Recession and Crime: An Overview

Apr 1, 2009

The current recession appears to be having an effect on different aspects of crime rates, crime data, and the criminal justice system. Research suggests that rising unemployment and widespread law-enforcement budget cuts in equipment and staffing has resulted in an increase in crime. Additionally, the recession may arguably have an even more radical effect and result in the abolishment of capital punishment in certain cash-strapped states, with debates heating up over whether states should continue to seek the pricey sentence.

The alleged link between the recession and an increase in crime is seemingly crime-specific. White-collar crime, including embezzlement and fraud, has reportedly been the area that has seen the biggest increase. Specifically, as reported by the National Internet Crime Complaint Center (NICCC), cyber fraud is at a record high. Online scams originating worldwide have seen a fifty percent increase in reported complaints in the month of March 2009 alone. The most common of the reported complaints was non-delivery of promised merchandise, with over thirty percent of the fraud being contributed to by Internet auction sites such as eBay and Craigslist. Credit and debit card fraud, confidence fraud, computer fraud, and identify theft fraud through e-mail messages and websites were also amongst list of commonly reported complaints. Also, more than 800 complaints of checking-account customers reporting of unauthorized transactions have been logged so far this year.

Not only have these cyber attacks increased in number, but they have also grown in sophistication. The number of fake websites masked as banks and government agencies, such as the FBI and FDIC, has grown. The NICCC report also highlighted an increasingly prevalent type of identity-theft fraud, coined the Nigerian Letter Scam, which consists of e-mail messages that seemingly originate from the FBI and seek bank account information to help in investigations of money being transferred to Nigeria. Recipients of such e-mails are falsely told they could be richly rewarded for their cooperation. Experts say that the widespread use of the Internet and the relatively inexpensive ways in which cyber fraud can be accomplished help to exacerbate this growing problem.

Reports show that property crime is escalating as well. A survey of 233 police departments throughout the country conducted by the Police Executive Research Forum found that 43 percent reported an increase in what they believed to be recession-related property crimes, including theft, robberies, and burglaries. Forty percent claimed that thefts had increased in recent months, 39 percent said that robberies were up and 32 percent reported that burglaries had risen 20 percent.

The deteriorating economy has been particularly hard on retailers across the country who are being increasingly hit by shoplifters. According to a recent study by the Institute of Corporate Productivity, workplace theft, especially in large organizations, is on the rise. Respondents to surveys have reported increases in theft of non-monetary, company-owned items such as office supplies, products their organization produces or sells, electronic equipment, and food items. There has also been a rise in reports of employee-related, monetary theft, such as the padding of expense accounts, the disappearance of petty cash, suspicious accounting irregularities, fictitious sales transactions, and other fiscal crimes. Also, respondents from large organizations have reported an escalation in the victimization of employees while at work, such as car break-ins and personal items being stolen from their workstations. Finally, experts predict that the economic downturn could trigger an increase in reports of domestic violence. Since the recession hit, more than four fifths of the workers laid off have been men. Studies show that unemployed males are more at risk to engage in domestic violence than other demographic groups. As frustration and depression over unemployment and money woes increase, emotions are heightened and it is not uncommon for individuals to turn to drugs and alcohol, which could arguably further trigger such violence.

Critics have argued that there is no link between the recession and rising crime rates and, even if such links exists, that it is small in magnitude. The stimulus package that was recently passed by Congress could help deter crime with its expectations of funding local and state crime fighting programs and initiatives, providing millions of jobs, extending other unemployment benefits, as well as other forms of relief. Also, organizations are taking increased measures of communicating with employees on theft issues, conducting audits more frequently, conducting more careful background checks, and adding extra security measures. Further, it has been argued that, although a recession may increase the number of people who are motivated to engage in crime-related activities, people’s exposure to property crime decreases because more of them tend to stay home, particularly at night, thus deterring potential crimes from occurring in unoccupied dwellings.

Another realm of the criminal justice system that may possibly be affected by the recession is the death penalty. There is a possibility that states with fiscal concerns may abolish capital punishment in an attempt to save costs. Those seeking to repeal the death penalty are producing hard numbers on its actual costs, with some of these numbers showing that it may cost up to three times as much as instances in which the death penalty is not sought. These opponents of capital punishment argue the money saved could be used to fund state and community programs and services, including prevention and corrections programs. However, critics see the death penalty as an unlikely target for states’ budget cuts, arguing that those seeking to abolish capital punishment as a means of cutting costs are not taking into account the many costs saved in seeking the death penalty.

Although history supports that crime rates peak during a recessionary period, as has happened during the last five recessions, predicting crime trends and the effects of economic climates can be speculative, since factors such as opportunity, need, and risk change on a daily basis. History, anecdotal evidence, and statistics all suggest that the criminal justice system and crime rates could very well be affected by our current recession, but only time will tell the nature and extent of the correlation.

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The Criminal Law Update is a periodic newsletter published by Jayne Law Group, P.C., to provide general information and updates on the legal field. It is not intended to provide legal advice or opinion on any set of specific circumstances. Please consult counsel regarding any legal questions you may have concerning your individual situation. For additional information, please contact Jayne Law Group, P.C.