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The federal government markets prison labor to businesses as the “best-kept secret”

The Department of Justice says prison labor is good for a company’s bottom line.

A US Department of Justice marketing brochure for call centers staffed by inmates in federal prison.
Federal Prison Industries

Prisoners in 17 states began a three-week strike this week, with many refusing to eat or work to protest what they consider “modern-day slavery” in America’s correctional facilities.

Among other demands, prisoners want to earn more than a few dimes for each hour of work that they do, considering that their work brings in billions of dollars in revenue to state and federal prisons. 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.

Just take a look at how the federal government markets its prisoner workforce to the private sector. In marketing brochures, the Department of Justice touts its “cost-effective labor pool” and a workforce with “Native English and Spanish language skills.”

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.

Unicor is expanding prison labor to the private sector, according to its annual report, as sales to federal customers are expected to shrink along with cuts to the federal budget. (The Department of Justice did not respond to a request from Vox for more details about those business partnerships.) Here are a three unsettling examples of how the federal government markets prison labor to US companies:

1) 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 shows smiling inmates wearing headsets as they handle calls from customers:

A brochure advertising customer service call centers staffed by prisoners.
Federal Prison Industries

The big sell for this service, according to the brochure, is that companies can avoid outsourcing their customer service departments to an international company to save money, because it’s just as cheap to hire American prisoners to take calls.

That’s how one unnamed CEO described the benefit of working with Unicor, according to a customer testimonial in the marketing 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.

Federal Prison Industries was created in 1934 as a government corporation. At first, inmates in the program mostly held factory jobs, and FPI could only sell goods to federal agencies. FPI later went through a corporate makeover (hence the new name, Unicor) and began creating jobs for inmates to answer customer service calls, ship goods, print manuals, and refurbish vehicles.

But it wasn’t until 2011 that Congress allowed Unicor to start selling products and services in the private sector, within certain limits. The idea was that it would better prepare inmates to work in a business environment after their release from prison, and maybe the effort would keep some US companies from outsourcing jobs overseas.

2) 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.

Another page from a DOJ marketing brochure touting the business benefits of prison labor.
Federal Prison Industries

Unicor highlights the experience federal prisoners have producing goods made from metal, plastic, wood, and textiles. The key selling points? Businesses can reduce manufacturing costs while also proudly displaying a “Made in America” label.

Here’s the sales pitch:

“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.”

3) Warehousing and distribution services

Unicor says prisoners are available to sort, package, and ship products from government warehouses and distribution centers. They’ve been doing this work for federal customers for decades and now they are offering this service to private companies too.

“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.

A Department of Justice marketing brochure lists the benefits of hiring prisoners.
Federal Prison Industries

Prisoners can also sort magazines, put together marketing flyers, and mail marketing products.

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.”

These marketing campaigns make this pretty clear: Paying people less than the minimum wage is good for a company’s bottom line. And this kind of exploitative relationship is what prisoners across the country are protesting.

It’s possible to pay inmates better wages without bankrupting prisons

Providing inmates with the option to do meaningful work is a worthwhile goal. It allows them not only to buy basic toiletries and goods from prison commissaries but also forces prisoners to save a bit of money for their release. Most prisons also deduct a percentage of earnings to help cover a prisoner’s child support payments, alimony, and restitution to victims. But at 40 cents an hour, that seems impractical.

The main argument for paying inmates pennies a day is that it would cost too much money for state and federal prisons to pay them more. There are more costs associated with running a prison factory than any other factory, they say, as they have to make sure there are armed guards and security measures in place.

But the federal government has already shown that it’s possible to pay prisoners regular wages without putting prisons in dire financial straits. It 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.

There is hardly any research on the effectiveness of PIECP. But researchers from the National Institutes of Justice say that people who participated in this federal program in the late 1990s and early 2000s were twice as likely to hold a steady job after leaving prison, and ended up earning more money in the years immediately following their release than their fellow inmates who worked in prison factories.

The conclusion are limited because participants in the program are picked by employers, so it’s possible that employers select workers who are more educated or skilled than the overall prison labor force. But the researchers say that the outcomes suggest the program should be expanded.

The PIECP program does have its share of critics. 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.

“Given the exploitation risks and the profit-enhancing incentives to lower costs further, the fact that [the National Corrections Industry Association] is charged with policing its own dues-paying membership creates a clear and concerning conflict of interest,” the Northstar report authors stated.

There is another option. 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.