The US Gov’t Is Secretly Marketing Slave Labor To Private Businesses

Image courtesy of Unicor

The federal government has created a lucrative market for prison labor.

As prisoners across the country begin a three-week strike protesting what they call “modern-day slavery”, Vox has put together a brief look at just how the federal prison system exploits U.S. inmates for profit and create a lucrative market for prison labor.

Most inmates across the country do skilled and unskilled labor typically for less than a dollar per hour. (In some states, it’s entirely unpaid.) The work ranges from building office furniture to answering customer service calls to video production and farm work — sometimes without the guarantee of safe work conditions.

Prisoners and human rights activists say this dynamic is a form of exploitation and disproportionately harms people of color, who are more likely to be incarcerated in the first place. But correctional facilities argue that prison laborers learn real-life job skills while offsetting some of the costs of running a prison.

There is truth to both arguments. But perhaps the most problematic element of prison labor is the twisted market incentive it creates. Because prison labor is so cheap, federal and state governments can sell prison-made goods and services to private companies at rock-bottom prices, creating a labor-market incentive for mass incarceration.

Case in point, the Department of Justice brands its labor force as a “cost-effective labor pool” and the call center industry’s “best kept secret”.

About 17,000 inmates at federal prisons work at more than 50 government factories, farms, and call centers across the country, according to the latest annual report published by the DOJ program Federal Prison Industries, also known as Unicor. Prisoners make air filters, clothes, lamps, and office supplies for wages that range from 23 cents an hour to $1.15 an hour.

Most of Unicor’s customers are other federal agencies, but the program also sells millions of dollars’ worth of goods and services to private companies that can’t find workers or plan to outsource jobs overseas. In the first half of fiscal year 2018, Unicor recorded about $300 million in total government and private-sector sales, according to the program’s midyear sales report.

As the federal budget is expected to shrink, so are sales to federal customers, which means Unicor must make up the difference by partnering with U.S. companies.

Vox provides a taste of how the government’s prison laborers are marketed to the private sector:

Prisoners in the US can replace offshore customer service call centers

The federal government wants businesses to know that its call centers, staffed by prisoners, are one of the “best-kept secrets” out there. The marketing brochure published by Federal Prison Industries [pictured above] shows smiling inmates wearing headsets as they handle calls from customers.

According to the brochure, companies can avoid outsourcing jobs by using American prisoners while still paying offshore prices.

Listen to the testimony of an unnamed American CEO, offered in the brochure:

“We would receive services from an onshore agent — a US citizen — but at offshore prices. It’s a win-win for everyone involved,” the aforementioned CEO said.

The Department of Justice runs seven of these call centers, staffed by “1,700 experienced inmate agents and support staff,” according to the brochure. The department plans to open more soon. In fiscal year 2017, revenue from these call centers and other commercial market services brought in $7.5 million to Unicor.

American-made manufacturing opportunities

This is a twist on President Donald Trump’s “America First” platform to keep factory jobs in the United States. The federal government is marketing prison labor as an enticing alternative for US manufacturers who are thinking about closing factories and moving jobs abroad to save on labor costs, or to those who want to bring jobs back to America.

“We can enhance your success ... and your bottom line,” the brochure states.

The benefit here is that companies can manufacturer goods in the U.S. at a cheap cost and still enjoy the benefit of boasting “Made in America”.

“There’s no need to deal with the hassles and logistical nightmares often associated with outsourcing in a foreign country! We perform many of the labor-intensive services that are moving offshore. And we continually investigate new opportunities to provide skilled labor to commercial firms looking for a stable, productive workforce.”

Warehousing and distribution services

Unicor runs numerous warehouses and distribution centers, previously serving government agencies but now marketed to the private sector as well.

“UNICOR has over 100 potential sites located throughout the country that can warehouse your products and provide order fulfillment services customized to your needs, whether your project is a one-time mailing or an ongoing commitment,” the program states in a brochure.

The three key selling points for hiring prisoners to do this work? It provides businesses with a “skilled workforce,” “low labor rates,” and “nationwide locations.”

One of the primary arguments against paying inmates fair wages is the cost factor: the government simply cannot afford to offer more money.

But there already exists one program that contradicts such a notion.

[The federal government] currently runs a small program — the Prison Industry Enhancement Program (PIECP) — where about 5,000 state and federal prisoners work for private companies and are guaranteed to earn the average wages for their work.

A portion of their wages cover the cost of their room and board in prison, another portion is saved for them to use when they are released, and some of it is set aside to pay alimony, child support, or restitution to victims. Employers must pay inmates the local average wage for the job they do, which cannot be less than the minimum wage. As of 2017, two Unicor factories participated in the PIECP program.

But this is not to say the PIECP program is perfect, and it does have its share of critics, Vox notes.

Northstar Asset Management, a financial management company whose investment portfolio only includes socially responsible companies, says employers in the program use loopholes to avoid paying prevailing wages to prisoners who participate.

In a report published in 2018, the asset management group also expressed concern about oversight of the program. The Department of Justice outsourced oversight to the National Corrections Industry Association, a group whose membership includes prison officials and the companies who hire workers through the program.

Still, the program is proof positive that other options are available.

The federal government could eliminate the perverse business incentive to keep people incarcerated, earning pennies per hour. Congress could change the laws that mandate decades-long prison sentences to people convicted of nonviolent crimes. Keeping people out of prison also saves money.

Read more here.