Inmates hired by private manufacturing business - Forbes
Michelle Conlin,09.21.98
NEW YORK - TROLLING THE BAHAMAS in his Hatteras
yacht four years ago, Minneapolis moneyman Irwin Jacobs flipped on the TV and
had an inspiration. On the screen flashed a news report about prisoners loafing
around with nothing to do. Hey, why not put some of these jailbirds to work?
Two years later Jacobs
Trading had hired 100 inmates from the Prairie Correctional Facility in
Appleton, Minn. to remanufacture returned goods like Prego strollers and Regal
crockware for resale. The plant sits inside the prison's razor ribbon walls and
comes with a loading dock secured with motion-sensitive fencing.
One of Jacobs' recruits
is Floyd Leonard, 51, a former drug addict and robber who now earns $5.15 an
hour as an inventory clerk. "I'd rather spend 20 hours at my job than 10
hours inside that prison," he blurts.
Unions don't like the
idea, but in a full-employment economy they aren't screaming as loudly in some
states. Still, gainful employment among the striped-suit set is small: 2,539 of
1.8 million prisoners are working for private businesses, as authorized by a
federal law. But that's up 31% in the last two years.
Inmates are working as
reservation agents for TWA in California, assembling electronic equipment
cables for Escod Industries in South Carolina and building circuit boards for
U.S. Technologies in Texas.
Convicts in Nevada even
restore antique motor cars for the Imperial Palace Hotel & Casino's museum
in Vegas.
In the 19th century
two-thirds of prisoners were contracted to private entrepreneurs to farm crops
and produce household goods. Under this system, many prisons, such as Sing Sing
and Newgate in New York, posted surpluses. Taxpayers didn't pay a penny. But
complaints from social reformers and union leaders forced lawmakers to restrict
private industry's ability to hire prisoners. By the end of World War II
convicts were only allowed to produce goods -- such as license plates and
furniture -- for government agencies.
The tide turned in 1979,
when Congress passed legislation to again allow private businesses to employ
state and local inmates -- as long as the companies don't eject nonprisoners
from jobs and pay prevailing wages in the area, as determined by state
authorities. Productivity behind bars is better than you might think, since
employers are permitted to be picky about their hires. A prison factory at
Evans Correctional Institution in South Carolina even received an award from
IBM given to only 10 of 500 plants for churning out 25,000 cables with zero
defects.
There's no lack of job
applicants, since state and federal make-work programs pay as little as 20
cents an hour, while the private gigs pay at least minimum wage -- and
sometimes more.
"On the outside,
you'd have to interview 1,000 people to get 50 minimum wage workers, and in 30
days most of them would be gone," drawls Kenneth Smith, chief executive of
U.S. Technologies, which has 100 inmates making circuit boards for Motorola,
IBM and Dell. Smith says his company has already brought back about 60 jobs
from Canada, Mexico and Haiti by promising to save his clients at least 10% of
the costs they pay offshore.
The private employers
usually don't have to pay for health care, pensions or vacation and sick leave.
Often they are given free facilities and even capital equipment. Taxpayers get
a break, too, since up to 80% of inmates' wages are used to pay room and board,
victims' restitution, child support, alimony and court fees.
Kenneth Mellem, chief
executive of St. Petersburg, Fla.-based Geonex, was all set to hire workers in
India and Malaysia to digitize the maps of his utility company customers. But
he was lured at the last minute by a Florida prison nonprofit executive who
wanted him to give 200 inmates a try. Since his is a service business, Mellem's
not required to dole out prevailing wages. Instead he pays a fixed rate based
on the amount of work completed.
Usually ex-cons get $100,
a bus ticket and a pat on the back once they are sprung. But many of the
inmates working for private industry are offered jobs by the companies who
employed them on the inside. Karen Smith left Iowa's Correctional Institute for
Women with $1,800 and a job as a packer for her prison employer, Diamond
Crystal Foods. "Without that job," Smith says, "I might have
gone back to writing bad checks."