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Paying Texas Prisoners Undermines Outside Businesses
Breaking with its longstanding tradition of using prison slave labor, the Texas Department of Criminal Justice (TDCJ) is paying certain prisoners, on several units, for working in industry programs. The upside is that some prisoners are being compensated for their labor and money is being added to the state’s General Revenue Fund as a result of deductions from their wages. The downside is that at least one Texas business has been forced to shut down part of its operations due to prison-based competition.
The Prison Industry Enhancement program (PIE) was created by Congress in 1979 (see: 18 U.S.C. § 1761). Its goal was to encourage businesses to use prison labor to train prisoners in jobs so as to increase their chances for success upon release. Reduced labor and overhead costs made the PIE program very attractive to a variety of free world industries. The biggest concern was that PIE programs could be implemented in such a way as to jeopardize the jobs of free world workers. This is exactly what happened to one Texas business.
Just under three years ago, Direct Trailer and Equipment Company (DTEC) implemented a PIE program at the Michaels Unit in Tennessee Colony, Texas. DTEC paid 53 prisoners minimum wage to construct flatbed trailers, which were sold on the open market for a sizeable profit. The company paid TDCJ just $1.00 per year to lease building space at the unit, and $1,100 per month to use TDCJ equipment.
DTEC even had an international twist to its operations. According to a sales brochure, the company provided its customers with phenomenal savings by “utilizing the buying power of a major corporation like [China International Marine Containers] and assembling the trailers in the U.S. at Tennessee Colony, TX, a state correctional facility.”
In fact, DTEC’s use of prison labor was so successful that it put a competitor, Lufkin Industries’ Trailer Division (LITD), out of business. “We sell a lot of our trailers to distributors across the country,” said Lufkin vice-president Paul Perez. “They alerted us that we had a direct competitor that was marketing a trailer similar to ours at a lower price.”
LITD officials were previously unaware they had any competition in the trailer construction market. “We started asking, ‘Who are they and why are they able to sell so low?’” said Perez.
Neither DTEC nor TDCJ seemed keen on providing Lufkin with any answers. According to Perez, “We started hearing last year that it was prison labor, but were unable to get proof until this summer [2007]. It took weeks and weeks of persisting, but we finally got permission to visit the work site and that was our proof.”
It was a “double whammy” Perez said of the use of prison labor to assemble Chinese-made trailer components. The United States criminalizes the importation of goods made with any type of convict labor from other countries, yet it is happy to distribute and export goods made and assembled with American convict labor. Apart from the savings from using incarcerated workers, DTEC does not have to pay retirement, health insurance or other benefits provided by most outside businesses. LITD, on the other hand, employed 150 free world workers at a cost of $7 million in 2007.
“They had some very favorable terms in addition to the labor,” stated Perez. “We had overhead, utilities, taxes, upkeep maintenance....We shouldn’t be competing against a state entity.”
Texas law supports Perez’s position. The Texas Administrative Code states, “...the [prison] industry project shall not result in displacement of free world workers or the loss of existing jobs of a specific type provided by the employer in this state.” 37 T.AC. § 245.21
But not surprisingly, Texas officials managed to screw it up. State Senator Robert Nichols and Agriculture Commissioner Todd Staples concluded that responsibility for investigating the possibility of negative impact on the public job sector fell to the Texas Workforce Commission (TWC). “We did our own investigating,” said Nichols. “We found out they did not validate” the PIE programs.
Nichols issued a letter on December 21, 2007 that called for an immediate halt to DTEC’s prison industry program. He raised concerns with the Private Sector Prison Industries Oversight Authority and the TWC. But his efforts came too late, as Lufkin was forced to shut down its trailer division three weeks later, on January 14, 2008, resulting in the displacement of 150 non prisoner workers.
“They [Lufkin Industries] survived the Great Depression, World War II, and numerous recessions,” said Nichols. “But they couldn’t survive competition subsidized by prison labor.”
The TDCJ’s PIE program is one of the best-kept secrets in the Texas prison system. The vast majority of Texas’ 170,000 prisoners work long hours for zero pay. Many of these jobs require prisoners to work 12-hour shifts. In some cases, field-hand prisoners perform back-breaking labor in the blistering summer sun and freezing winter cold. At least prisoners in PIE programs are being paid for their work – even though they keep only a small portion of their wages and generate profit for private companies.
At the Lockhart Secure Work Program Facility, run by private prison contractor GEO Group, 253 prisoners are employed by Chatleff Controls to make parts for air conditioners; 31 others make computer components for OnShore Resources. Atrium Company employs 47 prisoners to make windows at the Coffield Unit. Texas International Hardwoods and Veneers pays 14 prisoner workers at the Ellis Unit.
Currently, the only requirement for implementing a PIE program is that it must be approved by federal officials and the TDCJ’s governing board. Until recently this has been a minor obstacle – especially when a proposed PIE program is accompanied by campaign contributions from the company that wants to use prison labor.
In 2006 there was a push to have prisoners at the Boyd Unit assemble muscle cars from kits for a company called Unique Performance. About the same time, prisoners at the Telford Unit were being considered for manufacturing uniforms for U.S. postal workers. Neither effort was successful, despite a $1,000 contribution by Unique Performance to Governor Rick Perry’s re-election campaign.
This is partly because prison PIE programs are meeting with resistance. “We’re exporting jobs from all over the country and now we’re going to take the jobs that are left here and turn them over to prison labor at half, or less, the wages you’d expect to pay someone on the open market,” complained Ron Spurlock, a United Auto Workers (UAW) representative. The UAW represents 5,000 union members in Texas alone.
The Texas AFL-CIO describes PIE programs as “a new era of disregard for free-world workers.” But companies are unlikely to relinquish their windfall profits through the use of prison labor anytime soon.
“This is not meant to displace workers in the free world,” said GEO Group spokeswoman Panda Taylor. “It is meant to reduce recidivism.” Plus generate profit, of course.
PIE industry programs are a plus from the prisoners’ perspective. The law requires that PIE employees receive wages comparable to outside workers in the local area. This is usually determined to be minimum wage, regardless of what comparable free world employees earn. Of that wage, 80% goes to various deductions, including victim restitution and incarceration costs. Prisoners receive around 20% of their wages, which is placed in an account for when they are released. That can result in over $2,000 annually for a prisoner who otherwise would get only $50 and a bus ticket after years of incarceration.
Chatleff Controls pays its prison workers between $6.00 and $8.00 per hour before deductions. “They do a hell of a job. They’re the best work force I’ve ever had,” said Pete Arciniega, the prisoners’ supervisor.
According to the Texas Workforce Commission, however, comparable free world workers earn an average wage of $12.85 per hour.
Arciniega termed the comparison unfair, because free world employees often get seniority compensation after years on the job. It is unclear whether he meant to imply that Chatleff does not get years of work from its prisoner employees, or does not give them raises over time.
Penny Rayfield supervises the 30-plus prisoners who work for OnShore Resources. “They don’t have vacations; they don’t call in sick,” she noted. But data gathered by the TWC indicates that the $6.00 per hour paid to OnShore prison workers is $4.00 per hour less than comparable free world employees.
Since PIE industries came to the TDCJ in 1993, “We’ve contributed fourteen million dollars to the state from [PIE] programs” said Robert Carter, PIE representative for the Texas prison system. Of course, if the prisoners were paid more the state would get a bigger kickback. This number also ignores the cost to the state for additional guards and security staff and the bureaucracy that oversees the PIE program.
“The idea is very good,” observed State Sen. Robert Nichols. “You have prisoners who don’t have a good opportunity to get a job on the outside. The hope is if they develop those skills in prison, they are likely to become good citizens ....”
Yet Senator Nichols is no fan of PIE programs due to their impact on outside businesses such as Lufkin. “No Texan should lose his livelihood to businesses unfairly subsidized by prison labor,” he said. “I’m all for free trade, but trade isn’t free when you have the taxpayers subsidizing one company at the expense of others.”
From a practical standpoint, the 400 Texas prisoners employed in PIE programs constitute less than one-half of one percent of TDCJ’s total population. The unasked question is who chooses which prisoners get to participate in PIE programs and which have to labor in the fields? A case can be made that unfair labor practices exist on both sides of the fence, though it is doubtful the plight of incarcerated workers will draw much attention outside prison walls. Except when they take jobs away from free world businesses, apparently.
Sources: KETK News 56, Lufkin Daily News, On Shore Resources Newsletter, San Antonio Express News, Tyler Morning Telegraph
The Prison Industry Enhancement program (PIE) was created by Congress in 1979 (see: 18 U.S.C. § 1761). Its goal was to encourage businesses to use prison labor to train prisoners in jobs so as to increase their chances for success upon release. Reduced labor and overhead costs made the PIE program very attractive to a variety of free world industries. The biggest concern was that PIE programs could be implemented in such a way as to jeopardize the jobs of free world workers. This is exactly what happened to one Texas business.
Just under three years ago, Direct Trailer and Equipment Company (DTEC) implemented a PIE program at the Michaels Unit in Tennessee Colony, Texas. DTEC paid 53 prisoners minimum wage to construct flatbed trailers, which were sold on the open market for a sizeable profit. The company paid TDCJ just $1.00 per year to lease building space at the unit, and $1,100 per month to use TDCJ equipment.
DTEC even had an international twist to its operations. According to a sales brochure, the company provided its customers with phenomenal savings by “utilizing the buying power of a major corporation like [China International Marine Containers] and assembling the trailers in the U.S. at Tennessee Colony, TX, a state correctional facility.”
In fact, DTEC’s use of prison labor was so successful that it put a competitor, Lufkin Industries’ Trailer Division (LITD), out of business. “We sell a lot of our trailers to distributors across the country,” said Lufkin vice-president Paul Perez. “They alerted us that we had a direct competitor that was marketing a trailer similar to ours at a lower price.”
LITD officials were previously unaware they had any competition in the trailer construction market. “We started asking, ‘Who are they and why are they able to sell so low?’” said Perez.
Neither DTEC nor TDCJ seemed keen on providing Lufkin with any answers. According to Perez, “We started hearing last year that it was prison labor, but were unable to get proof until this summer [2007]. It took weeks and weeks of persisting, but we finally got permission to visit the work site and that was our proof.”
It was a “double whammy” Perez said of the use of prison labor to assemble Chinese-made trailer components. The United States criminalizes the importation of goods made with any type of convict labor from other countries, yet it is happy to distribute and export goods made and assembled with American convict labor. Apart from the savings from using incarcerated workers, DTEC does not have to pay retirement, health insurance or other benefits provided by most outside businesses. LITD, on the other hand, employed 150 free world workers at a cost of $7 million in 2007.
“They had some very favorable terms in addition to the labor,” stated Perez. “We had overhead, utilities, taxes, upkeep maintenance....We shouldn’t be competing against a state entity.”
Texas law supports Perez’s position. The Texas Administrative Code states, “...the [prison] industry project shall not result in displacement of free world workers or the loss of existing jobs of a specific type provided by the employer in this state.” 37 T.AC. § 245.21
But not surprisingly, Texas officials managed to screw it up. State Senator Robert Nichols and Agriculture Commissioner Todd Staples concluded that responsibility for investigating the possibility of negative impact on the public job sector fell to the Texas Workforce Commission (TWC). “We did our own investigating,” said Nichols. “We found out they did not validate” the PIE programs.
Nichols issued a letter on December 21, 2007 that called for an immediate halt to DTEC’s prison industry program. He raised concerns with the Private Sector Prison Industries Oversight Authority and the TWC. But his efforts came too late, as Lufkin was forced to shut down its trailer division three weeks later, on January 14, 2008, resulting in the displacement of 150 non prisoner workers.
“They [Lufkin Industries] survived the Great Depression, World War II, and numerous recessions,” said Nichols. “But they couldn’t survive competition subsidized by prison labor.”
The TDCJ’s PIE program is one of the best-kept secrets in the Texas prison system. The vast majority of Texas’ 170,000 prisoners work long hours for zero pay. Many of these jobs require prisoners to work 12-hour shifts. In some cases, field-hand prisoners perform back-breaking labor in the blistering summer sun and freezing winter cold. At least prisoners in PIE programs are being paid for their work – even though they keep only a small portion of their wages and generate profit for private companies.
At the Lockhart Secure Work Program Facility, run by private prison contractor GEO Group, 253 prisoners are employed by Chatleff Controls to make parts for air conditioners; 31 others make computer components for OnShore Resources. Atrium Company employs 47 prisoners to make windows at the Coffield Unit. Texas International Hardwoods and Veneers pays 14 prisoner workers at the Ellis Unit.
Currently, the only requirement for implementing a PIE program is that it must be approved by federal officials and the TDCJ’s governing board. Until recently this has been a minor obstacle – especially when a proposed PIE program is accompanied by campaign contributions from the company that wants to use prison labor.
In 2006 there was a push to have prisoners at the Boyd Unit assemble muscle cars from kits for a company called Unique Performance. About the same time, prisoners at the Telford Unit were being considered for manufacturing uniforms for U.S. postal workers. Neither effort was successful, despite a $1,000 contribution by Unique Performance to Governor Rick Perry’s re-election campaign.
This is partly because prison PIE programs are meeting with resistance. “We’re exporting jobs from all over the country and now we’re going to take the jobs that are left here and turn them over to prison labor at half, or less, the wages you’d expect to pay someone on the open market,” complained Ron Spurlock, a United Auto Workers (UAW) representative. The UAW represents 5,000 union members in Texas alone.
The Texas AFL-CIO describes PIE programs as “a new era of disregard for free-world workers.” But companies are unlikely to relinquish their windfall profits through the use of prison labor anytime soon.
“This is not meant to displace workers in the free world,” said GEO Group spokeswoman Panda Taylor. “It is meant to reduce recidivism.” Plus generate profit, of course.
PIE industry programs are a plus from the prisoners’ perspective. The law requires that PIE employees receive wages comparable to outside workers in the local area. This is usually determined to be minimum wage, regardless of what comparable free world employees earn. Of that wage, 80% goes to various deductions, including victim restitution and incarceration costs. Prisoners receive around 20% of their wages, which is placed in an account for when they are released. That can result in over $2,000 annually for a prisoner who otherwise would get only $50 and a bus ticket after years of incarceration.
Chatleff Controls pays its prison workers between $6.00 and $8.00 per hour before deductions. “They do a hell of a job. They’re the best work force I’ve ever had,” said Pete Arciniega, the prisoners’ supervisor.
According to the Texas Workforce Commission, however, comparable free world workers earn an average wage of $12.85 per hour.
Arciniega termed the comparison unfair, because free world employees often get seniority compensation after years on the job. It is unclear whether he meant to imply that Chatleff does not get years of work from its prisoner employees, or does not give them raises over time.
Penny Rayfield supervises the 30-plus prisoners who work for OnShore Resources. “They don’t have vacations; they don’t call in sick,” she noted. But data gathered by the TWC indicates that the $6.00 per hour paid to OnShore prison workers is $4.00 per hour less than comparable free world employees.
Since PIE industries came to the TDCJ in 1993, “We’ve contributed fourteen million dollars to the state from [PIE] programs” said Robert Carter, PIE representative for the Texas prison system. Of course, if the prisoners were paid more the state would get a bigger kickback. This number also ignores the cost to the state for additional guards and security staff and the bureaucracy that oversees the PIE program.
“The idea is very good,” observed State Sen. Robert Nichols. “You have prisoners who don’t have a good opportunity to get a job on the outside. The hope is if they develop those skills in prison, they are likely to become good citizens ....”
Yet Senator Nichols is no fan of PIE programs due to their impact on outside businesses such as Lufkin. “No Texan should lose his livelihood to businesses unfairly subsidized by prison labor,” he said. “I’m all for free trade, but trade isn’t free when you have the taxpayers subsidizing one company at the expense of others.”
From a practical standpoint, the 400 Texas prisoners employed in PIE programs constitute less than one-half of one percent of TDCJ’s total population. The unasked question is who chooses which prisoners get to participate in PIE programs and which have to labor in the fields? A case can be made that unfair labor practices exist on both sides of the fence, though it is doubtful the plight of incarcerated workers will draw much attention outside prison walls. Except when they take jobs away from free world businesses, apparently.
Sources: KETK News 56, Lufkin Daily News, On Shore Resources Newsletter, San Antonio Express News, Tyler Morning Telegraph
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