Mass Incarceration and Poverty in America

by Tim Planert

April 6, 2016

Cover Photo Credit

Despite being one of the wealthiest countries in the world, the United States has an unusually high poverty rate; among OECD countries, only Israel and Mexico have higher percentages of their population living in poverty than the United States’ 17.9% in 2012.[1] Even the official U.S. Census measurement of 15.1% in 2010 means that roughly 45 million Americans live below the poverty line.[2] Further, there are significant racial disparities in the poverty rate, with 27.4% of African Americans and 26.6% of Latinos falling below the poverty line in 2010, compared with just 9.9% of non-Hispanic Whites.[3] While many causes have been postulated for the U.S.’s abnormally high poverty rate, one particularly interesting potential cause is America’s extremely high incarceration rate. Not only does the United States have the largest prison population by far in both absolute and relative terms, but the racial disparities in incarceration rate mirror the racial disparities in the poverty rate. As of 2012, the United States imprisoned had 707 prisoners per 100,000 population, well ahead of the second highest country, Russia, which had an incarceration rate of 450 per 100,000.[4] From 1970 to the present, the U.S. prison population increased from 300,000 to 2.2 million, accounting for a quarter of the world’s prisoners. Further, a further 5 million Americans were on probation or parole in 2008, meaning that approximately 1 out of 31 Americans are under the control of the criminal justice system at any given time.[5]

In addition to costing taxpayers approximately $68 billion per year,[6] mass imprisonment contributes to poverty through multiple channels. Former inmates experience difficulty in finding work, with a study by the Center for Economic and Policy Research finding that having a criminal background reduces a worker’s chance of being hired by 15-30% and reduces his or her average number of weeks worked per year by 6 to 11 weeks.[7] Since between 6.6% and 7.4% of the working-age population are ex-felons,[8] the CEPR estimates that the lost employment from felony convictions increases the U.S. unemployment rate by 1.5-1.7% and reduces GDP by $57-65 billion per year. Further, incarceration is extremely disruptive to families of prisoners. In addition to greater economic hardship from one parent being unable to work, children of prisoners also have a substantially higher rate of delinquency and behavioral problems,[9] suffer from lower educational attainment,[10] and are more likely to become involved with the criminal justice system themselves as adults.[11] These statistics are particularly troubling given that incarceration has increased so dramatically in recent decades despite a massive fall in crime overall since the early 1990s. Unfortunately for proponents of tough crime laws, however, this fall in crime also occurred in countries where the incarceration rate did not increase, such as Canada, Norway, and Denmark, or even fell, such as Finland.[12] Further, studies by researchers at the University of California, University of Sydney (Australia), and Harvard University have found that increases in the imprisonment rate did not lower crime by any more than 2-5%.[13]

Compounding the problems caused by mass incarceration is the disproportionate impact it has had on racial minorities. The ACLU reports that black and Latino offenders suffer higher incarceration rates and longer sentences than white offenders convicted of similar crimes, and that federal policies such as habitual offender laws and mandatory minimums for drug possession, exacerbate racial discrepancies in the criminal justice system through their disparate impact on African Americans.[14] Further, the same report cites a study showing that black defendants face more severe criminal charges than white defendants after controlling for characteristics of the offense, criminal history, age, education, jurisdiction, and several other factors.[15] If discrimination in the criminal justice system results in disproportionate incarceration for African Americans and Latinos, it could explain part of the disparity in poverty between racial and ethnic groups.

A major study undertaken by Villanova University sociologists Robert DeFina and Lance Hannon provides substantial empirical evidence for a link between mass incarceration and poverty. Using data from 1980-2004 from all 50 states, they find that even when using instrumental variables and two-stage least squares estimation to control for simultaneity (incarceration and poverty both influencing each other), an increase in the incarceration rate is associated with a statistically and substantively significant increase in the poverty rate.[16] Further, were it not for mass incarceration, they conclude that the poverty rate would have fallen by 2.8 percentage points during the period of study (1980-2004), rather than the 0.3 percentage points it actually did fall, translating to several million fewer people living below the poverty line.[17] While DeFina and Hannon’s study may not be definitive, it, along with much of the other research discussed here, suggests that if we are serious about tackling poverty, we need to reexamine and reform our criminal justice system.




[3] Ibid.



[6] Ibid.


[8] Let alone ex-prisoners of any kind


[10] Holly Foster and John Hagan, “Incarceration and Intergenerational Social Exclusion”, Social Problems, Vol. 54, No. 4 (November 2007), 402.

[11] Beth M. Huebner and Regan Gustafson, “Effect of Maternal Incarceration on Adult Offspring Involvement in the Criminal Justice System”, Journal of Criminal Justice, Vol. 35, No. 3 (May/June 2007), 283-296.


[13] Ibid.

[14]; one notable example of such a policy is the 100-to-1 sentencing disparity between powder and crack cocaine possession, since crack cocaine is more commonly used by African Americans while powder cocaine is more commonly used by whites.

[15] Ibid, citing Onja B. Starr & M. Marit Rehavi, Racial Disparity in Federal Criminal Charging and its Sentencing Consequences, U OF MICHIGAN LAW & ECON, EMPIRICAL LEGAL STUDIES CENTER PAPER NO. 12-002 (2012).

[16] Robert DeFina and Lance Hannon, “The Impact of Mass Incarceration on Poverty”, Crime and Delinquency 59(4) (2013), 562-86.

[17] Ibid., 581.