Will your job be reshored to a federal prisoner?

While labor costs rise in Asia, US inmates are paid less than the minimum wage.

By Minyanville.com Mar 13, 2013 3:21PM
Jail copyright CorbisBy Justin Rohrlich

Twelve million Americans are currently unemployed, according to the most recent Department of Labor statistics. Forty percent of the unemployed have been so for at least six months, and the average job seeker spends 36.9 weeks out of work.

The good news for the jobless? U.S. industry is now in the throes of a "reshoring" trend.

"Next year we're going to bring some production to the U.S.," Apple (AAPL) CEO Tim Cook told Bloomberg Businessweek in December. "This doesn't mean that Apple will do it ourselves, but we'll be working with people and we'll be investing our money."

The bad news? The U.S. Bureau of Prisons is angling to have as many reshored jobs as possible filled by federal prisoners.

Between 2000 and 2011, wages in Asia have nearly doubled, according to the International Labour Organization. The Chinese government is planning to increase the minimum wage by 13% annually until 2015. Labor unrest, formerly unheard of in Asia, has become more frequent, with companies routinely raising workers' pay after strikes. At the same time, wages paid to federal inmates working in prison factories across the U.S. have remained flat, according to the Bureau of Prisons, ranging from $0.23 to $1.15 an hour.

Federal Prison Industries -- also known by the trade name UNICOR -- is a self-sustaining, self-funding company within the Bureau of Prisons. It is owned wholly by the U.S. government and was created by an act of Congress in 1934 to function as a rehabilitative tool to teach real-world work skills to federal inmates. These inmates were historically limited to producing goods for government use, such as furniture, uniforms, even, believe it or not, components for Patriot missiles (see story on Minyanville).

However, as Bob Sloan, a prison industries consultant and Executive Director of the Voters Legislative Transparency Project, explains to me, Congress amended the 2011 Continuing Appropriations Act "to allow private companies access to the labor of federal prisoners and UNICOR facilities" under what's known as the Prison Industries Enhancement Certification Program, or PIECP.

"Additionally, the FPI board of directors authorized a 'repatriation' program where U.S. companies can bring jobs back to the U.S. making products no longer manufactured in the U.S.," Sloan tells me. "Prisoners will be paid standard prison wages."

Indeed, FPI/UNICOR's 2012 annual report states that the board of directors "has approved 14 pilot programs for repatriated products."  It also details "substantial losses" incurred and asserts that "inmate employment levels have dropped precipitously." To be sure, not every job being reshored will be filled by an inmate. But according to the report, "FPI anticipates these pilot projects will assist in further reducing its losses," which would logically induce the Bureau of Prisons to funnel as much business as possible to its 109 existing UNICOR factories, which currently employ just over 21,000 inmates.

Though prison authorities welcome the opportunity to close their budget gaps through its industries, companies on the outside with which they will compete will be negatively impacted.

States have been partnering with private industry to manufacture goods in prison since the PIECP program was created by Congress in 1979. Prisoners in state prisons have packaged products for Microsoft (MSFT), Starbucks (SBUX), and Costco (COST) subcontractors, and helped build a Wisconsin Wal-Mart (WMT) distribution center. The goal is to keep as much of the population as busy as possible; as prison staff like to say, idle inmates are dangerous inmates. (Microsoft owns and publishes Top Stocks, an MSN Money site.)

"While there is a need for training of our incarcerated members of society, that training should not come at the expense of workers on the outside who have committed no criminal act and lose their jobs to prisoners," says Bob Sloan.

And why would that well-trained, experienced free-world worker lose out to a prisoner? When a business owner takes advantage of incentives that include facility leases for as little as $1 a year, tax subsidies or exemptions such as Nevada's Modified Business Tax, and a host of methods to avoid paying inmates even the minimum rates guaranteed by law, it is difficult for those paying a living wage, benefits, vacation pay, and so forth to compete. If Apple were so inclined, inmates working under the banner of UNICOR's Electronics Business Group seem to be able to do many of the same things as Foxconn employees -- and their products will be "Made in the USA."

Further, critics charge that prison labor not only drives down wages on the outside, its use can also counteract the skills training inmates receive while incarcerated -- if production in one's new area of expertise moves behind bars, where will an inmate look for work after he is released?

As for the inmates themselves, most are not immediately concerned with their effect on the outside labor market.

To quote one, from an interview by CorpWatch, "F--k society, they locked me up."

Bob Sloan and I have filed a Freedom of Information Act request in an attempt to identify the 14 industries set for repatriation. Stay tuned.

More from Minyanville
Mar 13, 2013 4:17PM
Anything to lower the costs for the 1%. 
Mar 13, 2013 5:10PM
Really prisoners whould be paid more. But most should go into an account that can only be used once they leave prison to pay for rent and bills and they don't get it all at once, like maybe cap it at a maximum of $1500/month lasting as long as they have a balance. That way they have some money to get a place and pay bills untill they find work which is hard with a record. But often those released just given a few bucks, a bus pass and then they are expected to make it in a world where employers avoid anyone with even bad credit much less a record? So is it a surpise they quickly go back to crime with no money. Maybe pay them $5/hr instead, $4/hr for savings and the other $1/hr for prison bought goods.
Mar 13, 2013 5:35PM

there should be a law REQUIRING ANYTHING made in prison to be clearly packaged or labeled as such........


i dont care how cheap it is, i wont willingly spend a dime of my hard earned money on a convict, or any scheme by prison officials to line thier pockets on slave labor.

Mar 13, 2013 7:20PM
This is disgusting! We have soldiers returning from the middle east and they can't find jobs.  We have former servicemen and women that are homeless, living on the streets, because there is no work available to them.  I think they should be moved to the top of the list to receive jobs that are returning to the US.  Next in line should be law abiding citizens who lost their jobs during this mess that started in 2008 and continues today.
Mar 13, 2013 7:13PM
"F--k society, they locked me up"  exactly how I feel about having to feed trash!
Mar 13, 2013 7:09PM
Got to love this country where Inmates and illegals are being talked about more than honest hardworking out of work Americans absolutely sickening!
Mar 13, 2013 5:22PM
And dont forget that one dollar an hour should go to make restitution.

Oh thats right....They are all innocent.   My bad.

Mar 13, 2013 7:58PM

Prisoners have NO COST of Living...So any wage under 3 bucks should be fine


Anything over should go to Education in the State..

Say, if paid min wage....The extra should go to benefit the schools or roads in the Locale...imo. 

Mar 13, 2013 6:08PM
Apple making millions of dollars and using prison help. Most expensive electronics made. Something is damn wrong with this picture. They love the asia people working conditions so much let there **** stay there.
Mar 13, 2013 7:53PM

What I wrote earlier, one thing....This would demand a lot of Scrutiny..


And the Labor and Institution should have a Limitation...

So it can't be used by the same Corporation, Company and Business over and over..

Mar 13, 2013 5:51PM
I wrote something wouldn't/didn't post...Getting real tired of this....About an hour ago..
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

124 rated 1
266 rated 2
452 rated 3
702 rated 4
671 rated 5
604 rated 6
640 rated 7
495 rated 8
267 rated 9
158 rated 10

Top Picks




Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.