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The Crippling Effect of Incarceration on Wealth

by Meredith Booker, April 26, 2016

The wealth disparity between young men who experience prison and those who never do is staggering. A fascinating study in Race and Social Problems makes this clear. The authors Khaing Zaw, Darrick Hamilton, and William Darity Jr. use the National Longitudinal Study of Youth to collect the personal wealth of a group of young men, following them for 27 years. When the young men are divided into two groups: those who experience incarceration at some point in their lives and those who never do, a striking disparity emerges.

Graph showing the increasing wealth disparity between incarcerated and non-incarcerated young men starting at age 14.When it comes to the economic impacts of incarceration, one point becomes very clear: men who experience incarceration maintain lower levels of wealth throughout their lifetime compared to men who are never incarcerated. This disparity is present before, during and after a person is incarcerated. (The data stops in 2000 because of small numbers of survey respondents for some subgroups; the authors note that the wealth trends remain in the years that followed.)

Once an individual is incarcerated, they often lose what little wealth they have and are left with little to no wealth accumulation. Once released, that individual may make gains in wealth accumulation, but they will always remain at significantly lower levels of wealth compared to those who are never incarcerated in their lifetime.

This is consistent with our previous conclusions about differences in pre-incarceration incomes from our report Prisons of Poverty: Uncovering the pre-incarceration incomes of the imprisoned where we use a little used government dataset, to find that pre-incarceration incomes of incarcerated people are 41% lower than those of people of similar ages on the outside.

Looking at the same trend separated out by race adds another layer of detail to the story. In a press release, author Khaing Zaw says, “when it comes to wealth and incarceration outcomes, the disadvantages of being black or Hispanic compound the disadvantages of poverty.” White men that never experience incarceration will accumulate the most wealth compared to Black and Hispanic men regardless of incarceration status. At the other end of the spectrum, Black men that are incarcerated at some point in their lifetime accumulate less wealth compared to all other groups regardless of incarceration status. Later in life, this disparity endures. As the survey respondents got older, Whites that experienced incarceration reported higher levels of wealth compared to Blacks that had never experienced incarceration.

Graph showing the increasing wealth disparity by race and ethnicity between incarcerated and non-incarcerated young men starting at age 14. Whites who have never been incarcerated have the highest incomes, followed by Hispanic never incarcerated, Whites who have been incarcerated, Blacks who have never been incarcerated, Hispanics who have been incarcerated and Blacks who have been incarcerated.Previous research in Black Wealth, White Wealth: A New Perspective on Racial Inequality highlights the gap between the wealth of White people and that of Black people. This graph shows that even Whites that experienced incarceration have higher levels of wealth than Blacks that have never experienced incarceration.

This striking racial disparity where even White men who have experienced incarceration accumulate wealth faster than Black men who have never experienced incarceration, is a nice complement to Devah Pager’s research about the impact of a criminal record on gaining employment. Pager found that between White men and Black men, White men who had a record of incarceration were more likely to be called back for a job interview compared to Black men with no history of incarceration. This suggests that not only is wealth affected by incarceration status, but also that racial differences in wealth mean that Whites will be better off economically compared to Blacks despite incarceration status. The “mark” of incarceration is harsh for everyone, but for African Americans, it can be financially crippling for a lifetime.

The study, “Race, Wealth and Incarceration: Results from the National Longitudinal Survey of Youth” follows a cohort of youth over 27 years and presents wealth data in relation to race, sex, and incarceration status. The article is available at http://link.springer.com/article/10.1007/s12552-016-9164-y/fulltext.html. For the graph entitled “Wealth accumulation and incarceration”, I used the tables in the article to calculate the average median wealth, weighted by the number of respondents in each racial category, for those that never experienced incarceration and those that experienced incarceration at some point, and I extrapolated the data for years 1991, 1995, 1997, and 1999.

One Response

  1. I Want Reparations from Liberals – Pesky Truth says, 10 months, 3 weeks after publication:

    […] lost productivity to this nation as millions of young, black men have wasted time in prison.  See this piece in Prison Policy Initiative for a chart showing what incarceration does to a person’s earning […]

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