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Why Ex-Convicts start their Own Businesses: A Look at Life after Prison

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  • Formerly incarcerated individuals are 45% more likely to become entrepreneurs compared to those without a criminal record, often due to systemic barriers in the traditional job market that limit their employment opportunities.
  • Entrepreneurship provides returning citizens with autonomy, flexibility, and a sense of purpose, and can lead to higher incomes and lower recidivism rates than traditional employment.
  • Access to capital, business education, mentorship, and supportive policies are crucial for the success of these entrepreneurial ventures, with programs like Inmates to Entrepreneurs and the Prison Entrepreneurship Program providing essential resources.

The transition from incarceration to freedom is fraught with challenges, but for many returning citizens, it marks the beginning of an unexpected entrepreneurial journey. The barriers that formerly incarcerated individuals face in the labor market often push them towards entrepreneurship as a viable path to economic stability and personal fulfillment. This phenomenon is not just a testament to their resilience but also highlights systemic issues within the employment sector that need addressing.

The Drive Towards Entrepreneurship

Upon release, many returning citizens encounter a labor market that is less than welcoming. Discrimination, lack of opportunities, and the stigma of a criminal record can make traditional employment an uphill battle. Wharton management professor Damon J. Phillips points out that "the set of stereotypes we have about people who have been incarcerated works against the goal of having a strong workforce." This discrimination is particularly acute for formerly incarcerated Black men, who face the highest barriers to employment.

Entrepreneurship emerges as a beacon of hope against this backdrop of exclusion. It offers not just a means to earn a living but also a sense of autonomy and purpose. Phillips' research reveals that previously incarcerated individuals are 5% more likely to start their own business compared to the general public. For Black men who have been incarcerated, entrepreneurship is not just a job—it's a lifeline that leads to higher incomes and lower recidivism rates.

Overcoming Systemic Barriers

The entrepreneurial spirit among returning citizens is often born out of necessity. The labor market's systemic inequality leaves them with few options, pushing them to create opportunities for themselves. This drive to entrepreneurship is a direct response to the paucity of low-wage, high-risk jobs that are typically available to them post-release. Many returning citizens are drawn to entrepreneurship because they recognize that the traditional employment route is fraught with obstacles that are almost insurmountable.

The Benefits of Entrepreneurial Ventures

For returning citizens, starting a business can be more than just a means to an end. It can be a transformative experience that offers several advantages over traditional employment:

Autonomy: Entrepreneurship provides the freedom to be one's own boss, which is particularly empowering for individuals who have spent time in the highly controlled environment of prison.

Flexibility: Owning a business allows for a flexible schedule, which can be crucial for those who need to attend to family responsibilities or parole requirements.

Purpose: Building a business from the ground up can instill a sense of pride and accomplishment, contributing to a positive self-identity.

Community Impact: Successful businesses can have a profound social impact, creating jobs and contributing to the economic growth of the community.

The Role of Support and Policy

While entrepreneurship offers a pathway forward, it is not without its challenges. Access to capital, business education, and mentorship are critical components that can make the difference between success and failure. Programs that provide business training in prisons, like the one led by Phillips outside New York City, are essential in equipping incarcerated individuals with the skills they need to succeed upon release.

Policy changes can also play a significant role in supporting returning citizens. Removing barriers to funding, such as the restrictions that the Small Business Administration previously had on loans for individuals with criminal records, can open up new avenues for entrepreneurial success.

The entrepreneurial endeavors of returning citizens are a powerful narrative of redemption and resilience. They demonstrate that when given the right tools and opportunities, individuals can overcome their past and contribute meaningfully to society. As Phillips aptly puts it, "It's not just an entrepreneurship story, it's an employment story".

The journey of returning citizens into entrepreneurship is a compelling argument for more inclusive employment practices and supportive policies. It's a reminder that with determination and the right support, second chances can lead to new beginnings and successful careers as entrepreneurs.

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