[carlyle4545]

Interesting. What you're saying makes sense. Given the choice between the two in your example, I'd honestly make the same decision.

I probably should've given a little more context in my initial question.

The US Dept of Labor offers the Work Opportunity Tax Credit (WOTC), a tax credit of up to $9600 for every "at-risk" person an employer hires. http://www.doleta.gov/business/incentives/opptax/

There's also something called Fidelity Bonding, which is basically free insurance to protect against employee theft up to $25,000. An employer becomes eligible for fidelity bonding by hiring an ex-offender. http://www.bonds4jobs.com/

So not only does the federal government offer a financial incentive to hire felons, they've almost completely mitigated the potential financial risk in doing so.

Going back to your example: Let's say you're offering a $40k salary for this position. With all things being equal between the two candidates, would the potential to hire a quality employee at a savings of nearly 25% be offset by the fact they're a felon?

[relaunched]

Most startups, venture-backed or otherwise, don't have the same standard financial incentives traditional / small businesses do; they use different economics. 10k isn't life-raft money. So, it's not like they'll get 3 more months of runway out of it. It's still not worth the risk.

I think there might be opportunities with companies that hire relatively low-skill, or unskilled labor. But, in tech startups, where in most metropolitan areas everyone makes 75k-125k, 10k doesn't really move the needle given the risk.