One-third of Americans under the age of 25 have been arrested at some point in their lives, according to analysis by Deutsche Bank based on 2015 data.
The National Longitudinal Survey of Youth shows that as the labor market tightens, employers are starting to close one eye on background checks to fill their hiring needs.
The 2015 survey took a nationally representative sample of approximately 9,000 youths and was conducted through annual hour-long personal interviews.
Torsten Sløk, chief international economist at Deutsche Bank, wrote in a note that this is especially important since Richmond Fed President Thomas Barkin recently cited an increase in anecdotes regarding employers relaxing their stance on arrest records, felonies, and drug testing in the face of a tightening labor market.
Barkin said that business people “think anything more than 2 or 3 percent wage increases actually put them at risk, right, from a competitive standpoint. They’re trying to find ways to get around it.”
For example, Barkin said he talked to a firm that’s relaxed its point of view on people with criminal records. “They’re delaying filling jobs. Or they’re trying to invest in ways they haven’t in years in retraining to qualify some of their people for different new jobs.”
Sløk told Yahoo Finance that he was “surprised that the number was so high” and that the fact that employers are relaxing criminal records testing “tells us that we are getting very close to full employment.”
Drug tests abandoned by some
Some companies have taken steps to address the tightening labor market, including dropping drug tests.
Earlier this month, FPI Management, a property company in California, said that they were dropping marijuana from drug tests in an attempt to fill dozens of jobs.
In April, AutoNation Inc. (AN) announced that it would no longer turn down job applicants who tested testing positive for weed.
The racial divide
While companies are looking for more ways to hire people, discrimination persists.
“When it comes to a hiring decision on the part of the employer – the arrests have a disproportionate impact on people of color,” Maurice Emsellem, program director of the National Employment Law Project, told Yahoo Finance.
“There’s a lot of discrimination against young men of color, and a lot of employers assume incorrectly that young men of color have an arrest record. There’s a lot of racial bias inherent in the hiring process.”
‘There’s a lot more customer service involved’
One industry that still relies on background checks, however, is retail.
Emsellem said that’s because, “There’s a lot more customer service involved.”
“The retail industry has done all sorts of things to try to dig up negative information on workers, period. They have these databases … There’s all sorts of stuff that happens at the retail level.”
And, ultimately, even if there were more jobs available, there is a lot of concern was about the quality of those jobs.
Emsellem noted, “The big question with a lot of workers is that there are still very low-quality jobs, low pay, low benefits — and for folks with [criminal] records, this is a big problem.”