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White House Justice Initiative Seeks Economic Boost from Policy Change

by Derek Gilna

Former President Obama’s Council of Economic Advisors produced a report in April 2016 that concluded the United States would gain an economic boost by reducing the nation’s level of imprisonment.

According to the report, titled “Economic Perspectives on Incarceration and the Criminal Justice System,” investments in “police and policies that improve labor market opportunity and education attainment are more cost-effective than additional incarceration.”

Calling for a $10 billion investment in police spending, the report also suggested increasing the federal minimum wage to $12 by 2020, claiming that together those initiatives would result in a three- to five-percent decrease in crimes rates and a “societal benefit” of $8 billion to $17 billion.

The Council also called for a “holistic approach to criminal justice reform,” arguing that investments in early childhood education and community policing should be paired with “expanding expungement, ‘banning-the-box,’ and limiting blanket criminal record exclusion in occupational licensing laws.”

Improving an ex-offender’s access to health care and housing should also be undertaken, along with “new approaches to fines, fees, and bail that do not criminalize poverty.”

“The reason we have so many more people in prison than any other developed country is not because we have more criminals – it’s because we have criminal justice policies, including unfair sentencing laws, that need to be reformed,” President Obama said in one of his weekly radio addresses, highlighting a “National Re-entry Week” that focused on efforts to successfully reintegrate over 600,000 prisoners released each year from state and federal prisons.

Currently, around 70 percent of those released are re-arrested within five years. The American Bar Association has tallied over 46,000 state and federal laws that restrict “employment, occupational licenses, and business licenses for people with criminal records” – a contributing factor to such high recidivism rates.

In a briefing that followed the report on C-SPAN, panelist Douglas Holtz-Eakin described the nation’s re-entry systems as “broken.” Pointing to a typical prisoner walking out the prison gates with “no high school diploma, no job skills, no real job experience, and a criminal record,” he noted that in some states he receives only “a bus ticket and $50 in his pocket.”

“If he does not have a family to support him, he’s going to get desperate fast,” Holtz-Eakin observed. “The government seems to be setting him up to fail – and that makes little sense.” Reforming drug laws alone would go a long way toward reducing the problem, he added.

Obama had also encouraged lawmakers to take action on several criminal justice reform measures stalled in Congress, urging them to embrace bipartisanship to make the justice system “smarter, fairer and more effective.”

Currently, 2.2 million people are behind bars – 4.5 times as many as in 1980. Even adjusting for overall population growth, the proportion of prisoners has more than doubled. During that same period the violent crime rate has fallen 39% and the rate of property crimes has dropped 52%. But the report credited those improvements to other factors, especially demographic changes, better police tactics and improved economic conditions.

A trend toward longer sentences, which contributed to the growth of the U.S. prison population, was not found to be a significant deterrent, though longer prison terms were shown to somewhat reduce rates of recidivism.

Also impacting recidivism, though, was the finding that 65 percent of prisoners had no high school diploma or its equivalent – including 14 percent who failed to complete the 8th grade – while half suffered from mental health issues and 70 percent had substance abuse problems.

All of those are also factors that directly limit economic achievement, a societal cost that falls on top of the average $870 the U.S. spends annually for every man, woman and child on our nation’s criminal justice system – of which $260 per person is spent on incarceration alone.

Previous studies have found that mass incarceration as a social policy fails when measured for cost-effectiveness. The Council of Economic Advisors report concurred, finding that for every $10 billion spent on additional imprisonment, the economic benefit is no more than $1 billion and may be a loss of up to $8 billion – which makes little fiscal sense. 


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