Nevin Shetty has been featured in The Lawyer Herald for his perspectives on economic reform. As a former CFO whose understanding of the justice system comes from both professional analysis and personal experience, Shetty makes an argument that most business leaders have not considered: the 71 percent recidivism rate is not just a failure of the criminal justice system. It is a direct cost to every employer, consumer, and taxpayer in America.
Here is how.
The Supply Chain of Failure
Think of the justice system as a supply chain. Raw material goes in. A finished product is supposed to come out. In this case, the raw material is a person who has committed an offense, and the intended finished product is someone who is prepared to reenter society, find employment, and contribute to their community.
The system’s 71 percent failure rate means that this supply chain delivers defective output seven times out of ten. And unlike a manufacturing defect that affects one company’s product line, this failure rate sends ripple effects through the entire economy.
When someone recidivates, the costs hit the public budget immediately: arrest, prosecution, defense, incarceration. But the costs that hit the private sector are just as real, even if they do not show up on a single company’s income statement. They show up in the aggregate. Labor shortages worsen because more people are removed from the workforce. Consumer spending declines in affected communities because more households lose earners. Tax revenue drops because more potential taxpayers are incarcerated instead of employed. And the cycle repeats, year after year, at a total cost that Shetty calculates at roughly 1.2 trillion dollars annually.
Why Employers Should Care About a Number That Seems Like Someone Else’s Problem
The 71 percent rate affects your business whether you hire people with records or not. It affects the labor market you recruit from, because every person who cycles back through the system is one fewer candidate in your pipeline. It affects the communities where your employees live and your customers shop, because economic instability in those communities depresses spending and reduces property values. It affects your tax burden, because incarceration is funded by the same taxpayers who fund schools, roads, and the infrastructure your business depends on.
Shetty, who has spent a career analyzing how economic systems interact, from hedge fund portfolios to startup cash flows to corporate turnaround plans, sees these connections clearly. The recidivism rate is not a criminal justice statistic. It is an economic indicator, and it is telling you that a system consuming massive resources is producing outputs that make the economy worse.
The Restorative Alternative
Restorative justice flips the assumption. Instead of asking how long someone should be punished, it asks what it would take to repair the harm and reintegrate the person into a productive role. The answer, overwhelmingly supported by research, centers on employment.
Stable work reduces recidivism by more than half in many studies. It costs a fraction of incarceration. It generates tax revenue instead of consuming it. And it gives employers access to a population that, when given proper support and onboarding, performs at least as well as the broader workforce on retention, attendance, and productivity.
The companies that have adopted second chance hiring are not solving the recidivism problem on their own. But each hire they make reduces the 71 percent rate by one person. Scale that across thousands of employers and millions of hires, and the aggregate effect on the economy is substantial.
What a Finance Professional Sees That Others Miss
Most people look at the recidivism rate and see a social problem. Shetty looks at it and sees a failing investment. The country is putting hundreds of billions of dollars into a system and getting back mostly the same people, in worse condition, requiring more spending. No rational investor would tolerate that return. No board of directors would approve that budget. But because the spending is spread across thousands of government entities and the costs are diffused across the entire economy, nobody is held accountable for the overall result.
Second Chance Economics is Shetty’s attempt to change that by presenting the consolidated financial picture in terms that business leaders and policymakers cannot ignore. The book, built on the same analytical rigor that produced more than a billion dollars in shareholder value over his career, treats restorative justice not as ideology but as fiscal common sense.
