Embedding prison industries in the private sector
At Oakhill Correctional
Institution in rural Wisconsin, 17 inmates crank
$1.15 million worth of office chairs a year out of a cramped basement
factory, making anywhere between 20 cents and $1.50 per hour. The money is
put toward release savings, victim restitution and court obligations such as
child support. The inmates can spend what's left.
The operation is part of Badger State Industries, Wisconsin's prison industries program, which employs about 600 of Wisconsin's 10,000 inmates to produce everything from coffee cups to furniture -- and, of course, license plates.
Last year, Badger State earned $1.2 million in profits on $15.4 million in sales by peddling its products to state and local government agencies. To protect manufacturers and labor from unfair competition, Wisconsin places restrictions on the selling of prison-made goods to the private sector.
But that's about to change. The new state budget includes a scheme to make prison facilities and labor available to commercial enterprises.
This, says Gov. Tommy Thompson, will help pay for the costs of housing the escalating prison population and provide prisoners with a work ethic.
What Thompson didn't mention was that the legislation will embed prison industries in the private sector, which in other states has led to a downward pressure on wages and to lost jobs for Joe and Jill Taxpayer.
A few years ago, when the country was locked in a recession, it was unlikely that the Legislature would have even considered expanding prison industries into the private sector. Now that unemployment is at a record low, and jobs are begging for takers, lawmakers seem to be making up for lost time.
Wisconsin is about to join the burgeoning market of commercialized prison labor.
Sales on prison-made goods to reach $8.9 billion by the year 2000
mistake about it, prison industries are big business. The $1.3
billion of sales nationwide in 1993 is expected to increase to a whopping
$8.9 billion by the year 2000, according to the Prison Industries Reform
Alliance -- a group that represents industries such as furniture, textiles and
electronics that have suffered from prison competition.
Prison industries provide so many goods and services that most Americans have probably encountered them, whether they know it or not.
Tennessee inmates produce jeans for Kmart and JC Penney and wooden rocking ponies for trendy Eddie Bauer (list price $80). Some states produce toys, and many produce mattresses. Until last year, 150 Ohio inmates made car parts for Honda. In Nevada, inmates convert luxury cars into stretch limousines. And nearly all of the programs produce furniture, the largest component of prison industries nationwide.
Inmates also book rooms for motel chains and take reservations for Trans World Airlines (yes, they do take credit card numbers -- and yes, there have been embarrassing incidents). In Kansas, they process Social Security numbers. In Iowa, they work for the Department of Tourism's Information Bureau, boosting the same state that locked them away. A number of states, among them Iowa and Nebraska, rent their inmates out as telemarketers.
Many states, including Florida, Minnesota and Oregon, have turned over the administration of their prison industries programs to quasi-private, nonprofit agencies that more resemble diversified corporations than corrections programs.
For example, UNIGROUP, Oregon's state prison industry administration, produces such familiar items as Prison Blues jeans, which are sold in nearly 500 stores nationwide. The jeans sell at prices comparable to Levis and have become a trendy export item in France, Germany, Italy and Japan, where the price can reach $80 a pair.
By the year 2000, UNIGROUP plans to employ 450 inmates in the production of $26 million in denim clothing. The program's administrators also plan to sell furniture products under the Mill Creek brand name to 500 stores this year.
Oregon has recently begun advertising its labor force and production facilities to businesses that it claims would otherwise go overseas for cheaper labor. The state is also unique in that a constitutional amendment to put 100% of its state inmates to work was voted in by an overwhelming majority last year, giving further impetus to expansion plans.
Prison labor keeps pressure on wages
of prison industries has fueled opposition from labor and
business groups across the country. The AFL-CIO has been pushing for
restrictions that would limit prison industries to selling to the public
sector in states like Ohio, Texas, Nevada, and Florida, where state prison
industries have made substantial headway into the commercial marketplace.
"Prison labor is one thing," says Phil Neuenfeldt, legislative director for the Wisconsin AFL-CIO, "but prison labor that provides unfair labor to the outside world and keeps pressure on wages downward is not a good thing. When you look at what's going on around the country, like some of the inmates that are being used to assemble PC boards for Lockhart industries, that costs 150 workers their jobs down in Texas."
Other examples abound.
The plant subsequently reopened -- as a joint venture between the Arizona Department of Corrections and the state's Pork Producers Association.
"We find it ironic that they are putting an industry out of business that they are purportedly training people to work in," said Steven Crawley, an attorney for the Utah Asbestos Abatement Contractors Association, which is suing Utah Correctional Industries on the claim it has illegally taken over the industry.
"Individuals who run these prison industries have an empire-building attitude"
labor's concerns seem to be low on Gov. Thompson's agenda. Aside from
the budget proposal, Thompson has proposed separate legislation that would
authorize Irwin Jacobs, a Minnesota entrepreneur who with his colleagues
contributed $40,000 to Thompson's reelection campaign (only a month after
one of his companies landed a $30 million loan from the State Investment
Board), to use prison labor to repackage damaged retail goods.
Corrections officials are quick to cite a statewide labor shortage to justify deals such as the Jacobs bill. Employers are having trouble finding people to work, they point out.
But Neuenfeldt shoots back: "If Jacobs wants to bring 50 jobs to Wisconsin, it would be good to open up an operation in central-city Milwaukee or somewhere else in the state where we have high unemployment.
"And I would think that the business community, especially small business, would have some concern over businesses set up using prison labor, because if this guy pays a dollar an hour it's pretty hard to compete with that," he adds.
If the Jacobs legislation passes as currently written, Jacobs will indeed pay inmates $1 per hour, skirting a federal interstate commerce law that requires that prisoners working for commercial ventures be paid prevailing wage.
"Federal law only applies to the production or manufacturing of a product," says Steve Kronzer, director of Badger State Industries. "If they started repairing then it would be considered manufacturing, and then it would come under the federal law."
The Jacobs plan demonstrates the enthusiasm with which the Department of Corrections is expanding into the private sector -- even at the expense of profits. "The whole reason for doing this thing is so the state gets money back to cover its losses for boarding these people," says Neuenfeldt.
But, the labor rep says, some basic math shows that the savings would be minimal, possibly nonexistent.
The 50 inmates involved would be paid $1 per hour for 1,950 hours. This would cost Jacobs $97,500 a year in wages. Thus, each inmate would be paid about $2,000 a year. Fifteen percent of that would go to the corrections system, and another 5% would go to the victim-restitution fund. The state's 15% comes to $14,625, plus an estimated $8,000 savings from wages the state would no longer pay the inmates who would otherwise be employed in other ventures. So the state gain would be around $27,525.
But the state would also have to pay for a supervisor, which the AFL-CIO estimates will cost $17,800. This brings the state's take down to $9,725. Subtract the costs of facility adjustments and security measures, and "the Jacobs bill could even be a money-losing proposition," says Neuenfeldt.
So why do it?
"You have to understand the mentality that goes on within the prison industries itself," says Nick George, director of government relations for Wisconsin Manufacturers and Commerce. George served on a prison industries advisory committee that discussed the governor's budget proposals.
"In prison industries, there is a mentality, and this is not unique to Wisconsin, of wanting to see their industries grow," he explains. "They have a number of advantages over private industry, and a lot of the individuals who run these prison industries have an empire-building attitude."
"Good for Offenders"
skepticism as this attitude invites, there's a case to be made that
commercialized prison work is worthwhile simply as a boon to rehabilitation.
"Working is really good for offenders," says Walter Dickey, a former top state prison official who teaches corrections and criminal law at UW-Madison. "First, they get to earn some money. Second, it's an activity, and that's good. Third, and probably most important of all, the development of work habits is essential to successfully reenter the workforce."
Dickey explains: "Learning discipline, how to follow directions, how to work with others -- these are really important habits. Many prisoners don't have them because they haven't worked a lot."
Badger State Industries has proven to be somewhat successful in helping inmates stay out of prison after they've served out their sentences. In one study, inmates who worked for BSI had a 15% lower recidivism rate after three years than those who hadn't.
According to BSI's Kronzer, other studies have come to the same conclusion -- "people who worked for prison industries tended to do better than normal."
In Wisconsin, the results are probably due largely to the fact that BSI's 10 factories hire workers and run their businesses as if they were private-sector ventures, which helps inmates gear up for similar situations they will encounter in society. Prisoners fill out applications, and are called for interviews on the basis of their work history.
"We try to make it a real-life job experience," says Robert Smith, who was recruited from a furniture company to manage the chair factory at Oakhill.
But making prison work too businesslike could be counterproductive, says Dickey, because it results in prison industries cherrypicking the best prisoners. "Now the best employees are not necessarily the ones who need the work experience the most," he says. To maximize rehabilitation, Dickey favors running as many prisoners as possible through the jobs.
"But you lose efficiency and you lose productivity when you're constantly in a state of training," Dickey says. "I guess where I come out on this one is that we should really abandon the idea that these [industries] are moneymakers."
"They get lower labor costs right here in, like, a little Third World country"
or not, these programs won't be lacking for applicants.
Because of recent initiatives such as "truth in sentencing," "three strikes and you're out" and limitations on parole, the growth in the prison population has been nothing short of explosive. In 1987, state and federal prisons housed 551,328 inmates. Since then that number has doubled, and by the year 2000, more than 1,700,000 inmates will be housed in the nation's state and federal correctional institutions.
Wisconsin's prison population is expected to nearly double, from 8,948 inmates in 1994 to 15,846 by the year 2000, according to the Department of Corrections. And this projection does not factor in the influx of juvenile offenders into the adult prison system as the result of a new law that treats 17-year-old offenders as adults.
What to do with the expanding prison population is a perplexing problem. Consider that of the state's approximate 10,000 prisoners today, 1,500 are on "idle status," meaning they have no scheduled activity to keep them busy. But while putting prisoners to work might be a quick fix to the problem, the costs to businesses and working people hurt by the competition might prove too onerous.
Even some inmates are skeptical of prison industries.
"It's positive that you can make some money before you get out and stuff," says Dale Austin, an upholstery sewer at Oakhill who is serving a 10-year sentence for burglary. "But it also takes away a lot of jobs from people on the streets."
Austin, who says he buys books on politics with the money he earns, sees a grand scheme in bringing private business into prisons.
"They're gonna open up more industries and build more prisons. And the more industries you got in prisons takes away from people's jobs on the streets. And it takes away from the cost of sending businesses overseas." The object, says Austin, is to lower domestic labor costs.
"They get lower labor costs right here in, like, a little Third World country," he says, referring to Oakhill.
Workin' on a chain gang
gangs are the latest (and oldest) prison work programs. Reinstated
recently in Alabama and Arizona, shackled gangs are also under study in
Florida, West Virginia...and Wisconsin.
State Sen. Scott Fitzgerald (R-Juneau) and State Rep. Eugene Hahn (R-Cambria) are proposing to begin the practice in Badgerland.
"Wisconsin correctional officials report that there are not enough jobs for prisoners. This legislation remedies this problem," Fitzgerald said in a press release.
And in his own press release, Hahn said, "Alabama puts 400 of the state's inmates to work using chain gangs. That's 400 inmates who won't want to be back in prison."
Hahn cited the example of John Wayne Bobbitt, who, facing jail for $30,000 in delinquent child-support payments, said he planned to "kick back, read a couple of books and take it easy."
"We could put deadbeats like him on I-90/94 picking up trash all day," said Hahn, "and maybe they'd be on time with their payments."
While putting John Bobbitt on chain-gang duty might elicit few sympathetic outcries, the efficacy of the program is not universally accepted.
"What miserable stuff," says state Rep. Tammy Baldwin, former chair of the Assembly Corrections Committee. Baldwin says that for security reasons maximum-security prisoners would not be sent on chain gangs. That leaves medium- and minimum-security inmates, many of whom escaped maximum-security status by behaving themselves, for the work.
"There is a system of rewards, and it's there for a reason," says Baldwin. "And putting people on chain gangs when they're on medium or minimum status is the converse of rewarding good behavior."
Inmates already work cleaning up parks, painting shelters and benches and otherwise contributing to communities, says Baldwin. "The only difference with this is they're going to have to be in shackles when they do it."
Although corrections officials declined comment on the proposed legislation, saying they'd rather wait until they see the actual language, Baldwin says her understanding is that they believe they can get better work out of an unshackled prisoner than a shackled one.
Nevertheless, the image of a shackled prisoner baking in the hot sun or freezing in the winter wind seems to have a nearly romantic appeal for some.
Maybe Hahn, as the chair of the Assembly Committee on Tourism and Recreation, feels that highly visible chain gangs will draw tourists.
Albion Monitor March 10, 1996 (http://www.monitor.net/monitor)
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