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Jobs wanted: Will work for (next to) nothing

January 1, 2000


Jobs wanted: Will work for (next to) nothing

Ask Ross Swanson about prison labor, and he'll tell you what most people would prefer it to look like.

"A lot of people don't want inmates working in anything meaningful," said Swanson, who is the division administrator of Montana Correctional Enterprises (MCE). They still have the mentality that inmates should "break big rocks into little rocks," he said.

But in the midst of a serious labor shortage across much of the Ninth District, some private employers and prison officials are seeing a burgeoning prison population as a useful and untapped labor pool.

Employment is not a new concept for inmates. Originally, work programs were designed to keep prisoners busy in an effort to improve facility security and to save some money on facility operation and upkeep, with inmates serving as the cooks, launderers and custodians to the facilities where they reside.

But states also have "prison industry" programs that employ inmates to produce certain goods on site—everything from furniture to apparel, signs, electronics, metal products and, yes, license plates—for consumption outside prison walls, mostly by other government agencies.

Collectively, these prison industries in Montana, the Dakotas, Minnesota and Wisconsin employed about 2,100 inmates and generated sales of $50 million in 1998.

Now many prison industry programs are evolving again to include partnerships with private companies in need of labor. In such cases, the private company either puts the inmates on their payroll or subcontracts with the prison industry program for inmate labor, most often for use in light manufacturing. All work is done on the grounds of correctional facilities, with setup costs negotiated by the two parties.

"We get inquiries almost weekly" from private employers asking about inmate labor, said Steve Kronzer, director of the Wisconsin Bureau of Correctional Enterprises, which oversees the state's prison industry program.

Minnesota's MINNCOR Industries program has recently received about 30 inquiries about inmate labor. "Businesses are saying [they] can't get enough labor," said Dan Ferrise, head of MINNCOR. "We're able to provide them with a labor source that they otherwise would not have access to."

But despite the interest, most states are still trying to streamline partnerships. Kronzer admitted that the current process of utilizing inmate labor in private partnerships was "very cumbersome and time consuming," but added "we're trying to make it more business friendly."

No Ninth District state has more than a very small handful of partnerships with the private sector for its prison labor. North Dakota started its first partnership less than one year ago, while Montana currently has none.

Ferrise said MINNCOR looks to add value to a private company's labor force, seeking labor-intensive activities that fit the lower skill levels of inmates. "That's a niche we're able to fill very nicely." He acknowledged that private companies have complained about MINNCOR's "partnering with the competition," but pointed out that partnerships are available to any interested company. "We tell them we'll partner with you too," at which point they do so "or they go away," Ferrise said.

Partnerships between the private sector and prison industries are part of a small but growing program called Prison Industries Enhancement (PIE). Started 20 years ago, PIE programs today involve just 3,200 inmates nationwide vs. about 80,000 in traditional prison industry programs that have no private sector tie. But PIE programs have been growing at a rate of better than 20 percent since 1995. (See chart for inmates involved in PIE partnerships in the Ninth District.)

Ninth District Prison Industries at a Glance

State Total inmates working in prison industries Inmates in PIE partnerships with private industry Total sales Notes
Montana Correctional Enterprises
$5 million Number of prison industry workers up 55 percent since 1990.
MINNCOR Industries (Minnesota)
$20 million Wages range from 50 cents to $2, and average $1.10; of the 200 inmates in PIE programs, roughly 40 percent are not connected with a private sector partner.
Rough Rider Industries (North Dakota)
$3 million PIE certified and started first private sector partnership in April 1999; 60 percent increase in prison industry workers since mid-1980s.
Pheasantland Industries (South Dakota)
$2 million Number of prison industry workers excludes the full-time equivalent of roughly 500 other inmates involved in initiatives outside prison facilities.
Badger State Industries (Wisconsin)
$20 million Number of prison industry workers doubled in last 10 years, while prison population has more than tripled; number of workers in PIE programs had been as high as 130.

PIE programs require that organized labor and local private industry be consulted before program start-up, and must show that no noninmates will be displaced by the partnership. Inmate labor is paid prevailing wages for comparable private sector work (whereas traditional prison industry work pays anywhere from 25 cents to $2 an hour). But a large chunk of these higher wages is sliced off the top to pay for room and board, victims' programs, family support and taxes.

In the last half of 1998, for example, about 200 inmates in MINNCOR PIE programs earned about $700,000 in wages, according to the Corrections Industry Association. Of that total, $300,000 was deducted from their paychecks. During the same period, Wisconsin inmates earned about $280,000, 40 percent of which was withheld.

Such a strategy appears popular with a general public eager to see inmates bear more of the costs incurred by their incarceration. "As a taxpayer, I don't like paying for these (inmates) any more than the rest" of the public, said Dennis Fracassi, director of Rough Rider Industries, North Dakota's prison industries program.

Polarized mission

Prison industries are "a very well-run government program," according to Dan Schiltz, vice president of Original Equipment Industries (OEI). OEI is a branch of Krueger International, a giant in institutional and contract furniture, which is a product staple of most prison industries. OEI was established to sell tooling and equipment packages to help kick-start prison industry programs, and works with all but a small handful of states.

Schiltz acknowledged that "there's always a little too much bureaucracy," but added programs do a good job of putting otherwise idle inmates into productive settings, "What else would they possibly do?"

But with a steadily growing inmate population, prison industries today are plagued by a "polarized mission statement," according to Fracassi.

Today most programs are required to employ as many inmates as possible while remaining self-sufficient. To keep abreast of a rapidly growing prison population, that means starting work programs—including capital costs—without the help of tax dollars.

"We have a hard enough time making existing factories self-sufficient," said Swanson of MCE.

Part of the requirement for self-sufficiency stems from a fear that subsidizing prison industries creates an unlevel playing field for private sector businesses that compete in the same markets.

"So many people think we're tax supported and taking jobs away from law-abiding citizens," Fracassi said. He and other prison officials claim competition fears from the private sector, while real, are overplayed. When new programs are started, Rough Rider makes "doggone sure we're not taking work from anyone," said Fracassi, adding his program looks for niche goods that are labor intensive and traditionally produced in overseas markets.

Kronzer said Wisconsin's prison industry has carved out a market supplying items needed for new prisons and state office buildings. "The boom in new prisons has been a boon to our industries," Kronzer said. "We look at what government needs and expand in those areas. We generally won't take work away from a [private] state company."

Cramped quarters

In getting more inmates into productive settings, one hurdle often overlooked is good old-fashioned elbow room. All prison industry programs are operated within correctional facilities for security reasons. As prison populations grow, industry workspace tends not to be a high priority when construction budgets are tight.

Ferrise said MINNCOR could employ an additional 1,100 inmates—more than doubling its current prison industries employment—if facility space were available to start new programs. New prisons, if built at all, often include little space for prison industries in order to save on building costs.

"Every time we build a prison, we're getting less and less space," Ferrise said.

He pointed out that the prison in Stillwater, Minn., built in 1912, was designed with the express purpose of putting prisoners to work. The complex included 800,000 square feet of industry space, and generated enough sales to actually give money back to the general fund, according to Ferrise.

In contrast, a new 950-bed prison in Rush City, Minn., will have just 39,000 square feet of industry space. Yet MINNCOR is expected to employ 300 inmates, Ferrise said, the likelihood of which will depend entirely on the product and the partnership.

The new chain gang: At your service

With states having their own prison industry programs, each has a slightly different mission from the next. In South Dakota, for instance, the goal is to first supply government with goods and services in a cost-efficient manner, according to Jeff Stroup of Pheasantland Industries, South Dakota's prison industry. Putting inmates in work settings that provide useful skills is an important but secondary goal, he said.

With this mission in mind, South Dakota Gov. Bill Janklow led an initiative about four years ago to dramatically increase the number of working inmates and diversify the types of work inmates were doing. Where traditional prison industries manufacture goods, inmates in South Dakota are now doing general maintenance and other service work—painting, tuckpointing, roofing—for a host of government agencies. Even more controversial, inmates are also doing community service projects like rewiring schools for greater telecommunications capacity, and even building affordable housing.

The growth of inmate labor in South Dakota dwarfs any other Ninth District state. In 1994—before Gov. Janklow's prison labor initiative—Stroup said there were 82 inmates working in Pheasantland Industries. Today that number has more than doubled to 182.

But that number doesn't include those in Gov. Janklow's inmate labor initiative. In the 1999 fiscal year, inmates worked the equivalent of almost 480 full-time employees, and became so large it was "spun off" from Pheasantland as a separate entity with its own administration, Stroup said. The housing construction program, for example, is now directed by the state's housing authority, which also pays the wages of inmate workers.

Proponents of the program—particularly Janklow—point out that such work saves valuable tax dollars. By using inmate labor (supervised by licensed electricians), the state spent just $15 million to update wiring for advanced telecommunications in 40 schools, saving an estimated $80 million to $90 million had the project gone out for private bid.

Prison labor is also used for the construction of manufactured affordable housing units in a project called the Governor's House. The program was designed to serve the housing needs of seniors and persons with disabilities, particularly in rural areas. It uses prison labor to assemble 768 square-foot houses, which sell for $22,000 including delivery and placement.

Since its inception in 1996, the program has built 424 houses in 155 cities across South Dakota, along with day care centers and other buildings in 16 cities, according to an analysis by the Sioux Falls Argus Leader. But the program has also built some houses in larger cities like Aberdeen, and is considering expanding into three-bedroom, 1,200 square-foot houses.

Such aggressive use of prison labor has raised the ire of many in South Dakota, including homebuilders.

"We appreciate that prisoners have to do something," said Glen Kane, president of the South Dakota Home Builders Association. But the governor "doesn't and won't believe what we're telling him" about its impact on private housing construction.

Kane said that only 2,500 new houses get built in a year in South Dakota, and "the governor is talking about building 300 a year"—making him the largest builder in the state. "The biggest effect it's going to have is in smaller communities where there is only one builder" that builds a few houses a year, he said.

Cashway Lumber of Watertown, S.D., knows firsthand about competing with prison labor. The company has a ready-build assembly plant and makes housing units similar to those made by inmates. Earlier this year, the company lost out on a bid for a 10-home project on the Sisseton-Wahpeton Indian reservation. It lost the bid to the Governor's House program.

With winter around the corner at the time, work can be hard to come by. "We were banking on those 10 jobs," said Cashway president Wayne Meester.

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