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Answering the Critics


From the earliest days of prison industries, complaints have surrounded work by prisoners - complaints about prison-made goods competing with those produced on the outside; about physical abuse of prisoners, especially those leased to private businesses; and about security. The objections to competition from prison-made products were largely responsible for the restrictive state and federal laws that play a big part in the idleness of so many prisoners today. Are these objections and concerns serious enough to keep productive work for prisoners to a minimum, or can they be dealt with in ways that allow the use of this resource?


Does Prisoner Work Create
Unfair Competition for Free Labor?


From an economist's perspective, newly created value - whether produced inside or outside prisons - is a social boon, not a curse. Production by prisoners creates rather than destroys jobs. For example, if prisoners make filing cabinets, the task requires someone to manufacture sheet metal, to transport it to the work site and to transport the finished product. These and the demands for other goods and services create new jobs. But certain firms and local labor might be hurt more than helped, at least in the short run.

Case Studies. It is not difficult to find complaints about prison labor on the outside. For example, an article in the December 1995 issue of Furniture Design and Manufacturing magazine criticized a Federal Prison Industries (FPI) proposal to expand its production of furniture.65 The FPI is a wholly owned government corporation created in 1934 to produce goods for sale exclusively to the federal government. The FPI is responsible for employing 25 percent of sentenced federal inmates and is required to diversify as much as possible to minimize its market impact. In response to industry criticism, the FPI argues that its overall economic impact is positive, especially since 73 cents of each sales dollar is spent directly on materials, equipment and services purchased from private businesses. The competitive impact on the furniture industry is minimal, and if anything, creates net jobs in the industry, according to FPI analysis.66

Other cases that have given rise to complaints, especially from organized labor, are as follows:

Lockhart Technologies. Lockhart Technologies, Inc. closed its Austin, Texas, branch, laid off 150 workers and moved its operations into a state prison located in Lockhart, Texas, that is operated by Wackenhut Corporation. The prisoners are paid the federal minimum wage to assemble circuit boards, provided no health or other benefits (they have them already) and allowed to keep 20 percent of their wages. The products go to computer industry giants like IBM, Compaq and Dell. Joe Gunn, president of the Texas AFL-CIO, complained that Wackenhut violated federal law by not consulting with organized labor and declared this kind of prison labor "absolute indentured slavery. [Wackenhut] puts people to work under conditions that we criticize China for."67 The Texas Employment Commission, on the other hand, said that the only economic impact was in largely rural Caldwell County, where the prison is located and where there were no unions to be considered.
Weastec Corporation. The United Automobile Workers union (UAW) pressured Honda in 1992 into discontinuing a contract with Weastec Corporation for parts assembled by jail inmates in Ross County, Ohio. "Honda backed off," says Ohio UAW official Warren Davis, "because they didn't feel the negative publicity was worth it."68

Toys R Us. A union protest stopped a Chicago-area Toys R Us store from using inmate labor to stock shelves at night in 1994.69

Hog Slaughtering in Arizona. A hog-slaughtering plant was closed, putting United Food and Commercial union members out of work, and the Arizona Department of Corrections and the Pork Producers Association subsequently opened a joint venture plant.

According to Jack Henning, executive secretary-treasurer of California's Federation of Labor, joint ventures using prison labor are obligated to consult local labor unions but "they rarely do."70 Opponents of profit-and-loss prison labor projects - sometimes termed "enterprise prisons" - argue that cheap labor, not social responsibility, fuels the movement toward private employment for prisoners.71 Some critics admit that prisoners are eager to work, especially since they can save thousands of dollars over a few years, but object that prisoners are exploited without the right to organize politically or unionize.72

Overall Economic Benefits. In the competitive fray, one person's productive success often harms or even ruins another supplier financially. Yet we tolerate competition, even celebrate it, because its advantages vastly outweigh its disadvantages. Despite sometimes visible and poignant costs, competition is good rather than bad. As gymnastics coach Bela Karolyi put it, "No competition, no progress." Economist Joseph Schumpeter (1883-1950) called the innovations that continuously render obsolete old inventories, ideas, technologies, skills and equipment "gales of creative destruction." The only alternative to consumer sovereignty and free markets is producer sovereignty and guaranteed monopoly.73 This would serve us very badly as a society because competition allows us to discover the cheapest and most efficient or effective way to do any job, sparing productive resources for new tasks.

Comparing Prisoner Work to Workfare for Welfare Recipients. Consider a related issue: welfare reform. Getting able-bodied adults off welfare and into jobs is widely viewed as progress rather than as a threat to the livelihood of others.74 Work for prisoners, by contrast, has been treated as a competitive threat. What is the economic difference? To be sure, community hostility toward convicts emerges from the fact that they are criminals, and the welfare recipients are merely dependents. Yet there appears to be little concern over the competitive impact of large numbers of welfare recipients going to work. With 15 million persons receiving Aid to Families with Dependent Children, 6 million receiving Supplemental Security Income, 27.5 million on food stamps and millions more on Medicaid and other welfare programs, the potential impact of a large expansion in work and production among welfare recipients would dwarf that of putting 1.1 million prisoners to work.

Comparing Prisoner Work to the "Dumping" of Goods in Foreign Trade. Fear of prison production resembles the debate over the so-called dumping of goods by foreign producers. Economists argue that we should let foreigners "dump" all the valuable goods they want. If others wish to give us their goods, they add to the opportunity and wealth in our community. Adversely affected business owners and displaced workers are seldom so sanguine. Yet interest groups like the U.S. Chamber of Commerce and the AFL-CIO are on record in general support of private-sector prison industries.75

Minimizing Adverse Impacts. One way to minimize the adverse impact of prisoner labor is to apply it to products that have negligible domestic competitive effects. For example, Prison Blues, jeans produced by prisoners, compete primarily with jeans produced offshore. However, if domestic and free private enterprise cannot produce something at a profit, prison labor probably cannot, either. A second way is to remove restrictions on prison-made goods in interstate commerce, insuring that prison labor competes in a national market.

Finally, states should repeal requirements that prison-manufactured goods be used by state agencies or given preferences by those agencies. The federal government should do the same with its mandatory purchase requirement for federal agencies. This would give private enterprise an opportunity to compete for the business from state and federal agencies and from joint ventures employing prisoners.

Why Prison Production Is No Guarantee of Profit. Focusing only on wages can be misleading. There are other factors that make prison production more, not less, expensive than non-prison production. These factors include security problems, high turnover, lack of skills, poor work habits and remote prison locations. A large percentage of inmates are illiterate or semiliterate. Prison labor usually is suitable only for labor-intensive, low-skilled work, at least on a large scale. In general, profit is no more easily achieved in prison than out. If convict labor is cheaper than civilian labor, it probably is because the entrepreneur hiring the labor expects it to be less productive.


Does Prisoner Work Make
Prisoner Abuse More Likely?


Accounts of the abuse of prisoner workers are often mixtures of fiction and truth. Some of these accounts have come from historians who despised capitalism and sought to discredit it, especially in labor matters, in both prison workplaces and free world enterprises.76 Journalists are alert to any story of abuse, whether behind bars or not.77

Certainly convict laborers have been killed and seriously injured on the job, especially in railroad construction and mining. The same has been true of non-convict workers.78 However, no systematic data exist and no one has demonstrated a "convict differential" in industrial accidents.

In a new book, Rutgers University historian David Oshinsky declares that convict leasing "would disgrace the South...serve to undermine legal equality, harden racial stereotypes, spur industrial development, intimidate free workers and breed contempt for the law. It would turn a few men into millionaires and crush thousands of ordinary lives."79 Oshinsky maintains that "the South's economic development can be traced by the blood of its prisoners," an unsustainable accusation in view of the fact that the rate of incarceration in the South was about the same as in the nation as a whole. In 1880, for example, Mississippi had 65 prisoners per 100,000 population and the nation's average was 61. By comparison, in 1994 the national incarceration rate was 386 per 100,000.80 While the convict mortality rate was high,81 the real villain was not leasing, but rather government's failure to protect human rights in the entire prison system.82

Private lease deals and work behind prison walls for private employers (sometimes termed "enterprise prisons") must conform to the U.S. Constitution's Eighth Amendment prohibition of cruel and unusual punishment. Further, the state should retain ultimate control and responsibility for the treatment of convicts, whether they are leased out for profit or working within prisons. As in prison operation, the state is likely to do a better job of investigating, monitoring and auditing private enterprise than of overseeing jails and work facilities operated by other bureaucrats. [See the sidebar on Penal Servitude.]


Does Prisoner Work Create
Unreasonable Security Problems?


Security is, rightly, a central preoccupation of prison officials. But convicts are far from equally bad or equally risky. Systematic risk classification of prisoners was one of the advances in penology during the 19th century. Among the manifestations of such progress are minimum, intermediate and maximum security prisons.

Accountability is the fundamental answer to the security question. Prison authorities and private enterprise must continue to be held liable for escapes and security. Performance bonds posted by private employers entrusted with prisoners can improve the incentives for those employers to maintain security. In some cases, contractors can hire their own guards and adopt their own innovative security methods under careful monitoring. Work release programs already operate successfully, as do joint ventures within prison walls, and no peculiar new security solutions are required before prisoners go to work either inside or outside prisons. As mentioned above, constructive occupation of prisoner time is likely to reduce security problems.


Conclusion


What can be done to make prisons hum with productive work? In particular, how can private-sector jobs and high-quality goods and services be radically boosted within prisons? State and federal prison systems control a huge asset - convict labor - and largely waste its productive potential. All 50 states now have prison industry programs, and in 1934 Federal Prison Industries, Inc. (trade name UNICOR) was established as a self-sustaining corporation to keep federal inmates constructively employed and provide job training. But the possibility of making a profit must be allowed if the rapidly growing population of prisoners is going to have gainful employment. This means repealing state and federal obstacles and encouraging private-sector involvement.
[See figure on Penile Servitude]
Public Policy Reforms. Among the steps that need to be taken are these: Running Prisons as a Business. The proper way to mimic the free world of work as closely as possible is to encourage profit-and-loss employment of prison labor by private enterprise. Prisoner-run firms might even be allowed, provided the activity is consistent with orderly operation of the facility.84

Inmates are eager to work for a variety of reasons: to relieve monotony, to earn money wages and to claim good time credit and early release. What about prisoner wages? Let them be flexible and set competitively. Prisoners and prison labor pools expected to yield low value-added will attract low offers and vice versa for high value. The evidence shows that for products that need entry-level, unskilled workers who are reliable and stable (light mechanical assembly, welding, sorting, data entry, etc.), inmates can be competitive with free world workers in terms of quality and productivity, given close supervision and clear work standards.85 We can put many of the problems of prison industry into better - competitive - hands.

What about the choice of businesses and markets? Two methods are available. First, allow prison authorities to innovate and choose, aided by private-sector marketing and management consultants. Second, solicit private-sector bids for contracts and leases on convict labor and choose among the proposals. Only businesses can really succeed in business. So the answers to questions about what to produce and how can be answered by the competitive marketplace.

Policy Options. Repeal of federal restrictions on prison labor would allow the states to design their own lease and contract systems. Conditions and criteria would differ among the states. States could lease labor to industries both inside and outside prisons and retain final control, inspection and auditing responsibilities. Allowing state authorities maximum latitude in negotiating prison lease deals would benefit taxpayers, prisoners and crime victims and would improve public safety over the long run. As the Houston Chronicle put it in a recent editorial, "The advantages to society of prison jobs vastly outweigh any disadvantages."86

Comprehensive legislation from the U.S. Congress may be the best approach because a coherent package would make the goals and methods clear and likely would elevate the political discussion as well.



NOTE: Nothing written here should be construed as necessarily reflecting the views of the National Center for Policy Analysis or as an attempt to aid or hinder the passage of any bill before Congress.

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