In April 2023, the United States unemployment rate reached a 50-year low, registering at just 3.4 percent. Coming only a few years after the COVID-19 pandemic wrought a global economic crisis, this statistic should have been a major achievement. But behind this record low lies a hidden reality: nearly 2 million unemployed people are missing from the data.

The millions rendered invisible are people incarcerated in prisons and jails nationwide. Had they been counted, the unemployment rate would have grown more than a third—from 3.4 to 4.7 percent.

The systematic exclusion of incarcerated people from official employment statistics not only gives a false impression of the country’s economic well-being but also obscures the financial burdens shouldered by system-impacted families and households.

Donna Robinson is a legal reform advocate and grandmother from upstate New York. Since her daughter, Missy, was incarcerated, Robinson has become caregiver to several of her grandchildren and three great-grandchildren. Robinson said she is behind on rent payments and has accrued significant credit card debt to keep her multigenerational household afloat. She also supports her daughter from afar by helping fund her commissary account.

“I can’t give up,” Robinson told Vera. “So many people are dependent on me.”

With 1.8 million people in U.S. prisons and jails, Robinson’s reality is one faced by many. However, Missy’s removal from the workforce and the economic burden this placed on Robinson are not reflected in official employment statistics; the Bureau of Labor Statistics (BLS) completely omits incarcerated people from its federal employment data. Their exclusion skews unemployment numbers, misrepresents economic reality, and has implications for how the government disperses workforce development and other resources across the country.

To capture a more accurate picture of the country’s economic and social landscape, Vera has created an “expanded unemployment rate” that counts every person of working age, including those behind bars. The results are startling—revealing racial disparities far worse than those shown in official statistics—and pave the way for a more equitable use of the nation’s economic resources.

Unemployment data fails to show true racial disparities

Unemployment rates are a “fundamental measure of racial equity,” Vera researchers explain in a new report, Locked Out of the Labor Market: A New State-Level Measure of Incarceration and Inequality. Erasing incarcerated people from government statistics distorts and disguises the country’s persistent economic disparities.

Because Black people—especially Black men—are disproportionately imprisoned, excluding people behind bars from BLS data artificially lowers Black unemployment rates. When incarcerated people are counted among the unemployed, the 2023 national unemployment rate for Black men more than doubles from 5.3 percent to 10.9 percent.

This omission creates a false impression of improved racial equity. For example, BLS data suggests that Michigan might be one of the most racially equal places in the country, with Black men and white men in the state having a near-identical unemployment ratio (1.1 to one). However, Vera’s expanded unemployment rate tells a different story. When Vera counted incarcerated people, Black men in the state were, in fact, 2.3 times more likely than white men to be unemployed—a wide disparity much greater than what official figures convey.

Like Michigan, Pennsylvania’s unemployment data masks its true racial economic inequities. Although official numbers show that Black men are 1.5 times as likely as white men to be unemployed, Vera’s expanded unemployment measure reveals a far greater contrast—they are nearly 3.5 times more likely to be unemployed. In fact, in every state Vera considered, the addition of incarcerated people in the metrics revealed higher racial disparities in unemployment than shown in official figures.

Excluding people in jail and prison from data obscures incarceration’s immediate and long-term economic impacts

On average, state and federal prisons release more than 1,000 people each day, totaling 448,400 in 2022 alone. Approximately one in three U.S. adults has a history of criminal legal system involvement.

Even brief incarceration or a vacated conviction can lead to lasting financial harm. A past prison sentence, on average, decreases a person’s lifetime earnings by half a million dollars. Research shows that workers with prior criminal legal system involvement usually have lower wages and are less likely to participate in union organizing. In 2019, 23 percent of system-involved households were denied a loan application—more than twice the rate of non-system-involved households. People with conviction histories regularly face barriers to stable housing and higher education—both of which have been shown to reduce the likelihood that people will return to prison.

“It has taken a great toll on me,” Robinson said of incarceration’s impact on her financial state. Even though she has never been incarcerated herself, its reach nonetheless extends to her.

The case for an expanded unemployment rate

Governments use unemployment data to make expenditure decisions and determine funding for resources like workforce training programs that can help support people during reentry—if they know how many people to account for. But because incarcerated people—the vast majority of whom will return to their communities—are omitted from data, areas where many are out of work can present as otherwise and thus may receive less than adequate support.

Incarceration is a policy choice that prevents full participation in the economy and disproportionately impacts low-income people and people of color. Accurately tracking joblessness over time for different places is an essential tool for advocates, researchers, and policymakers seeking to address longstanding inequities. This is difficult to accomplish when the official measures are unreliable barometers of economic opportunity.

Advocates and policymakers can use Vera’s expanded unemployment rate to highlight and address this economic disenfranchisement. Government agencies can better allocate resources to areas with the most demand for employment and workforce training services. Using the expanded rate to account for incarcerated people will help ensure that the people who require the most support to get back on their feet receive it.