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Businesses, Members of Congress Not Happy with UNICOR
Kurt Wilson, an executive with American Apparel, Inc., an Alabama company that makes military uniforms, and Michael Marsh of Kentucky-based Ashland Sales and Service Co., found that out after they learned that UNICOR, which runs prison industry programs for the BOP, was considering bidding on contracts for business that their companies already had. A public statement from U.S. Senator Mitch McConnell, who sits on the Senate Appropriations Committee, led UNICOR to change its mind.
Like many other initiatives of the federal government, UNICOR, formally known as Federal Prison Industries, Inc., started off as well-intentioned. Prisoners earning from $.23 to $1.15 an hour are trained to work in factories supervised by BOP staff, where in theory they learn job skills that will help them find employment following their release. However, UNICOR has become not only a job training program but a manufacturing behemoth that employs some 12,300 prisoners and made approximately $606 million in gross revenue in fiscal year 2012 – yet still reported a net loss of $28 million. [See: PLN, Nov. 2013, p.52].
With that kind of size, purchasing power and cheap prisoner labor, it is almost impossible for small businesses to compete. Indeed, several companies have lost federal contracts due to competition from UNICOR, resulting in job losses among freeworld workers. [See: PLN, Feb. 2013, p.42]. This has made some business owners nervous – and angry.
American Apparel has to compete head-to-head with UNICOR on almost all of its contracts with the federal government, and the company said unfair competition from low-paid prisoner labor forced it to close a plant in May 2012 and lay off 175 workers. “We pay employees $9 on average,” Wilson stated. “They get full medical insurance, 401(k) plans and paid vacation. Yet we’re competing against a federal program that doesn’t pay any of that.”
Ashland Sales and Service Co. has been making windbreakers for the U.S. Air Force for 14 years, according to Marsh, and competition from UNICOR is endangering 100 jobs at the company, which is the largest employer in Olive Hill, Kentucky. “That’s 100 people buying groceries. We use trucking companies in the town; buy parts and light bulbs there every day. That’s all lost when prisons take away contracts.”
UNICOR has 81 factories in BOP facilities around the country and does far more than supply products and services for prisons and prisoners’ needs. It manufactures goods in six industry categories – clothing and textiles, electronics, fleet and industrial products, office furniture, recycling, and data entry and other services – with clothing being its mainstay.
In the past, legislation gave UNICOR an advantage in obtaining various federal contracts, but the law was amended by Congress from 2002 to 2005, and again through Section 827 of the National Defense Authorization Act of 2008, to limit that preferential advantage.
Kurt Courtney, director of governmental relations at the American Apparel and Footwear Association, said UNICOR is “a federal program [that is] tanking our industry.... The only way for workers to get jobs back is to go to prison. There’s got to be a better way to do this.”
U.S. Representative Bill Huizenga sponsored a bill in 2011 to do just that – HR 3634, the Prison Industries Competition in Contracting Act. “This is a threat to not just established industries; it’s a threat to emerging industries,” Rep. Huizenga stated at the time. “We know that in the [economic] recovery, many new jobs are coming out of small businesses, and it makes no sense to strangle them in the cradle.”
Manufacturing in America has changed over the decades but UNICOR does not use state-of-the-art manufacturing techniques because it has no need or motivation to do so – even though this means prisoners employed in UNICOR programs don’t receive modern job training that will help them obtain post-release employment.
As for quality, when UNICOR steps outside of its comfort zone and attempts to compete in areas other than prisoner goods and services, it sometimes falls flat. Even though it landed a federal contract to supply helmets for the U.S. military based upon a preferential bidding process, 44,000 of the helmets were recalled in 2010 due to quality issues. UNICOR then won a no-bid contract the following year to produce body armor to be supplied to Pakistan’s military. [See: PLN, Sept. 2011, p.46; Jan. 2011, p.20].
Although the BOP has cited statistics claiming that UNICOR workers have lower recidivism rates, such data has been questioned. In 2013, the Congressional Research Service noted that “... questions about the methodology used in most evaluations of correctional industries means that there is no definitive conclusion about the ability of correctional industries to reduce recidivism.”
John Palatiello, president of the Business Coalition for Fair Competition, said his organization comprised of businesses and taxpayer groups is sympathetic to the BOP’s goals of providing job training to prisoners and reducing recidivism, but that such goals should not be accomplished at the expense of small businesses and their employees who face unfair competition from UNICOR.
HR 3634 failed to pass and was reintroduced on May 22, 2013 as HR 2098, which has 15 cosponsors and is currently pending in committee. Among other provisions, the legislation would require UNICOR to compete for its contracts, “minimizing its unfair competition with private sector firms and their non-inmate workers and empowering Federal agencies to get the best value for taxpayers’ dollars.”
HR 2098 would further require UNICOR’s board of directors to, “not later than September 30, 2014, increase the maximum wage rate for inmates performing work for or through Federal Prison Industries to an amount equal to 50 percent of the minimum wage,” and “not later than September 30, 2019, increase such maximum wage rate to an amount equal to such minimum wage.” However, the bill also provides that up to 80% of prisoners’ gross wages may be deducted for taxes, fines, restitution, family support, a savings fund or other purposes.
Sources: www.money.cnn.com; www.govtrack.us; www.businessinsider.com; “Federal Prison Industries: Overview and Legislative History,” by Nathan James, Congressional Research Service (Jan. 9, 2013)
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