The labor shortage has businesses tapping an underused pool of workers: People with criminal records

• Businesses are seeking to hire people with criminal records amid the labor shortage.
• A new analysis from Indeed looks at the change in the share of postings mentioning fair chance hiring over time.

A new analysis from Indeed Hiring Lab Economist AnnElizabeth Konkel finds that in the current extremely tight labor market, employers are seeking people with criminal records, an underutilized pool of talent.

"At the end of the day, employers want to be able to fill the positions that they have," Konkel told Insider. "They want to be able to get enough workers to be able to meet consumer demand, and exploring untapped pools of talent is one way to hopefully get the workers that they need."

Konkel added wage increases and advertising more benefits are other ways to deal with the labor shortage.

Indeed's US job postings data over time shows that the share of postings mentioning fair chance hiring, which Konkel described as the "practice of not discriminating against a job seeker because of past arrests or involvement with the criminal justice system," was 2.5% in May 2022. That's higher than the 1.9% three years earlier in May 2019 but lower than the share in May 2020 and May 2021. As seen in the chart, the share has been 2.5% for three consecutive months.

Konkel said that while some employers may just note fair chance hiring in job descriptions, others are "very explicit" in their wording with postings that say "applicants with conviction records will not be excluded" or "applicants with criminal histories are welcome to apply."

"And so my takeaway from this is that employers are now warming up to the idea of considering these types of applicants," Konkel said. "And at least some of that has to do with the current labor market conditions we're seeing right now."

The unemployment rate was 3.6% in May, and the US will likely be back to its pre-pandemic nonfarm payroll level this summer if job creation at the current rate continues. However, businesses still are worried about finding talent as there were over 11 million openings in April, the latest month of data, and people continue to quit their jobs at high levels each month.

Additionally, Konkel said Americans are still spending, pointing to the Bureau of Economic Analysis' personal income and outlays data, and businesses are going to still need to be able to meet demand amid the labor shortage.

"So particularly in the case of the next few months where it looks like that should continue, employers want to be able to staff up," Konkel said. "And looking at groups of workers that are often overlooked or skipped over like this group is one way to try to meet that consumer demand."

JPMorgan is one firm "hiring thousands of individuals with criminal backgrounds into the workplace," JPMorgan's Brian Lamb told CNBC.

"That is another specific example of what we're doing to make progress around tapping into the talent pools that have historically been left behind," Lamb said.

The report from Indeed also notes that "among the top fair chance job titles by posting volume were barista, shift leader and store manager."

The new analysis from Indeed shows that the share of job searches for jobs noting fair chance hiring have also soared.

"As of May 2022, the share of such searches was up an impressive 117% from May 2019," Konkel wrote in the post. "Today's tight labor market is pulling jobseekers with criminal records into the workforce."

In general, there may be obstacles those with criminal records may face while looking for a job, such as background checks. People with criminal records may also feel discriminated against during the process or once they have the job.

Americans with criminal records or formerly incarcerated people are not the only groups of people who are sometimes overlooked in the labor market. Another group is people with disabilities. Mia Ives-Rublee, director for the disability justice initiative at Center for American Progress, told Insider that it's "most definitely" the case that companies aren't doing enough to hire this group of job seekers.