 211 businesses—six of which generated over $1 million in annual revenue.  LIFE in Wilsonville, Oregon teaches female prisoners business development, reentry planning, and character building. More importantly however, a study shows that LIFE graduates are 41 percent less likely to recidivate than the control group. Finally, Defy Ventures operating in New York City and San Francisco provides an online platform in order to more effectively use staff resources and reach more individuals. Individuals who have utilized Defy Venture have a recidivism rate of less than 3 percent and 95 percent of individuals secure wage employment within the first seven months.

To read more about the effects entrepreneurial training has on reducing the rate of recidivism and ultimately narrowing the racial wealth gap, please read the brief published by the Assets Funders Network by following this link.