FOR the last decade or so, the number of persons incarcerated in the United States has grown at an exponential rate. The average annual increase in the jail and prison population from 1980 to 1991 was 8.5 percent. This year or next, the number of men incarcerated, on probation, and paroled could exceed the number of men unemployed.
Yet the number of crimes committed hasn't fallen much.
Why not, with so many criminals behind bars?
Economist Richard Freeman argues that one reason could be economic. Until recently, unemployment has remained high in this economic recovery. During the past decade or so, the rich have got richer and the poor poorer. The growing inequity of income has been particularly hard on men with a poor education - those most prone to engage in crime. More than a million more Americans fell into poverty in 1993, reports the Census Bureau.
The number of serious crimes per 100,000 residents fell 3.1 percent between 1992 and 1993, according to Federal Bureau of Investigation statistics. Last week, the agency announced that law-enforcement agencies reported another drop of 3 percent in the first half of 1994 compared with the same six months of 1993.
For many years, economists have been trying with more or less success to find economic causes as one factor in criminal behavior. The thesis is that some individuals, disadvantaged by poor education or other factors, find that crime pays better than legitimate employment - or at least the criminals believe that to be the case.
In a new National Bureau of Economic Research study, Mr. Freeman, a Harvard University professor now teaching at the London School of Economics, has reviewed the extensive ``economic literature'' on this topic and concludes:
* The United States developed a large, relatively permanent group of young male offenders and ex-offenders in the 1980s and early 1990s who, for the most part, are unlikely to be productive members of the work force in the foreseeable future.
In 1993, the number of men incarcerated in the US was equivalent to 1.9 percent of the male labor force. The number of men on probation or parole was about 4.7 percent. So the number of men ``under supervision of the criminal justice system'' was 6.6 percent of the male work force - 1 of 12 men in the work force.
Some 11 percent of all young men (aged 18 to 34) and 36.7 percent of young black men were under supervision. The proportion of high school dropouts would be greater, Freeman notes.
* Statistics show that higher joblessness is associated with higher crime rates.
This implies that if the economic recovery continues to push down the unemployment rate, crime should diminish. If the Federal Reserve's current tight money policy kicks the economy into recession, crime could rise again.
Most of those people who commit crime are employed. But many young men hold jobs for short spells and move back and forth between legitimate and illegitimate earnings.
* Growing income inequity and the low wages of much legitimate work contributed to the rising propensity of men to commit crime in the 1980s. Between 1973 and 1993, the value of the minimum wage after inflation has fallen about 24 percent.
* A prison record depresses the average earnings of young men once they are back in the job market. One survey found that young men incarcerated in 1979 worked 25 percent less in the ensuing eight years than young men who had not gone to prison because many had a hard time getting work.
The quality of data on criminal earnings is poor, Freeman notes. However, one study found that drug dealers in Washington made about $30 an hour. In Oakland, Calif., the pay for drug runners was an estimated $7.82. A 1989 survey of Boston ghetto youths found them reporting about $3,000 a year in criminal income. Earnings from burglary, robbery, and theft are modest.
``The magnitude of involvement in crime is such that analysts who once dismissed criminal behavior as a peripheral issue to employment or poverty can do so no longer,'' Freeman states. ``No other advanced society has as large a proportion of its potentially productive work force involved in illegitimate activities, nor as large a proportion incarcerated.''