Ta-Nehisi Coates has asked for a post on the economics of hiring felons.
The obvious common-sense fear is that ex-convicts will steal from you. But a conviction also signals other undesireable traits. Criminals tend to be poor, yes, and have bad educations. But they also tend to have appalling impulse control, often accompanied by substance abuse problems and/or mental illness. The hourly wage of most criminal enterprises is extremely low; with the possible exception of the drug trade, if they could do something else, it's likely they would. Criminals clearly display a certain lack of respect for others. And prison doesn't improve them.
Mark Kleiman has done some sterling work on ways to deal with the impulse control problem--close monitoring of parolees with small immediate punishments, rather than rare but severe punishments. In this way, you try to move groups of felons to a new, lower crime equilibrium, and then switch monitoring resources to the next group.
However, it's very hard to prevent crime if criminals have no other way to support themselves, and it's devastatingly hard to get a job with a prison record. One way to look at hiring ex-felons is as a collective action problem. The individually rational decision is not to hire a felon. But as a group, this makes us worse off, because when you have no future outside of prison, inside doesn't look so bad.
There's also the moral dimension. I don't know about you, but I've made a fair number of spectacular moral and economic mistakes in my life. Middle class kids, though, have margin for error. It's all very well to talk about how poor kids could pull themselves out of it if they did X, Y and Z, and I happen to believe that this is correct. The problem is that the first slip a poor kid makes is usually his last--as John Scalzi said, "Being poor is having to live with choices you didn't know you made when you were 14 years old." One of the really, really great things about America is that more than almost anywhere in the world, you get to start over. But that's not true for idiots who committed crimes more serious than drinking too much and flunking out of school.
But it's pretty hard to ask individuals to lean into the strike zone and take one for the team. Collective problems do require collective solutions. These aren't perfect, but here are a few off the top of my head:
1) Reduce the number of crimes to things like assault, so that poor kids have as few opportunities as possible to make those sorts of permanent mistakes.
2) Less prison. Prison is awful for us as well as the prisoners. I'm not saying we shouldn't punish kids who rob liquor stores, but we could try to think of ways that don't involve shoving them into a metal box with a lot of other criminals. Here's where Mark Kleiman's ideas have a lot of merit--use intensive monitoring instead of warehousing. There's a lot of garbage that needs picking up on the streets of American cities; this is one example of something that would be a better use of low-level criminal time then staring at bars.
3) Tax breaks for hiring ex-felons, say for the first two years of employment. It will cost us more money up front, but less money if the felons stay out of prison--prison is extremely expensive, not only in the direct cost, but also because it makes criminals about as socially and economically unproductive as possible. Add a bonus for anyone who gets a sizeable promotion/raise, or skills training. Yes, this will be in part a boondoggle. So are prison building projects ardently supported by the prison guard's unions.
4) Small bonuses for the criminals themselves (or perhaps a reduction in monitoring) for things like getting their GED or staying clean for a year.
This is not perfect; the poor, and the criminals, we will probably always have with us. But it would be a hell of a lot better than what we have now.