This NZ law aims to give people with criminal convictions a ‘clean slate’. It’s not working

If you own a business, would you be willing to hire a person who has been convicted for a crime? Give them a chance when a background check shows they have a criminal record?

The answers matter for both individuals and communities. For people who have paid their debt to society, rejoining it can hinge on getting a second chance without being judged on their past.

It is not something they can really hide. Employers often conduct criminal background checks as part of the hiring process. People with criminal records face high levels of stigmatisation, making it harder to reenter their communities and make money legally.

The thorny question of what to do with people with convictions when it comes to employment has been considered by policymakers and justice campaigners around the world.

In the United States, more than 27 states have introduced “Ban the Box” legislation. While each law is unique, by and large they have eliminated the requirement to provide criminal background information in job applications.

And a number of countries, including New Zealand, have implemented clean slate initiatives which help conceal criminal records for people who meet certain criteria.

Our new research looks at whether New Zealand’s clean slate scheme increases the job prospects for eligible people.

The clean slate reform was introduced as the Criminal Records Act in 2004. People who were previously convicted of minor offences can now have their criminal records automatically concealed if they can maintain a conviction-free record for seven years after their last sentence.

The regulation excludes people who were involved in a serious offence (such as sexual misconduct) or who received a particularly punitive sentence (such as incarceration or an indefinite disqualification from driving).

Clean slate and the labour market

Our research started with the Integrated Data Infrastructure (IDI), hosted by Statistics New Zealand (StatsNZ). This is a repository of records provided by different public and private agencies, including court charge data from the Ministry of Justice and tax records from Inland Revenue.

StatsNZ uses specific characteristics of individuals (such as name and birth date) to identify them across the different datasets. This enables researchers to track the same individual’s data footprint across different administrative records.

We used court charges data on all men convicted between 1992 and 2003 who had fulfilled the clean slate eligibility criteria. We then linked this pool of people with their Inland Revenue records to measure their employment and earnings.

To identify the labour market impact of the clean slate policy, we compared the employment and earnings of those who completed their seven-year rehabilitation period (the treatment group) with individuals who become eligible some time later (control group).

Limited benefits of clean slate scheme

Our analysis found the clean slate scheme has no relevant impact on the likelihood of eligible individuals finding work. This could result from the length of time required between sentencing and being eligible for a clean slate. Seven years could simply be too long.

But the clean slate scheme did create at least a 2% increase in eligible workers’ monthly wages and salaries – equivalent to a NZ$100 hike for an individual with an average monthly salary of $5,000.

The increase in monthly earnings appears to be greater for workers with a stronger commitment to working and for those who remain with one company for longer periods.

Global patterns

The labour market effects of concealing past convictions have also been explored in the US. Recent research looked at a policy enacted in Maryland, New Jersey, Pennsylvania and Bexar County, Texas. Mirroring our own results, the authors do not find any relevant impact on gaining employment.

Our findings indicate the concealment of past convictions through New Zealand’s clean slate scheme might happen too late to make a huge difference. But there are changes that can be made to improve work outcomes for people who have completed their sentences.

This could include following the example of countries such as Finland, where access to criminal histories is much more restricted. In Finland, the background check has to be directly relevant to the job requirements. For example, the law allows checks for someone applying to work in the financial sector who was convicted of fraud.

There would also be benefits from looking at the eligibility criteria for New Zealand’s clean slate scheme.

Currently, it only applies to people who committed a minor offence. But policymakers should consider whether it makes sense to expand the policy to people who committed more serious crimes but managed to turn their life around. Making this change would allow people to reap the benefits of working without stigma.

All that said, the government’s current “tough on crime” stance makes change unlikely, with a focus on the cost of crime rather than what happens after punishment has been completed.

Kabir Dasgupta is affiliated with the Federal Reserve Board. The opinions expressed in this article does not reflect the views of the the Federal Reserve Board or the Federal Reserve System.

Alexander Plum does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.