Today's Article
Is the government's
use of prison
workers creating
what's little better
than a slave labor
force?
The American Spark
Does Prison Labor Undercut American Workers and U.S. Business?

By Cliff Montgomery - Sept. 24th, 2007

A very interesting July
Congressional Research Service (CRS) report documented the little-discussed issue
of prison labor. It specifically investigated whether UNICOR--the government-owned corporation that employs
prisoners--maintains an unfair pay advantage over both American workers and American businesses, by
employing what may amount to little better than slave labor.

As the report itself crystallizes, the central issue  is "between competing interests that represent two social
goods--the employment and rehabilitation of offenders and the need to protect jobs of law abiding citizens."

We quote from the CRS report below:

"UNICOR, the trade name for Federal Prison Industries, Inc. (FPI), is a government-owned corporation that
employs offenders incarcerated in correctional facilities under the Federal Bureau of Prisons (BOP). UNICOR
manufactures products and provides services that are sold to executive agencies in the federal government.

"Although UNICOR industries are located within various federal prisons, they operate independently from the
prison.

"FPI was created to serve as a means for managing, training and rehabilitating inmates in the federal prison
system through employment in one of its eight industries.

"Of the eligible inmates held in federal prisons, 21,250 or 18% are employed by UNICOR.

"UNICOR has 108 factories in federal prisons representing seven different industrial operations.  UNICOR’s
seven industrial operations are comprised of roughly 150 different types of products and services.

"UNICOR’s industrial operations include the following:

  • clothing and textiles;
  • electronics;
  • fleet management and vehicular components;
  • industrial products;
  • office furniture;
  • recycling activities; and
  • services (which includes data entry and encoding).

"UNICOR uses the revenue it generates to purchase raw material and equipment; pay wages to inmates and
staff; and invest in expansion of its facilities.

"Of the revenues generated by FPI’s products and services, approximately 77% go toward the purchase of raw
material and equipment; 18% go toward staff salaries; and 5% go toward inmate salaries.

"Inmates earn from $0.23 per hour up to a maximum of $1.15 per hour, depending on their proficiency and
educational level, among other things.

"Under BOP’s Inmate Financial Responsibility Program, all inmates who have court ordered financial
obligations must use at least 50% of their FPI income to satisfy those debts, which accounted for $2.7 million
in FY2005; the rest may be retained by the inmate.

"As the federal prison system was established in the first decade of the 20th century, factories were
constructed within the prisons to manufacture products needed by the federal government.

"Labor organizations had been making arguments against prison industries since the late 1800s due to the
poor conditions in which inmates were working and their perception that the industries were taking jobs away
from law abiding citizens. The Depression of the 1930s and the resulting high levels of unemployment
crystallized the debate.

"UNICOR was established in 1934 under an executive order issued by President Franklin Delano Roosevelt.
The purpose of UNICOR was to consolidate the operations of all federal prison industries in order to provide
training opportunities for inmates and 'diversify the production of prison shops so that no individual industry
would be substantially affected.'

"The question of whether UNICOR is unfairly competing with private businesses, particularly small businesses,
in the federal market has been and continues to be an issue of debate.

"The debate has been affected by tensions between competing interests that represent two social goods--the
employment and rehabilitation of offenders and the need to protect jobs of law abiding citizens.

"At the core of the debate is UNICOR’s preferential treatment over the private sector.

"UNICOR’s enabling legislation and the Federal Acquisition Regulation (FAR) require federal agencies, with
the exception of the Department of Defense (DOD) and the Central Intelligence Agency (CIA), to procure
products offered by UNICOR, unless authorized by UNICOR to solicit bids from the private sector.

"While federal agencies are not required to procure services provided by UNICOR they are encouraged to do
so.

"It is this 'mandatory source clause' that has drawn controversy over the years and is the subject of current
legislation.

"In recent years, the [Bush] Administration has made several efforts to mitigate the competitive advantage
UNICOR has over the private sector.

"Going beyond the Administration’s efforts, Congress has taken legislative action to lessen the  adverse
impact FPI has caused on small businesses.

"For example...in 2004, Congress passed legislation limiting funds appropriated for FY2004 to be used by
federal agencies for the purchase of products or services manufactured by FPI under certain circumstances.

"Legislation introduced in the 110th Congress would address many of the same issues as legislation in the
109th Congress.

"By statute, UNICOR must be economically self-sustaining, thus it does not receive funding through
congressional appropriations.

"In FY2006, FPI generated $718 million in sales."



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