Lack of healthcare, limited job opportunities, growing income inequality, are just a few reasons off the top of my head.
Crime goes down when the gap between the rich and the poor goes down.
The idea that humans only commit crime out of necessity and wouldn't do it if they could just get a 9-5 job is extremely naive.
I believe that most people are good, but others do not have good character. They are the ones who ruin things for everyone else. They even ruin things for the people who are "good but victims of bad luck." By refusing to deal harshly with the bad actors (e.g. by locking them up), we create a world where you can't really trust anyone, including those who are just down on their luck but have integrity.