Prison Labor As A Money Making Enterprise

(MoneyWatch)  Both the Federal Government and some states use the readily available labor force of people in their prison systems to do contract work. In fact for the U.S. government contracts the Federal Prison Industry (FPI) company has priority for contracts. Often they can undercut a normal company as their rate of pay is so low. This can lead to situations where BAE Systems and Pennsylvania were arguing about the FPI taking all the work making helmets for the U.S. military. FPI is not run to make a profit and actually states that one of the company's goals is to "minimize FPI's impact on private business and labor".

The FPI does not wait passively for contracts but makes investments in facilities and tooling in order to compete. In this instance they bought a complete photovoltaic module assembly system to produce these solar units for sale to other Federal departments. With the emphasis on "green" technologies and energy generation by the Obama administration there may be a great deal of this type of business available.

Of course there are other reasons then just the profit motive for running these types of industries. The inmate may be able to learn a valuable skill that they may use once their sentence is complete. In Michigan a state struggling with unemployment, the collapse of the car industry and budget problems the Bureau of Correctional Industries was just audited. The audit found a poorly marketed company that may have cost the state seven million dollars over recent years. The Department of Corrections argued that despite the losses the industry provides "prisoners with activities, work-related skills, and the ability to show up at work in a timely manner and develop aptitude for the work place,".

Another version of prison industry is receiving money to take care of prisoners from other jurisdictions. This can be done by the government or private contractors. Of course then you end up with locales basing their budgets on receiving a certain number of prisoners and when that may not happen facing money problems. Another rather unique problem to a Pennsylvania county was judges taking bribes to send people to the contractor run youth detention facilities. There is so much money involved in government that corruption can come in a wide variety of ways.

If the economy continues to be bad and states lose revenue there may be a greater effort to turn to the incarcerated workforce to make up some of the difference. Obviously the example of Michigan should make other states and localities think it through. Despite the lure of cheap labor the costs associated with administering the program and the possible low work output historically associated with this type of worker it may be hard to turn a profit.