Prison labor versus private sector jobs

By Eric Badertscher, UPI, 1 February 2002

WASHINGTON, Feb. 1 (UPI)—In the midst of the U.S. economic downturn, certain employees in Washington State enjoy what might be the ultimate in job security: they’re prison inmates, working for the state-chartered Correctional Industries, part of the Department of Corrections. Among other goods and services, CI provides office supplies and equipment to state agencies, through mandatory contract awards.

To supporters of the program, this seems an ideal situation: the state lowers the costs of running its prisons, while the inmates learn marketable skills for when they return to society.

But according to a recent policy paper from a Washington State think tank, the mandatory contracts have hurt the ability of local private firms to compete. The paper argues that the CI, which it calls a state-sanctioned monopoly, has forced some Washington furniture companies to lay off almost their entire workforce.

The policy paper, Putting prisoners before working families? Time to end the monopolistic practices of Correctional Industries, published in December by the Evergreen Freedom Foundation, a public-policy research organization, does not criticize prison labor as such, or even CI’s basic existence. Instead, it focuses on the problems with the mandatory buy contracts.

Based in Olympia, Wash., EFF seeks free-market solutions to public policy, as well as greater accountability in government. It was founded in 1991 by former Washington State legislator Bob Williams, who had also worked for the Pentagon as a certified public accountant.

The debate over prison labor is chronic, having lasted for decades without resolution. Jason Mercier, EFF’s Deputy Communications Director, said Washington State has sanctioned the use of convict labor since the 1880s, when the state built its first prison in Walla Walla.

The Washington State Constitution specifically addresses the issue of convict labor. According to Article 2, Section 29, beginning on Jan. 1, 1890, convict labor is not to be contracted out to any person, co-partnership, company, or corporation. Rather, inmates are to work for the benefit of the state, as provided by the legislature.

The current statute at issue is RCW 43.19.534, which reads that state agencies, the legislature and departments shall purchase all their required goods from Class II inmate programs, operated by the department of corrections through state contract. (Class II refers to state-owned and operated businesses, with sales going to support their activities.) Mercier told United Press International that Evergreen Freedom Foundation has no problem with convict labor as such.

It really is a pretty good idea there, he said, to have prisoners learn skills while paying their debt to society. But allowing CI a virtual monopoly, he argued, has almost put some private companies out of business.

CI has the power to rule that state agencies can buy from outside companies, Mercier said. But even when an outside firm offers a better price, CI has a vested interest not to allow the state to purchase from that company.

In addition to furniture, CI provides services in construction, data entry and management, office support, printing, laundry, and furniture restoration. Other products include food, garments, and signage.

In comparison, Mercier said, the federal government doesn’t allow its own prison-labor program, Federal Prison Industries (also known as UNICOR), to encroach on the private market. The U.S. Code has been revised to prohibit Federal Prison Industries from seeking more than a reasonable share of the federal-government market for any specific product.

The EFF spokesman argued that this government-supported monopoly is part of an unfavorable government attitude toward business.

We’re facing the prospect of Boeing, the biggest employer in the state, leaving because of the anti-business climate of the state, Mercier said. He asserted that the state would lose about three support jobs to every Boeing job, and noted the testimony of Boeing Chief Executive Officer Alan Mulally before a State legislative committee on Jan. 16.

Mulally had told the House Labor Committee that Washington State is not competitive, in the areas of transportation, taxes, energy, education, unemployment insurance and regulations. Because of market realities, he had said, Boeing might need to leave the state entirely. After decades in Seattle, the aircraft maker has moved its headquarters to Chicago. Mercier also noted that the Washington State Supreme Court has a prison-labor case on its docket.

Washington Jet Workers Association (appellant) v. Yarbrough (respondent) is raising constitutional issues over whether state statute RCW 72.09.100(1) violates the state constitution’s Convict Labor section. The statute authorizes the State to contract with for-profit organizations to employ prison inmates in the production of goods and services for sale.

Dr. Marvin H. Kosters, director of Economic Policy Studies at Washington-based American Enterprise Institute, agreed with EFF’s basic position. But though mandatory contracting has problems, he said. Neither business nor organized labor likes competition from the prison system. They would prefer to sell to the state themselves, he said.

Though we need to guard against the dangers, Kosters argued, we need to see the social and rehabilitative benefits of prison labor.

Hardly anything is without its dangers for abuse, he said. The situation is not like prison labor in countries such as China, where the state seizes people to work in publicly run factories.

Knut Rostad, president of the Enterprise Prison Institute in Bethesda, Md., said he supports the concept of prison labor, emphasizing privatization. He wants to see policies that the business community can support.

Labor groups such as the AFL-CIO are opposed to prison labor on principle, he said, as are many in the U.S. Chamber of Commerce of U.S. Manufacturers’ Association. Even so, he argued, Most people are for it. It’s just a matter of how it’s done. I am a solid believer in it, but we make a mistake when we make it a state monopoly.

Rostad agreed that prison labor has not recently had high visibility. He added that most think tanks have not taken a look at the issue. Generally what you’re going to get, in differences of opinion, is in variations on the mandatory source, he said.

Rostad said that Morgan Reynolds, now the chief economist for the U.S. Department of Labor, is the only academic he knows who has dealt with the topic extensively in recent times. Reynolds is currently on leave from the National Center for Policy Analysis, a think tank based in Dallas. The two men have collaborated on prison-labor policy studies for NCPA.

The EPI head disagreed with the contention of EFF’s Mercier, that the Federal prison system doesn’t have a problem with monopolistic contracts. Rostad argued that the federal system has mandatory sourcing as well.

UNICOR’s web site specifies that federal organizations must give first priority to its products over those of a private-sector supplier.

Rostad said that, given the current lack of study on the issue: The excitement that could be created is if you could get the prison industry officials to agree that the system has problems.