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America's Prison Epidemic Drains Economy, Doesn't Register In Unemployment Stats, Report Says

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The official unemployment figure of 9.6 percent is, according to a new report, "unrealistically rosy" because it doesn't account for a full 2.3 million Americans -- those serving time.

And not only that: When formerly incarcerated men find work after prison, their annual earnings are 40 percent lower than if they had never been behind bars, and their prospects for upward mobility are significantly bleaker, according to a new study by the Pew Charitable Trusts (hat tip to Mike Konczal).

The report, authored by Bruce Western and Becky Pettit, which investigates the relationship between incarceration and economic mobility, concludes that the vast amount of resources dedicated to incarceration amount to a significant drain on the nation's economy. Currently more than one in 100 Americans is in prison, the report says, as the total incarcerated population, at 2.3 million, is by the far the world's largest. The U.S. prison population, in fact, is larger than that of the top 35 European countries combined. What's more, the U.S. spends about $50 billion annually to maintain this system.

Among men, and especially non-white men, the proportion of inmates is particularly high:

  • For men of working age (18 to 64 years old), 1.1 of the white population is in prison, compared to 2.7 of the Hispanic population and 8 percent of the black population.
  • For young men (aged 20 to 34), 1.8 percent of whites are incarcerated, compared to 3.7 percent of Hispanics and 11.4 percent of blacks.
  • For that same age group without a high school degree, 12 percent of whites, 7 percent of Hispanics and 37.1 percent of blacks are behind bars.

Former inmates earn significantly less after prison than if they had never served time, the study found. White men earn 52 percent less after serving time; Hispanic men earn 41 percent less and black men earn 44 percent less. Considering these losses in a larger context, the investigation found that total wages earned by all white men are 2 percent lower than they would be if the incarcerated population weren't incarcerated, compared to a 6 percent reduction for Hispanics and a 9 percent reduction for blacks.

The nation's headline unemployment rate has been stuck at around 9.6 percent for months. If U.S. GDP growth remains lackluster, economists predict unemployment will rise to 10.1 percent in 2011.

But, the report says, those figures don't account for the incarcerated population. "With more than 2.3 million adults incarcerated," the report says, "the effect of this omission has become too substantial to ignore."

The report likens the official survey method for unemployment to a school that assesses student health but omits all the students who were at home, sick.

Read the report, with helpful charts, below:


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