Manufacturing Jobs lost to Federal Prisoners

story first appeared on Associate Press

On the outside, Unicor, with its big oaks and magnolia trees, looks like it could be part of a landscaped industrial park. Step a little closer and it's clear the apparel shop lies in the middle of a medium-security federal prison in east Alabama.

The factory and those like it that employ convicted felons are at the heart of a simmering debate about whether prisons should be siphoning away jobs — at much lower wages — that could be filled by those who need them during the nation's toughest period of unemployment in decades.

Congressional Republicans, a handful of Democrats and private-industry critics want to clamp down on Unicor, the trade name for Federal Prison Industries.

Almost 13,000 inmates working in federal lockups around the country for a few dollars a day make everything from military uniforms to office furniture to electrical parts that are sold exclusively to federal agencies. With annual revenues that reached $900 million last year, Unicor is the federal government's 36th-largest vendor.

Corrections officials say the program teaches prisoners invaluable job skills and personal discipline that help cut down on their return to prison. Inmates who work in the program are 24 percent less likely to commit more crimes than other prisoners after being released, they say.

Philip J. Sibal, senior deputy assistant director of Federal Prison Industries, told a congressional committee earlier this year that althought Unicor operates as a business, the benefit is inmates who are trained in marketable job skills so that they can return to the community as productive members of society.

But Misti Keeton's eyes welled with tears at the thought of losing her job to a convict. She sews military apparel in the west Alabama town of Fayette at American Power Source. The company is laying off about 50 workers at her plant and another one in Columbus, Miss., after losing a contract to make Air Force exercise garb to Unicor.

Critics of the program say Unicor undercuts private companies because of lower operating costs and laws that require federal agencies to use inmate-produced products when able.

Inmates in the Talladega prison factory are paid by the pieces of clothing they complete and average around $150 a month, which goes into an account at the prison. At American Power Source, workers make $9.25 an hour average, or about $1,480 a month based on a 40-hour week.

Federal prisoners, though, haven't taken huge numbers of jobs away from private industry. Private groups supporting limits on Unicor's operation have documented only 300 or so layoffs directly linked to private companies losing work to federal prisoners, all at four textile plants in Alabama and Tennessee.

And, though Unicor doesn't have to pay benefits like many private employers, Talladega plant manager Robert Bynum said the factories face a challenge other businesses don't: Making quality products with convicted felons, many of whom don't know how to work. He says many have never had a job.

Correctional officers are stationed all around the prison, but not inside the factory unless needed.

The tension between private jobs and rehabilitating prisoners has hounded the prison industry program since it began under President Franklin D. Roosevelt during the Great Depression in 1934, when the national unemployment rate was 22 percent.

Back then, the American Federation of Labor opposed creating a prison-based manufacturing network, arguing it would suck jobs away from the private sector at a time when working people needed every job they could get. The arguments today against Unicor are similar as the nation tries to escape lingering high unemployment following the worst recession since before World War II.

Federal agencies are now required to purchase items when possible from Unicor. However, Rep. Bill Huizenga, R-Mich., is the primary sponsor of legislation to change that.

Among other things, the proposal that has drawn bipartisan support would subject prison factories to direct competition with private business by removing a requirement that makes Unicor the "mandatory source" for some products for government agencies.

The House passed such legislation in 2003 and 2006 before it stalled in the Senate both times; this year's version got stuck in the committee that held the hearing where Sibal spoke in June.

John M. Palatiello of the Business Coalition for Fair Competition, which supports the bill, says there is still a good opportunity to get something done.

But with Unicor plants at 66 prisons nationwide, critics say prisoners are doing work that law-abiding citizens could be performing. The operation isn't nearly as big as just a few years ago because the sluggish economy and tight budgets have reduced government orders, forcing the Bureau of Prisons to close or downsize 43 Unicor factories nationwide.

James Hamm isn't following the Unicor debate closely, but he knows all about prison factories: He's serving 38 years for bank robbery at the Talladega Federal Correctional Institution, which houses 1,050 prisoners. Hamm is among the 210 inmates who produce military apparel in a 30,000-square-foot factory at the prison.

Hamm, 34, has used prison wages to pay his court-ordered fine of $1,200, and he earned the high school equivalency degree that was required as part of his participation in Unicor. He said the prison job has taught him about hard work and responsibility — things he didn't know anything about on the outside.

About 130 miles away on the other side of Alabama, Keeton does the same thing at American Power Source.

Keeton sympathizes with the need to rehabilitate prisoners in a way few others might — she's a former inmate herself. Keeton served time at a state prison on drug-related charges but is now laboring in the same building where her mother worked for 27 years for a different apparel maker.

New York Pays Inmates for Workers' Comp Claims

Story first appeared on Business Insurance.

An audit found that New York's State Insurance Fund paid workers compensation benefits to incarcerated felons, but examiners could not conclude whether private insurers and self-insured employers also paid benefits to any inmates.

The State Insurance Fund improperly paid seven state prison inmates $36,000, according to an examination conducted by the New York State Comptroller. Inmates jailed on felony convictions are not eligible for workers comp benefits in New York.

These payments are indefensible and should have been stopped. The Workers' Compensation Board owes it to businesses and taxpayers to put stronger internal controls in place. New York state businesses can't afford to pay higher insurance premiums to cover the cost of these inappropriate payments.

The comptroller's office found the improper workers comp payments by cross-checking work comp claimant records with Department of Correction files for benefit payments made during the three-year period that ended last September.

The comptroller said another 193 inmates also may have been inappropriately paid benefits, but examiners could not say for certain because their benefits are paid by private insurers and self-insured employers.

However, the New York Workers' Compensation Insurance Board could assist both itself and the State Insurance Fund as well as the more than 1,600 private and self-insurance companies by performing a periodic match of claimant and inmate files.


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