Making Slave Labor Fly: Boeing Goes to Prison
Knut Rostad, head of the right-wing The Enterprise Prison Institute (EPI), which boasts Edwin Meese--Ronald Reagan's ethically challenged attorney general--as chair of its national advisory board is trying to rally support for the scheme. Citing Republican pollster Frank Luntz, who helped shape the Contract with America, Rostad told a Congressional committee that "the American public believes the greatest failure of government on a national level -- other than welfare involves crime and punishment." Luntz's focus groups, Rostad went on, "reveal a negative emotional response to the prison system which is unlike anything he has seen in recent years." "The bottom line," says Rostad, is that the "state prison system should be changed from the ground up, and that inmate work programs should drive this change."
Currently more than 90,000 state and federal convicts work in a variety of public and private enterprises while serving time. The majority are employed in state owned enterprises such as making license plates or furniture for government offices. Increasingly though, private businesses have contracted with at least 25 states to set up businesses inside prison walls to take advantage of state-supplied facilities and low wage non-union workers. The sales from privately operated industries totaled $83 million, a relatively small but growing addition to the $821 million generated from sales of state agency industries products and services.
Advocates of the expansion of private industry into prisons argue that "legal restrictions, aided by bureaucratic inertia and labor union sensitivities, continue to hamper progress." They propose repealing laws that protect prisoner laborers from the worst exploitation and protect free labor from unfair competition. In a May Day Wall Street Journal editorial Meese proposed repealing depression era laws that require prison workers making goods transported in interstate commerce be paid at least the minimum wage. Part of his argument rests on the assertion that if the labor market is opened up for them, prisoners can help pay the costs of their incarceration. The illogic of this position is that if the state really wanted to make money from prison industries, where its "profit" supposedly comes from a portion of the salary paid to the prisoner, it should push for higher wages. On the other hand, in a happy consequence not mentioned by Meese, the lower the wage, the higher the profits for corporations.
Testifying before Congress, Morgan Reynolds, director of the Criminal Justice Center, National Center for Policy Analysis, was not so circumspect. "State and federal prison systems," he said, "control a huge asset -- convict labor -- and largely waste its productive potential." He advocated changing the law to "Allow private prison operators to profit from the gainful employment of convict labor. Encourage and publicize private sector proposals for enterprise prisons. Set up procedures for competitive bidding for prison labor. Diminish prisoner litigation against prison work by repealing the Civil Rights of Institutionalized Persons Act and the federal habeas corpus procedure...."
Prison Industries Making out like Bandits
EPI's Meese touts Washington state as a model for prison industries. In one Washington prison, Boeing Corp., headquartered in Seattle, is discovering the benefits of a captive work force. Last year, while the world's largest civil aviation manufacturer made more planes and more money than ever before, it cut the number of employees on its US payroll. The only significant challenge to its drive to increase profits and executive salaries at workers' expense was a lengthy strike by the machinist union over eroding job security and disappearing pension and health benefits. Like most corporations, Boeing has been cutting costs and countering organized labor's threat to its bottom line by moving factories abroad and out-sourcing to non-union subcontractors in the US. Its search for workers who are unable to unionize or demand a decent wage took it to two widely divergent, yet strangely similar places: China and the Washington State Reformatory (WSR) in Monroe, Washington.
In China, where Boeing sold ten percent of its planes between 1993 and 1995, the company operates at a fraction of its US costs. According to the Seattle Times, "Employees live mostly on or next to the factory premises. Workers receive a salary of about $50 a month. They are forbidden to form independent trade unions. For those who step out of line on the shop floors in China, there is the notorious Lao Gai 'reeducation through labor' prison work camps...."
The newspaper, could have written almost the same story by traveling 25 miles to the Washington State Reformatory where MicroJet is employing prison labor to make aircraft components. Among the recently formed company's customers is none other than Boeing. MicroJet, which lists its address as 16700 177 Ave. SE -- the same address as the prison, currently employs eight prisoners. They train for minimum wage and eventually progress to $7 an hour, unlike those pesky machinists at Boeing's Everett plant who earn up to $30 an hour for the same work. Like all companies employing prison labor, MicroJet saves further by not paying benefits such as health insurance, unemployment, workers' compensation, etc. Even if a prisoner worker is seriously injured, it is the state, through the prison system, which picks up the tab.
In addition to savings on salaries, prison industries also enjoy subsidized overhead. MicroJet's rent-free factory is in a 56,000 square foot industrial building built and maintained by Washington state. The arrangement offers a "just-in-time" inventory of labor: Prisoner workers can be simply left in their cells for weeks on end if there is no work, then be called in on short notice. Outside competitors, on the other hand, have to pay overhead and workers even if no production is taking place and have to maintain a steady production line even when demand drops. Moreover, in prison, any attempt at labor organizing is met with immediate and harsh state repression which generates even less negative publicity than similar moves in China. Not a bad deal; not for MicroJet anyway. Nor for the other private employers at the Washington reformatory including Redwood Outdoors, a garment-making sweatshop that makes clothes for Eddie Bauer, Kelly Hanson, Planet Hollywood, Union Bay, and other brands; Elliot Bay, a metals manufacturing company that makes crab pots and fishing industry equipment; A&I Manufacturing, which makes blinds; and Washington Marketing Group, a telemarketing company that has been used to campaign for Republican congressional candidates among others.
With these competitive advantages, prison industries can easily underbid any US competitor. The real losers, then, are the free workers, machinists in particular, whose jobs have gone to prisoner slave laborers or Chinese workers.
Wage Slave or Chattel?
If the Seattle Times had come to Monroe to describe the set up that these companies enjoy, it could have written: "Employees live right next to the factory premises. They are forbidden to form any type of trade union, much less an independent one. For those who step out of line on the shop floors of Washington prisons, there is the notorious Intensive Management Unit of 'reeducation through sensory deprivation' fame."
In prison, the term wage slavery takes on a new meaning since prisoners are confined to their cells for much of the day. An industry job "consumes virtually all of your out-of-cell time," said Chris St. Pierre, who is serving a life sentence at WSR, "making you a virtual slave where all your time is spent at work or locked in your cell. This limits your ability to visit with your family and attorneys, do legal research, go to school, exercise, etc."
But while a $7 an hour wage clearly puts prison workers at a competitive advantage, it does not at first seem to exploit them. In fact, prisoners hired by MicroJet take home only a small fraction of their earnings. Right off the top, the state deducts 20 percent for "cost of corrections"; 10 percent goes into a mandatory savings fund controlled by the Department of Corrections (DOC); and 5 percent to a crime victim compensation fund that is actually used to fund DOC victim notification and awareness programs. In addition, the prisoner pays state and federal taxes, social security, and up to 20 percent more to pay off any victim restitution, child support, trial costs, and other court ordered financial obligations. After Albert Delp works 40 hours a week making carabiners for Omega Pacific at $6 an hour his weekly pay is $240. After three quarters of that is eaten up by deductions, he takes home $60.
"I don't support prison industries as they are run now." said St. Pierre. "Due to the deductions, the more you make, the more they take. You pay taxes and can't vote and have no say in how the money is used. You pay for room and board yet you're still subject to the same shit food and conditions. Even with the money you earn, there isn't much you can buy with it due to property limits. The employers treat prisoners poorly because they know the prisoners have limited employment options and aren't gong anywhere."
"It's not really slave labor because that implies it is compelled," argues a former Redwood Industries employee "It's more like serfdom, [or like being] a domesticated animal."
Few prisoners are willing to speak publicly against the program for fear of losing their industry jobs, being blacklisted by prison industry employers, or incurring retaliation from prison officials. In any case, most of Washington state's 12,800 prisoners would probably say that they support prison industries, regardless of any objective exploitation. Just like on the outside, people in prison work at jobs they dislike because they need the money and there are long waiting lists for the 300 industry jobs available. While food, clothing and shelter are provided, prisoners are required to pay for such basics as soap and toothbrushes and a $3 per visit charge for access to medical care. Their situation is similar to that of sweatshop and maquiladora workers in South Asia and Latin America who earn a few dollars a day. While such wages are exploitative and paltry by First World standards, in the Third World they make the difference between starvation and poverty and are thus highly sought after. Prison industries represent a Third World labor model in the heart of America. And while $1.50 an hour take-home pay for work that brings $30 an hour on the outside may not seem like much, it looks pretty good against the 38 to 42 cents an hour Washington convicts earn in prison kitchens, laundries, janitorial services, etc. And even those jobs have eager takers since overcrowding has created a prison "unemployment rate" of more than 50 percent. Like the maquiladora workers, the prisoners are objectively exploited but subjectively paid quite well. This disparity creates a relatively (by prison standards anyway) wealthy class of prisoners; a miniature labor aristocracy.
Prisoners also look to these industries for training that will make them more employable on the outside. "Elliot Bay is the best program in this joint," said one prisoner, since it allowed him to hone his welding skills in preparation for a job after he serves his remaining seven years. When reminded that companies like Elliot Bay drive down wages and take jobs out of society, he was blunt: "Fuck society, they locked me up."
St. Pierre has worked at both Redwood Outdoors making clothes as well as the prison's print shop. "I worked in prison industries for several years in order to earn enough money to hire an attorney and challenge my conviction and sentence .... I learned good skills while working in the prison print shop," he adds, "but because of my sentence there's no way to tell if I'll be able to get out and use it."
His situation is not unusual. Prison industries prefer to hire people serving life terms to avoid the retraining and slow production associated with worker/prisoner turnover. Reynolds tacitly admits that industry favors prisoners with longer terms, but explains it this way: "One of the difficulties of creating jobs for prisoners is that many of them are illiterate or semiliterate, or have low IQs .... The federal system may have the best prospects for high rates of payback because many of the prisoners are there for crimes typically committed by more intelligent criminals like counterfeiting, kidnapping and drug smuggling." These are also crimes that tend to carry longer sentences.
This pattern of favoring lifers and long-termers calls into question the claim that such programs are intended to provide meaningful job skills. Also debatable is whether the skills are marketable on the outside. How many ex-prisoners will find work sewing garments in a sweatshop? Most of those jobs go overseas, and those that stay in the US are often filled by undocumented immigrants and, increasingly, by prisoners. Ironically, skilled labor jobs such as those at MicroJet and Elliot Bay help ensure that such jobs become scarcer on the outside and the wages paid are forced downward.
And indeed, the interests of labor and most taxpayers may be ill-served by these programs. In touting the "revolutionary" impact of changing the system so that half of all prisoners could be employed by private industry, Meese cited the example of Lockhart Correctional Facility in Texas where the 180 prisoners who assemble circuit boards for Lockhart Technologies are paid minimum wage. In fact, they actually take home about $.50 an hour. The example is indeed illustrative, but of how the system fails, not how it works. In 1993, Lockhart Technologies closed its Austin, Texas plant where it paid about 130 workers $10 an hour to assemble circuit boards and moved the whole manufacturing operation to the prison about 30 miles away. Even if the prisoners were paid minimum wage, as Meese claims, Lockhart essentially cut its labor costs by more than half and it now pays $1 a year in rent. Meese says that this type of operation will reduce the "cost of incarceration," but says nothing about the social cost of driving down wages.
Another runaway shop that scampered behind bars rather than to Mexico or Indonesia is Omega Pacific, which manufactures carabiners (D shaped metal rings used by climbers to secure ropes). In December 1995, the Redmond, Washington company laid off 30 workers earning $7 an hour plus benefits and moved to the Airway Heights Corrections Center near Spokane. There, five free employees supervise some 40 prisoners who earn $6 an hour. Omega Pacific owner Bert Atwater told the Spokane Spokesman Review that he moved to prison because of the rent-free quarters where "the workers are delighted with the pay; [where there are] no workers who don't come in because of rush hour traffic or sick children at home; [and where] workers ... don't take vacations. Where would these guys go on vacation anyway?" Atwater was also pleased that he doesn't "have to deal with employee benefits or workers' compensation."
One Washington prisoner dismissed the program as serving neither prisoners nor the public. The DOC industries program is "nothing more than a dog and pony show. The state spends millions on its prison industries bureaucracy alone just to say 300 prisoners are being employed by Class I industries. That's money that can't be used for educational programs, literacy, and vocational training, etc. The point is they're squandering taxpayer money, it just doesn't make sense."
Others find prison industries sensible indeed and see the program as a sophisticated and palatable form of corporate welfare. EPI head Knut Rostad says his institute was formed after discussions "between me and Meese to fill a void in the market place that focuses on the management part of prisons. The market was extremely interested in prison industry."
The program is attractive not only to industry on the make for a good deal, but to state governments and penal authorities overburdened by the highest per capita incarceration rate in the world. As the number of convicts explodes, so do the costs.
'Since 1980, the state and federal prison population has increased from 316,000 to 1.1 million," said Reynolds. "By the year 2002, the inmate population is expected to increase by another 43 percent .... The expense has reached about $25 billion a year, or $250 a year for every household in America. One of the most obvious proposals to reduce the cost of criminal justice is to increase the amount of productive work by prisoners." Senator Phil Gramm (R-TX) has proposed that federal prisoners pay 50 percent of their annual support through prison work. Rostad predicts that "Up to 60 to 80 percent [of wages paid prisoners in private industries programs] can end up going back to the state."
So far that scenario seems largely hype. In 1995, the Washington state legislature, for example, appropriated over $19 million to the DOC's correctional industries for the 1995-97 biennium -- $9.5 million a year to ensure that 300 prisoners are employed at minimum wage jobs. The money goes to pay the staff salaries and benefits of the bureaucracy set up to oversee the prison industries program. In essence, the state is spending more than $30,000 a year to ensure each prisoner earns $5-7 an hour, with the state getting 20 percent of all paid wages back in the form of its "cost of corrections" deduction. Prisoners in Class I industries would have to gross at least $160,000 a year for the state to break even.
Nor does the DOC's prison industries budget include the salaries of the additional guards hired to provide security and supervision of the prisoner workers. Nor does it cover capital construction costs, such as the $5 million spent by the DOC to house MicroJet. And in addition to the direct expense to taxpayers, the loss of jobs in the community means a declining tax base of revenues coupled with the loss of property taxes businesses such as MicroJet would otherwise be paying if they were not housed in prisons.
Our Tax Dollars at Work
Prisoners can and should be given the right to perform meaningful work for decent wages and the opportunity to gain job skills and earn money. A sane program that would serve both society's and prisoners' interests would require that:
prisoners keep the wages they earn, subject to the same deductions as any other citizen;
prisoners be paid the same wages as free world workers in comparable industries;
prisoners learn job skills that would help them get decent jobs on release;
prisoners have the right to unionize and bargain freely;
products be labeled to indicate that prison labor was used;
the use of prison labor to break strikes or replace striking workers would be outlawed; and
prisoners be allowed to live up to financial responsibilities to those on the outside.
Such a program would pay off in lower recidivism without driving down wages on the outside.
The right-wing drive to make prisons pay--while racking up a nice profit for industry--fits well with the continuing transformation of America into a nation of small government, big corporations, and big prisons. And just like the welfare bill, it gives the public the false sense that meaningful reform is taking place. Meanwhile it takes pressure off a system which cannot provide enough decent jobs and uses incarceration as the remedy of choice for poverty, unemployment, poor education, and racism. If you've lost your job in manufacturing, garment or furniture fabrication, telemarketing or packaging, it could have simply been sentenced to prison.
[I would like to thank Terry Allen and Tom Sowa for their assistance in researching portions of this article, which originally appeared in Covert Action Quarterly, 1500 Massachusetts Ave NW #732, Washington DC 20005. Subscriptions are $26/year.]
1. Jeff Nesmith, "Prison Job Expansion Stirs Concern," Atlanta Journal and Constitution, Sept. 18, 1996, p. A7.
2. Knut A. Rostad, president of the Enterprise Prison Institute, testimony before the House Judiciary Committee Subcommittee on Crime, Sept. 18, 1996.
3. Nesmith, op. Cit.
4. Rostad, op. Cit. The figure of 25 states comes from Joyce Price, "License Plates Not All That Inmates Make," Washington Times, April 17, 1996, p. A6.
5. Dr. Morgan O. Reynolds, Ph.D. "The Economics of Prison Industries," testimony before House Judiciary Committee Crime Committee on the Economics of Prison Industries, Sept. 18, 1996.
6. Edwin Meese, "Let Prison Inmates Earn Their Keep," Wall Street Journal, May 1, 1996.
7. Ibid In fact, neither the Civil Rights of Institutionalized Persons Act nor the habeas corpus provision has anything to do with the issue of prison labor litigation.
8. Boeing's 1995 profits rose 66 percent to $856 million with sales of almost $20 billion. At $1.66 million a year, Boeing's Frank Schrontz was the state's highest CEO. Meanwhile from 1989-95 the number of workers fell from 107,000 to 95,000. (Byron Acohido, "Top 5 Revenue Generators Hold onto Their Rankings," Seattle Times, June 11, 1996, p. G5.) This trend continues as Boeing announced its proposed merger with McDonnell Douglas in December, 1996.
9. Ken Silverstein, "The New China Hands," The Nation, Feb. 17, 1997, p.12.
10. Stanley Holmes, "Produce a Faulty Part, Be Punished," Seattle Times, May 26, 1996, p. A15.
11. They utilize a relatively modern technology that forces water through small nozzles at 55,000 pound per square inch to precision cut metals, plastics, ceramics and other materials. (MicroJet promotional materials.)
12. MicroJet hiring application.
13. Dan Pens, "Microsoft Out-Cells Competition," Prison Legal News, April, 1996, p.3.
14. WSR, a medium security prison built in 1908 houses about 730 prisoners.
15. Revised Code of Washington, 72.09.111(1)(a).
16. Revised Code of Washington, 72.111.
17. Tom Sowa, "Paycheck Deductions Make Inmates Hone Subtraction Skills," Spokesman Review, Feb. 22, 1996, p. Al.
18. Interview with Chris St. Pierre, Sept. 1996.
19. Interview with former industry worker, Sept. 1996.
20. As part of a recent "get tough" legislation, Washington prisoners are charged fees for watching TV (whether they have access to one or not), schooling, family visits, some medical care, etc., as well as such small luxuries as coffee and tobacco. Those too poor to pay either have the fees deducted from monetary gifts or go without.
21. Interview with Elliot Bay employee, Feb. 1996.
22. Interview with Chris St. Pierre, Sept. 1996.
23. Although there are no national figures available, at WSR, of the 8 MicroJet workers 4 are lifers; as are 12 of the 15 who work for Redwood.
24. Reynolds, op. Cit.
25. Ibid. [Edwin Meese, "Let Prison Inmates Earn Their Keep," Wall Street Journal, May 1, 1996.]
26. "Forced Workforce," Dollars and Sense, July/Aug. 1995, p. 4.
27. Tom Sowa, "Companies Find Home Inside State Prisons," and "Paycheck Deductions Make Inmates Home Subtraction Skills," Spokesman Review, Feb. 22, 1996, p. Al.
28. Interview with former industry employee, Sept. 1996.
29. Interview, Oct. 4, 1996.
30. Interview, Oct. 4, 1996.
31. David Frum, "Working for the Man," The American Spectator, August 1995, p. 48.
32. Reynolds, supra.
33. 1995-97 State Budget Appropriation, Washington state legislature.
34. Dan Pens "Microsoft Outcells the Competition, Prison Legal News, April 1996, p.1.