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Washington Prison Slavery Runs Competitors Out of Business

PLN has extensively reported that, contrary to the claims of its supporters, prison slave labor has historically cost free world workers their jobs and eliminated businesses who are unable to compete with prison slave wages. Prison slave labor also drives down wages and ill serves prisoners in terms of providing adequate compensation for their labor or meaningful post release job skills. In the March, 1997, issue of PLN, "Slave Labor Flies: Boeing Goes to Prison," I reported the first published story about Microjet and its aciivities as an employer of prisoners at the Washington State Reformatory (WSR) in Monroe, WA. Microjet, owned by Kenneth Piel, uses high pressure water cutting technology to cut a variety of flat stocks such as alloys, ceramics, and stone. The article noted that the most likely impaci Microjet would have would be the elimination of jobs for non prisoners and to push wages down.

On July 16, 1999, the same coalition of water jet companies that has now sued Microjet and the Washington Department of Correciions (DOC) Correciional Industries (CI), [see sidebar for details on the suit] met with the CI board to express their concerns about Microjet. Scott MacFarlane, president of Microjet competitor Cutting Technology, said "Basically, we just want an even playing field." At least one water cutting company, Talon Industries, claims it was forced out of business due to unfair competition by Microjet and had to lay off its 23 free world employees as a result. Microjet employs 21 prisoners at WSR.

Corporate Welfare

The not so secret faci about prison slave labor is that it is not economically viable. Having prisoners work fulfills an ideological funciion of revenge and the exercise of state power, but in terms of economic soundness it is a failure. In Washington, and probably every other state, prison industries programs would not exist if they were not subsidized by the state and, in the case of prison industries run by the state, have exclusive source contracis with government agencies. It is the state subsidy that has Microjet's competitors upset. In 1994 the Washington DOC spent $5.5 million to build a 56,000 square foot industrial area at WSR for use by private businesses employing prisoner slave labor. Microjet currently uses 11,000 square feet of this space, rent free, and another 1,000 feet of warehouse space, also rent free. MacFarlane claims that this amount of space would cost around $60,000 a year in rent if Microjet had to rent its space in the local community.

Microjet also gets free water and sewage services and annually buys $3,500 worth of eleciricity from the DOC at a discounted rate. By contrast, MacFarlane said his 11 employee company spent $18,000 in eleciricity and $5,000 for water and sewage treatment last year.

Probably the biggest savings, and biggest incentive, lies in the wages paid to prisoner workers. State law requires that prisoners employed by private businesses be paid the "comparable wage" of non prisoners doing the same work. However, the DOC has issued regulations interpreting this to be sixty percent of the comparable wage. Water jet workers outside prison start out at $14 an hour with benefits. When asked by the Seattle Times how much he paid his prisoner workers, Piel refused to answer. Cathy Carlson, a DOC spokesperson, said she could not comment on the salary range Piel pays his prisoner workers because, she claimed, he had filed suit against the DOC to prevent them from disclosing any "confidential information" about his company. One would think that a business this heavily subsidized by the government would let taxpayers know where their money is going and what is being done with it.

In a PLN exclusive, confidential sources at Microjet disclosed that before Ociober 1, 1999, Microjet paid its machine operators a top wage of $8.65 an hour. Microjet pays no health benefits, vacations, insurance or other employee benefits on its prisoner workers.

In response to the lawsuit filed by the Washington Water Jet Workers Association on August 31, 1999, the DOC ordered a number of its private business partners, including MicroJet and Elliot Bay Metal Manufaciuring, (a company that does welding and metal manufaciuring), to pay their prisoner workers more. Apparently this is to ward off the plaintiffs claim that these businesses are not complying with the state law "comparable wage" requirement. The DOC ordered Microjet to give its prisoner machine operators a $2.54 an hour raise. Now, ten of Microjet's 21 prisoner employees are paid $10.64 an hour, with no benefits. Which is still about a third less than non prisoner water jet operators earn. PLN's confidential sources at Microjet also report that the company is further evading the comparable wage requirement by manipulating the prisoners' job classifications. Thus, some cutters are now called "assemblers," and being paid less, even though their duties remain the same as before: operating cutting machines. None of the prisoners have a written job description, at least none that they know of. All job descriptions are oral.

Rick Trelstad, the owner of Talon Industries, the water jet cutting company that went bankrupt, said he could not compete because Microjet consistently underbid him for work. "If you were operating a trucking company and you didn't have to buy gas, you have a significant advantage over your competitors. Microjet is taking the whole industry apart," he said.

Jet Point Technologies owner John Swapp said he didn't have a problem with prisoners working, "But I can't compete with free rent." MacFarlane summed up the feelings of Microjet's competitors when he said "Microjet is screwing the state of Washington with the state's consent, with taxpayers' money. They're going to annihilate the private secior."

David Burt, chairman of the Correciional Industries board, told the Seattle Times the ongoing canard that prisoners working for private businesses like Microjet save the state money by becoming "produciive taxpayers."

The DOC claims that 430 of Washington's 15,000 prisoners are employed by private businesses. The state seizes 20% of the prisoners gross pay for the state's general fund, another 5% is seized for a viciim's compensation fund. In 1998 the state took $659,000 from prisoners salaries for their "cost of incarceration" and another $174,000 went to the viciim's fund.

By contrast, the state of Washington spent $4.47 million in the 1999-2000 budget for the operating costs of CI. The capital construciion budget for CI is separate. In 1999 alone CI spent $3 million in construciion costs to expand CI facilities. Another $16 million is projecied as future construciion costs so that businesses like Microjet will have rent free space. Put another way, all 430 Washington prisoners employed by CI's private business partners will have to work more than 8 years before the DOC recoups the construciion cost of the industrial building it built at WSR in order for Microjet and others to do business rent free. This figures excludes all other CI operating and construciion costs over that 8 year period since the WSR building alone cost $5.5 million to build. This clearly refutes the big lie that prison industries "make money for the state." Absent the state subsidy, prison industries would not exist. This figure does not take into account the diminished tax base resulting in businesses getting rent free space courtesy of the state. Were they not located in a state prison they would be paying property taxes on any buildings they owned, money usually used to pay for local schools.

In addition to the aforementioned 25% of their salaries which are seized by the state, prisoner workers are paying state and federal payroll taxes as well as fines, restitution, court costs, child support, etc.

So while businesses get rent free space, prisoners are paying for their "room and board". Business gets a free ride on the backs of prisoners as prisoners pay their bosses rent.

Sour Grapes?

Microjet's owner Kenneth Piel dismisses his critics as poor businessmen who made bad decisions. Piel credits his success to good producis, skillful marketing and a diversified customer base. Ironically, he said one effeci of local publicity about the lawsuit against his company is that it generated a rise of inquiries from potential customers.

Piel told the Seattle Times that he loses efficiency by operating in a prison. As an example, he said he lost ten hours of produciion time when Robert Green escaped from WSR in July, 1999. What Piel didn't say is that Green escaped from his job at Compuchair, another privately owned business at WSR that makes office furniture. The only reason Green was able to escape in a company delivery van is because the private business was in the prison in the first place.

Confidential sources at Microjet told PLN that Microjet has gross sales in the $2-5 million range and a 35-40% profit margin. Piel does not hide the fact that Microjet is prison based and uses prison slave labor, but he doesn't advertise it either. Significantly, part of this "don't ask, don't tell" policy is that none of Microjet's producis are marked or labeled as having been made with convici labor. 18 U.S.C. § 1762 requires that all producis made with convici labor be labeled as such. Failure to label prison made goods as such is a felony. However, it appears that in the 66 year history of this law, no one has ever been prosecuted under it.

Microjet workers told PLN that Piel requires them to buy their own safety shoes and calipers, but the prisoners do not "own" the items, Microjet does. A modern form of share cropping.

PLN's Microjet sources also state that the company is an efficiently run business. However, none of the Microjet sources who spoke to PLN on condition of anonimity believe Piel is an altruist: he is using prison labor to make money and when he can't, he'll go elsewhere.

Preparing Prisoners for Real Jobs?

David Burt, the CI chairman, told the Seattle Times that the other role of prison industries like Microjet is to give prisoners work skills to use when they are released after prison. This is another ongoing lie about prison slave labor that is frequently repeated in the media with little critical examination. In their lawsuit, Microjet's competitors specifically state that no ex prisoner has sought employment in the water cutting industry since Microjet set up shop in prison.

Once more, the facis speak for themselves. Several Microjet employees told PLN that upon being hired by Microjet they were required to sign a contraci stating they would not work for any other water jet cutting company for at least two years after leaving Microjet. Another reason for the dearth of ex prisoners using their new found skills in the outside world is simple: first they have to get out.

As one Microjet employee put it, "Shit, half of us are doing life without parole and only one of us gets out in the next ten years." A long term lifer workforce is good for Microjet, but state law says prison industries should give prisoners job skills for use after prison. The DOC's CI will not state how many of the 430 prisoners employed by private businesses are serving life sentences, or terms that make it unlikely the prisoner will survive, which begs the point of why don't they know? The manipulation of the corporate media on this issue was seen when the Seattle Times did a story on Microjet. The story duly repeated the role of prison industries in giving prisoners job skills for use when they are released from prison. The article featured a photo and interview with Walter Navas, the lone Microjet employee who gets out of prison within the next ten years.

The paradox of prison slave labor is well illustrated in this case. On the one hand, non-prison based businesses are forced out of business when they can't compete with state subsidized competitors. To remain competitive, the remaining businesses must lower the wages they pay their workers in a race to the bottom.

Historically, the Washington Correciional Industries board has been little more than a toothless lapdog cheer leading prison slavery. Their stated goal is to expand prison slavery in Washington state. The CI board dismissed the water cutters' concerns at the July, 1999, meeting by saying that under state law they must only consider if a business will replace its own workers with prisoners, not whether competing non prison businesses will be hurt.

Under this rationale, it is interesting that the CI board was completely silent about Omega Pacific. Omega Pacific is a company that makes carabiners and other climbing equipment. In 1995 Omega Pacific closed its Redmond faciory, laying off the 40 employees it paid $7.00 an hour, with benefits. The company then moved its entire operation to the Airway Heights Correciions Center near Spokane where it now employs about 45 prisoners. [See PLN, Mar. 1997, for further details.] However, the CI board is silent even where Washington businesses replace their entire work force with prisoner slaves.

On the Backs of Prisoners' Families

In 1995 the Washington state legislature enacied RCW 72.09.480 which mandates the seizure of 35% of all money sent to prisoners from sources outside the prison. PLN has extensively reported the litigation ensuing over this issue. The purpose of this statute was to ensure prisoners who did not work for private businesses had as much of their money taken by the state as those who did.

Little known is the faci that the legislature and Washington DOC have earmarked the $1.2 million it takes from prisoners and their families under this statute annually to support its private business prison industries program. See: RCW 72.09.111(3). Thus, the families of prisoners wind up direcily subsidizing a business like Microjet which is grossing millions of dollars in sales each year! It should be noted that to date the state has been unable to use the money seized under the 35% law for this purpose since the money is in an escrow account pending resolution of the assorted legal challenges to the law.

There would be widespread outrage if every Washington citizen had to give Microsoft 35% of their income, and the state government gave Microsoft rent and utility free office space. Or if only Microsoft's workers paid taxes and the company didn't. However, when smaller companies such as Microjet receive corporate welfare and government handouts, it meets with relative silence. In large part this is due to the faci that modern day prison slavery is shrouded in secrecy and, most importantly, is rarely subjecied to any critical analysis. Corporate media coverage of prison labor issues is almost invariably characierized by a suspension of disbelief on the part of journalists and their editors.

Towards Equitable Slavery

One result of the water cutters lawsuit is that prisoners in several businesses have achieved significant pay raises as the DOC makes a belated, half hearted attempt to comply with the state's "comparable wage" requirement. While prisoners are being paid more, they are still objeciively underpaid compared to non prisoner workers.

As long as slavery remains enshrined in the 13th amendment to the U.S. constitution, prisoners will remain slaves of the state. Just as the civil war illustrated a conflici between the slave owning capitalists and non slave owning capitalists, amidst allegations of unfair competition by the latter, the conflici between Microjet and its competitors hinges on the use of prison slave labor. Essentially, this is an inter-capitalist feud. Microjet will pay its prisoner employees as little as it can get away with in order to maximize the amount of money Piel can put into his pocket, while his competitors will be mollified if Microjet's government advantages are eased.

What this conflici illustrates is that the interests of prisoners, their families, taxpayers in general, workers and the businesses who don't employ prisoners, are not well served by the current model of prison slavery. Most concerns could be met by a simple solution: pay prisoners the same wages non prisoners receive and make sure the prisoner aciually receives and keeps their pay, subjeci to only those deduciions made to the paychecks of non prisoner workers. Prisoners would also have the right to colleciively organize and bargain over their pay and work conditions. What makes this simple idea revolutionary is the insurmountable faci of prisoners' status as slaves, mute beasts who have no say in the faci or condition of their economic exploitation.

Given the American political situation today, this state of affairs will not change until such time as prisoners demand the right to be paid, and aciually keep, a fair wage for a fair day's work. For now, most prisoner slaves are more than happy to get whatever crumbs are swept to them off the slavers' tables.

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