A higher minimum wage and earned income tax credits can mean the difference between a return to prison or making a living outside of crime for recently released convicts, according to research by a Clemson economics professor.
Michael Makowsky found that for every dollar increase in the minimum wage, one percentage point could be shaved off the number of those returning to prison. In states where earned income tax credit wage subsidies are available, there was an even bigger effect on recidivism, though only for women.
“The bulk of prior research on minimum wages has focused on the demand side and the potential effects it might have on fewer people being hired,” Makowsky said. “We wanted to look at the supply side and, in particular, how the minimum wage affects crime and the recidivism rate.”
The research by Makowsky and Amanda Agan, an assistant professor of economics at Rutgers University, examined records from nearly 6 million criminal offenders released from prison between 2000 and 2014. Also taken into account were more than 200 state and federal minimum wage increases and earned income tax credit programs in 21 states.
“People who were released where the minimum wage was raised had a lower recidivism rate,” Makowsky said. “And in those states that chose to subsidize wages of adults with custody of dependents, women experienced an 11.4 percent drop in recidivism. These aren’t trivial numbers when you’re talking about whether or not a person returned to prison.”
The researchers’ observation of decreases in recidivism were solely for property or drug-related crimes. Violent crime remained largely unchanged.