A Free Market System? Not When It Comes To Prison Labor

By @TrishaMarczakMP |
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    (Mint Press) – As long as the prison population remains substantial, it seems the U.S. military will have a uniform supplier. That is, at least, if Federal Prison Industries (FPI) jumps at the opportunity to take the government contract — one they are guaranteed to win.

    While it may seem like a free market, that’s not exactly the case when FPI, otherwise known as UNICOR, is involved. According to a 1930 federal law, the FPI gets first bid when it comes to government contracts, regardless of the price they offer. All the while, the prisoners who are put to work aren’t held to fair compensation rates, earning well below the minimum wage.

    The impact of this policy is set to play out in Alabama, the home state of private businesses American Power Source and American Apparel, which has held the government contract for the production of military uniforms. With its contract set to expire in October, FPI is likely to move in and seal the deal in its favor, a blow to those employed at American Power Source.

    This has led to taxpayer money funding contracts with the prison industry, often at a higher rate than the government could pay out on the private sector market. In the case of the military uniform contract, FPI would charge the government 15 percent more per uniform than American Apparel.

    During a time of high unemployment and concern over government spending, why isn’t Congress able to drive through a bipartisan effort to reform the system?


    The jail industry: big money

    According to the Prison Policy Initiative, FPI, working under the name UNICOR, has more than 22,500 prison workers. The minimum wage for UNICOR workers is a measly 23 cents-per-hour — the maximum wage is set at $1.15.

    UNICOR has it made, really. It’s not held to the same minimum wage guidelines as the private sector, and it’s given a free pass to government contracts, without having to offer competitive prices. Any threat to the operation would be a big blow to the company, which last year raked in a $900 million worth of revenue, according to an August report in the Huffington Post.

    In a true public relations spin, UNICOR touts itself as a company dedicated to preparing prisoners for working life, post prison life.

    “It is the mission of Federal Prison Industries to employ and provide job skills training to the greatest practical number of inmates confined within the Federal Bureau of Prisons; contribute to the safety and security of our Nation’s federal correctional facilities by keeping inmates constructively occupied … ” the website states.

    If there’s one thing UNICOR can rely on, it’s a large workforce. The prison population in the U.S. is considered the most robust in the world. In 2009, it reached an all-time high with 2.3 million people locked up. That equated to a ratio of 1 in every 100 Americans. In the early 2000s, UNICOR had roughly 22,560 prison employees on the docket — the same year it received $388 million in Department of Defence contracts.

    UNICOR itself isn’t the only body to profit from its prison labor. It works with a number of private companies, which in a roundabout way benefit from low-wage labor that falls well below the national minimum wage of $7.25 an hour. Those companies include: Filtration Services, Inc., Nightingale, HumanScale, OEI, Uvex and 2/90 Sign Systems.

    Its move into offering services to the private sector began in 1999, nearly seven decades after the FPI was established by Franklin D. Roosevelt. Since then, UNICOR operations have skyrocketed, with more private companies available to cater to.


    Attempts to reform

    It seems like a black and white issue — one that would draw support from both sides of the aisle. But as Rep. Bill Huizenga (R-Mich.) has discovered, it’s not that easy.

    “This bill gives the taxpayer the greatest value for their hard-earned money by forcing federal agencies to bid for fair and reasonable prices and for products that best suit their needs,” Huizenga said in 2011. “The bill preserves market access for these products or services to their hard-working men and women of our districts. This is simply one more easy, common sense way to preserve jobs and help restore economic security for America.

    Huizenga sponsored the bill, introduced in 2011, to repeal the 1930 federal law and open the doors for private sector competition with FPI for military contracts. And while his co-sponsors have included both Republicans and Democrats, the bill hasn’t gone very far.

    Brian Patrick, communications director for the Congressman, said in an interview with MintPress that Huizenga has no intention of slowing down his efforts to reform the current practice by which government contracts are awarded. While the issue has been within Congressional view since 2006, Patrick said turnover in the Legislature has slowed the process down.

    “My boss finds this issue particularly damaging to small businesses,” Patrick said, adding that many of the sectors UNICOR covers, including solar panels and data entry, should be put back in the hands of the private sectors.

    Patrick said Huizenga is not in favor of breaking down UNICOR, but simply providing an alternative system that ensures private sector businesses get a fair shake on government contract deals.

    “We’re not trying to eliminate UNICOR, we’re trying to make sure that small business can compete and get bids on these contracts,” Patrick said. “UNICOR is not always the best avenue to pursue.”

    Bill H.R. 3634 would repeal the 1930 federal law in the sense that it would create a more competitive market. Titled the Federal Prison Industries Competition in Contracting Act of 2011, it would essentially do just that.

    In a government summary of the bill, it describes provisions that would be put in place, including one in which FPI would have to prove that the impact to the private sector competition would be minimal.

    “… Revises rulemaking procedures for approving new FPI products or services,” it states, and “requires the Chief Operations Officer of FPI to submit a proposal to the Board of Directors of FPI with a detailed analysis of the probable impact on the private sector of a proposed expansion of sales from such new products or services.”

    The last major action on the bill took place back in January, when it was referred to the Subcommittee on Crime, Terrorism and Homeland Security.

    So, why was that its final resting place, and is it going to make its way onto the main stage? Not likely. While the military contractor uniform may seem like a slam dunk, the bill would do a whole lot of damage to UNICOR and its operations. And they’re not likely to go down without a fight.

    Until there is a change, taxpayer funds will continue to benefit UNICOR, a company acting outside of the rules of a free market economy, charging more for products, while relying on prisoners for cheap labor. In the meantime, small businesses continue to suffer, and unemployment hovers around 8 percent.

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