Marketplace
Inmates' Labor, Expenditures Enhance Prisons' Bottom Line
From the book 'Going Up the River: Travels in a Prison Nation' by Joseph T. Hallinan. Copyright 2001 by Joseph T. Hallinan. To be published by Random House Trade Publishing, a division of Random House Inc.
At the eastern Oregon Correctional Institution, a medium-security prison in the famous mill town of Pendleton, inmates don't make license plates anymore. They make money. Pretty good money, too: $6.25 an hour, on average.
That's because the prison here, like prisons across America, is turning itself into a for-profit factory, cashing in on a tight labor market and public disenchantment with rehabilitation programs. In 1994, Oregon voters overwhelmingly approved an amendment to the state constitution known as Measure 17. For more than 100 years, the state's inmate work program had existed primarily as a rehabilitative tool, designed to keep inmates busy and to teach them usable skills. No more: Measure 17 required that the work programs be run instead "to achieve a net profit."
So today the state's inmate work program is run as a for-profit business under an assumed business name, Inside Oregon Enterprises. It functions, in essence, as a convict version of Kelly Girls, leasing inmates to companies in need of labor. Although the inmates must be paid market wages, employers offer no retirement, vacation, or health benefits; nor do they pay for Social Security, workers' compensation, or Medicare. Altogether, according to IOE, hiring inmates can cut an employer's payroll costs by 35%.
Among IOE's best-known employers is Prison Blues. It makes a line of clothing that features T-shirts, jackets and jeans, some of them identical to the ones worn by Oregon inmates. The company, owned by a businessman from Portland, employs 100 inmates. Its 47,000-square-foot factory is located behind the walls of the prison in Pendleton. In addition to paying for the inmates, Prison Blues also pays IOE a 6% royalty on its net sales.
Depending on the work Oregon's inmates perform, the state calculates that it can earn a profit of between 76 cents and $1.14 for every hour of their labor. The Oregon Department of Corrections expects that by 2006 it will make $10 million a year from its inmates. This prospect is so appealing, a spokeswoman says, that the state plans to equip each new prison with built-in factory space.
The penchant for profit springs in many ways from the 1970s, when federal courts around the country began seizing control of state prisons. In many cases, federal judges ordered costly reforms, forcing previously tight-fisted corrections departments to go on shopping sprees. Private corporations got wind of the money being spent and sensed opportunity. They saw inmates as a great untapped market that needed the same things free people did: not only food and clothing but "amenities" like telephones and TV sets, weight-lifting equipment and basketball hoops, shampoo and soap. There was almost no end to the things that prisons could be sold. And now, they had the money to buy.
The 'V Bottom Crew' stands next to a tank where they check for leaks on boats they assembled.
One of the more profitable prison ventures is pay phones. Historically, prisons seldom granted inmates access to telephones, and then only as a reward for good behavior. But as prisons grew, this reluctance softened. By 1990, with close to a million inmates behind bars, long-distance giants like AT&T Corp. and MCI (bought by WorldCom Inc. in 1998) began clamoring for convict callers. Why? Because inmates love to talk. In Louisiana, the state's 17,000 inmates made 2.7 million calls in 1995, for an average annual bill of $605 per inmate.
Prisons typically get a 50% cut of the calls, most of which are collect. Small wonder, then, that almost no prison is complete today without a bank of pay phones.
In 1992, the state of Washington opened the Airway Heights Corrections Center, a 2,000-man, medium-security prison near Spokane. It furnished the prison with 142 pay phones -- one for every 14 inmates -- and allowed prisoners to use them virtually anytime they were not asleep or otherwise confined to their cells. During December 1997, inmates spent $458,581 calling home for Christmas -- an average bill, per inmate, of more than $200.
Morgan Reynolds, an economics professor at Texas A&M University, directs the criminal-justice programs at the National Center for Policy Analysis. The center is a conservative advocacy group from Dallas that does not, Mr. Reynolds tells me, "make any pretense to be grassroots." It is funded by wealthy individuals who arguably would benefit from an increased use of inmate labor.
Classic prison jobs like making license plates, Mr. Reynolds says, are just part of a "tired old socialist model" of prison labor. In his new world, wardens are "marketers of prison labor" and prisons themselves are little more than industrial parks with bars. They should be built not where the crime is but where the jobs are.
Mr. Reynolds believes commercial opportunities hold the key to prisons' success. "It's pretty clear," he says, "that's where the future is if we're going to grow our prison population."
It's a chilling thought: the decision to consciously "grow" prisons, as if they were any other industry. But businessmen now all but beg for prison labor. Among the most outspoken is Edwin Meese III, who served as attorney general during the Reagan administration. Mr. Meese is chairman of the Enterprise Prison Institute, a for-profit group in Bethesda, Md., that is pushing for greater access to prison labor. As attorney general, Mr. Meese oversaw stiffened sentencing for drug offenses, which in turn swelled the nation's prisons. Now, on the lecture circuit, he speaks to business groups of the potential for the nation's inmates.
It is a violation of federal law for state prisons to sell their products in interstate commerce -- unless they are certified by a federal program known as Prison Industry Enhancement. Under the provisions of the PIE program, which was created in 1979, inmates must be paid the same wages as free workers engaged in similar work. They must also be allowed to keep at least 20% of what they earn. The rest of their wages can be withheld to pay income taxes, child-support obligations, room-and-board charges, and payments due to victim-assistance funds.
The vast majority of the inmates employed through PIE perform menial labor. "What it does is just flood the [labor] market at the bottom end," says Mark Smith, president of the Iowa Federation of Labor, a coalition that represents 150,000 union members. "And it's a way, when you've got relatively low employment, to discipline the labor market, to pull wages down."
A prisoner sews gloves as part of the work program at the Fort Dodge Correctional Facility in Iowa.
A case in point, he says, is the Boomsma chicken farm in Clarion, Iowa, 92 miles north of Des Moines. Clarion is in Wright County, where the unemployment rate is low, and a job in a chicken house is at the bottom of the pecking order. It's hot, dirty work and the pay is not much more than minimum wage.
Julie Glessner, whose family owns Boomsma, says she ran ads in the newspaper for months looking for help, and for months she got virtually no replies. Desperate, she applied to the Iowa Department of Labor for permission to import workers from Mexico. The department told her to try the prison system first.
She hired 23 minimum-security prisoners from the North Central Correctional Facility in Rockwell City, Iowa. Under the supervision of one guard, armed not with a gun but with a cell phone, the inmates' job was to sort, clean and package 1.3 million eggs a day, 365 days a year.
Mrs. Glessner stopped using the inmates last year -- not because they were poor workers but because they got a better offer. They now work for a boat factory in Fort Dodge, which offers a starting wage of about $8 an hour, according to the state, compared with about $6.50 at Boomsma's.
The Iowa pie program is run by Roger Baysden, a 53-year-old retired food broker who believes fervently in the rehabilitative power of work. "There's only two things that'll change an inmate," he says, "and that's work and God. I gotta count on God to do his stuff, and I'll take care of the work." Until he joined the program in 1997, Mr. Baysden had never been in a prison. He was surprised to learn that 40% of the state's inmates would return to prison one day, and even more surprised to learn that the prison system did little to improve those odds.
"In Iowa, when they get out of prison, they get a hundred-dollar bill and a one-way bus ticket," he says. "Now, what are you going to do with a one-way bus ticket and a hundred-dollar bill?"
Like all states, Iowa requires inmates to work. One of the lingering myths about prison is that inmates are allowed to loaf. The average workday in prison varies between 6.5 and 7.4 hours -- a full day after deducting the time spent moving inmates to and from their cells, feeding them and counting them.
But in many cases, prison work is make-work. "You can only mop a floor so many times," Mr. Baysden says. And besides, such jobs offer little prospect for earning a living wage in the outside world. So the state decided to try something different, and in 1995 it renewed efforts to place its inmates in private industry. So far, the program has had limited success. Of the state's 7,800 inmates, only 225 work for private businesses.
The inmates make between $7 and $12 an hour. Of this, they get to keep the requisite 20%. To participate in the program, inmates must meet three requirements: They cannot have been charged with a crime against another person; they must have a clean prison disciplinary record; and they must have a scheduled release date. To avoid having the inmates exploited, Mr. Baysden says, he also requires every contractor of prison labor to offer a job to an inmate upon his release. So far, he says, they have placed at least 19 inmates in full-time jobs, "and that's a pretty good record."
David A. Smith, director of the public policy department of the AFL-CIO, disagrees: "This is coerced, incarcerated labor competing in a commercial marketplace against free workers." To him, using prison labor in America is no different from using prison labor in China.
But inmates see it differently. "Ain't no comparison," says Dick Williams, a 46-year-old inmate. "This is not forced. This is the premier place to be." "This," in his case, is a small room on the second floor of the North Central Correctional Facility, a minimum-security prison 60 miles southwest of Julie Glessner's egg farm. Here he works as a telemarketer for the Heartland Communications Group, a publisher based in Fort Dodge, Iowa.
Mr. Williams spends eight hours a day with 15 or so other convicts, each hunkered down in a cubicle trying to sell magazine subscriptions or services of one sort or another. Across the room from him, a pedophile pushes the Iowa Political Hotline. Another inmate makes appointments for salesmen from Pet Alert of the Carolinas, which sells shock collars for dogs. Mr. Williams's specialty is farmers. He tries to get them to advertise their used tractors and other items in Farmers Hot Line Iowa. He's been at it 15 months, he says, and loves his job.
The Diamond Crystal Foods plant in Bondurant, Iowa, is just a few hundred yards from the women's prison. Diamond Crystal is a packager of dry blended food products. Basically, workers tend machines that take bulk containers of products similar to Kool-Aid and dry pudding mix and seal them into tidy six-ounce packages. Diamond Crystal runs two shifts a day and employs 130 people. Inmates account for 12 of those employees.
Guards bring the women down from the prison in a van every morning, says Chuck House, the plant manager. "Then in the afternoon they bring the fresh people down. ... One nice thing about them is they don't mind working overtime. Some of our people, you say, 'Overtime.' They say, 'Overtime? What, you want me to work overtime?' These people, 'Oh, yeah, you betcha.' "
Diamond Crystal has been involved in the program for two years and has hired half a dozen women after their parole from the prison. One of them is Karen Smith, 45, who served 16 months for passing bad checks. She has been out of prison for a year and a half now, and has been employed at Diamond Crystal the entire time.
At $7.70 an hour, the job enabled Ms. Smith to save $1,800 -- enough to get a new apartment, a secondhand car, and a new start on life. Without that, she would have left prison with only $100 and a bus ticket. "When you come out and you don't have anything," she says, "those old ways start to come back."