Doing Something Right

Oct 11, 2011 by

Doing Something Right

by Kristie Wang

Transforming inmates into entrepreneurs in Texas — and saving millions of tax dollars

Texas has been the center of a swirl of controversy lately in two very different arenas: the state’s enthusiastic embrace of the death penalty, and Republican frontrunner Rick Perry’s touted track record of job creation. Perry’s history of job creation has come under fire from numerous critics, as well as a new study revealing that Texas’ poverty levels rank the second highest in the nation.

But deep in the heart of Texas, there’s a promising light for real job creation — and for bringing positive change to the criminal justice system.

Prisoner Entrepreneurship Program (PEP) is a privately-funded organization working with the Texas Department of Criminal Justice to provide inmates with entrepreneurial training and post-release support. Since the organization began seven years ago, PEP has graduated 600 entrepreneurs, only 10 percent of which return to incarceration (the recidivism rate). Compared to the average national recidivism rate of 50 to 75 percent, the program’s success is astonishing.

About 90 percent of PEP graduates gain employment within 90 days of release, and ex-inmates have started 75 new businesses so far. Not only do graduates re-enter society as productive citizens, they save taxpayers millions of dollars by helping close the revolving door of incarceration. PEP writes:

“Based on our 2010 scale of operations, tax payers save more than $5 million in future incarceration costs alone for each 150 graduates . . . a 300 percent return on investment. In 2011, PEP’s released graduates are expected to earn more than $14 million, $4 million of which is expected to be returned in the form of income, sales and other taxes.”

What has made PEP so successful? Its highly selective entry process and comprehensive, long-term support of graduates — inside prison and out — are key elements. PEP handpicks applicants from more than 60 prisons across Texas, selecting, as PEP’s website states,

“participants who demonstrate the following characteristics (in order of importance): 1) commitment to personal transformation, 2) work ethic, and 3) entrepreneurial ability.”

Accepted participants are then transferred to a facility in Cleveland, Texas where they start “PEP Bootcamp,” a rigorous five-month entrepreneurial education program. During this time, they also craft a business plan and practice pitching it under the guidance of executive and MBA student volunteers.

Graduation from the program is just the first step, however, with re-entry support a critical piece of the puzzle. “Providing inmates with a business plan and goodwill was not enough for them to make it on the outside,” according to PEP. “So PEP has provided a high level of re-entry services — we call it ‘doing life together’ — for our graduates.”

Typically, ex-inmates face huge challenges reintegrating into society after imprisonment. Most inmates are released with nothing but the clothes on their backs, a bus ticket, and sometimes “gate money” ranging from $25 to $200 dollars. Studies have shown that the first 72 hours after release are the most critical for determining whether the inmate will successfully re-enter society.

Once outside of prison, people face an uphill battle countering stigma to find housing and a job. Given these challenges and with ex-inmates often returning to their old neighborhoods, the temptation to return to crime can be a strong pulling force.

Recognizing these factors, PEP sends case managers to pick up graduates at the release gates and provide transportation to their homes or halfway houses. “We do our best to provide our graduates with a warm greeting back to the ‘free world’ by offering a structured environment of accountability,” according to PEP. “We leave them with no excuse to return to a life of crime.”

The organization continues to provide transportation to job interviews, parole offices, churches, food stamp offices, and other necessary appointments. It then gives graduates access to a variety of support services, from complementary medical services to help getting an apartment.

The program doesn’t stop there. Highly motivated graduates can attend PEP’s weekly entrepreneurship school — or “eSchool” — to continue their business educations. After four weeks, participants can be matched with an executive mentor to further equip them with the skills to succeed in the business world. And those who complete 20 workshops are eligible to apply for small business financing through the organization’s network of angel investors.

In a time when so many Americans are struggling with unemployment, states may be reluctant to focus on helping inmates find jobs.  But, the tax savings generated by offenders staying out of prison is a figure worth revisiting: PEP generates savings of $5 million per 150 graduates.

The swelling prison population is both a social and fiscal crisis. Since 1980, the U.S. prison population has quadrupled from 500,000 to 2.3 million, which means that approximately one out of every 100 adult Americans is currently behind bars. In Texas, it costs $20,000 per year to house an inmate. In California, the number rises to $47,000.

Given these statistics, it’s clear that effective re-entry programs like PEP strengthen our social fabric and our sustainable future as a nation. Helping ex-inmates stay out of prison and become entrepreneurs, jobholders, and taxpayers makes both social and economic sense. What do you think?

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Prison Entrepreneurship Program was recently selected as a finalist in the eBay Powering Economic Opportunity competition.

1 Comment

  1. John W. Strobel III

    I find your report encouraging as recividism in California is a huge problem. I see the value of the program as a tax saving scheme, however, how long has the program been in operation and have those who attained the highest ranks ie. CEO’s, COO’s or CFO’s been monitored for criminal activity? In other words, is someone besides the fox guarding the hen house? I hope it works, for both the prisoners and the public’s sake but I would suggest it needs much more fermenting before it can be called a success. JWSIII