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? US industry is now in the throes of a “reshoring” trend:
“Next year we’re going to bring some production to the US,” Apple
(NASDAQ: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 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 United States have remained flat, 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 US Bureau of Prisons. It is owned wholly by the US 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
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 US companies can bring jobs back to the US making products no longer manufactured in the US,” 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
(NASDAQ:SBUX), and Costco
(NASDAQ:COST) subcontractors, and helped build a Wisconsin Wal-Mart
(NYSE: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.
“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.
one, "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.
Follow Justin Rohrlich on Twitter: @chickenalaking
No positions in stocks mentioned.
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