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WI: Competing with prison wages?

By   /   January 14, 2013  /   News  /   2 Comments

FAIR TRADE: Wisconsin’s Badger State Industries manufactures prisoner-made goods. In a tough economy, is prison labor unfairly competing against the private sector?

 

By M.D. Kittle | Wisconsin Reporter

MADISON – Fiscal year 2012 was another tough year for the convict economy, with the recession’s grip continuing to squeeze prison workers.

But while the wages and vacation plan may be nothing to speak of, the workforce can pretty much count on a job with health care provided.

Badger State Industries, the state Department of Correction’s inmate work program, posted a projected cash-balance shortfall of $4.331 million in the fiscal year, ended June 30, 2012, according to a DOC memo to the Legislature’s Committee on Joint Finance.

“Due to the economic situation,” the report notes, Traditional Industries had a negative cash forward balance of $7.939 million from fiscal year 2011.

The negative balance was due in part to the “purchase of materials necessary for the construction of systems furniture, which was ordered by the Department of Military Affairs and the University of Wisconsin Systems,” the Corrections memo noted.

With the offsetting cash-balance gain of $3.608 million in FY ’12, the program netted the $4.33 million negative projected balance, according to the memo.

DOC spokeswoman Jackie Guthrie said that the Prison Industry program posted a $3.6 million profit in 2012, and Corrections expects “this trend to continue.”

“Like most businesses, BSI had a decrease in sales in recent years because of the economy,”  Guthrie said.

Legislative Fiscal Bureau report shows Badger State Industries recorded negative closing cash balances between $3.23 million and $7.93 million in each of the previous three years, and losses of as much as $4.7 million in 2010-11 and $3.94 million in 2009-10.

BSI is by state statue allowed to maintain a continuing negative cash balance, which equals revenue less expenditures plus the accumulated balance from all previous years, if it can be offset by program assets. That’s been the case seven out of the past 19 years, according to the nonpartisan Fiscal Bureau.

The good news for taxpayers, a bad year in the convict economy can’t be subsidized by the state.

99-cents an hour

DOC’s Bureau of Correctional Enterprises administers the inmate employment and training programs, including Badger State Industries.

BSI operates 13 industries within 11 correctional facilities, manufacturing everything from license plates to office furnishings to “state-of-the-art” signage. The prison industry program includes a textile shop that sews a growing line of garments, mattresses and other sewn projects, and it operates  laundry services to a laundry list of state agencies.

About 350 inmates worked in various BSI programs, according to the latest information by the Fiscal Bureau.

Prisoner Industries, which started 100 years ago, is about rehabilitation, training, teaching the fundamentals of work and work ethic.

Inmates earn on average 99-cents an hour, with a top rate of $1.46 per hour, according to the Fiscal Bureau.

Corrections also compensates inmates for institutional jobs, with pay ranging from 12-cents to 42-cents per hour, depending on experience. Prisoners earn a nickel an hour on the waiting list for a position to open up.

Not a nickel of taxpayer money is supposed to fund the essentials of the program, which is paid for by revenue generated from the sale of goods or services produced by inmates.

“Sales revenue must, by law, cover the costs of raw materials, inmate wages, equipment, staff salaries, and administrative overhead,” the Fiscal Bureau report states.

BSI has an authorized budget of nearly $15.47 million, with about 98 Corrections staff overseeing the program.

Competing behind bars

Prison labor raises competitive concerns in the free market, particularly in challenging economic times.

Private-sector employers bidding for government contracts have long lambasted the preferential treatment the afforded to Unicor, also known as Federal Prison Industries, part of the U.S. Bureau of Prisons.

Federal law requires government agencies to buy products from Unicor without competitive bidding.

With more than 80 factories producing goods in seven industries and more than $900 million in revenue, small manufacturers nationwide have complained about Unicor’s muscle and reach in a free-market system with more than enough competitive obstacles.

“We pay employees $9 on average. 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,” Kurt Wilson, a former executive at Selma, Ala.-based American Apparel Inc. told CNN/Money last year.

U.S. Rep. Bill Huizenga, a Republican from Michigan’s 2nd Congressional District, plans to reintroduce a bipartisan bill that would essentially end Unicor’s no-bid contract status.

“They would have to compete like everyone else,” Brian Patrick, Huizenga’s communication director, told Wisconsin Reporter. A bill that stalled, again, in the previous Congress, would have forced a minimum wage on the government manufacturer and benefits, “not to give benefits to prisoners but to make sure Unicor is competing under the same rules as small businesses,” Patrick said.

He noted an apparel maker in Elk Rapids, Mich., which lost a military pants contract to the government-run company, as well as an onslaught of competition Unicor has brought to the western Michigan furniture corridor.

A congressional committee is looking into the bidding practices, and whether Unicor prices are costing taxpayers significantly more than would private manufacturers.

“This bill has been around for several congresses,” Patrick said. “It’s got a lot of traction … but a lot of new members need to be educated on this issue. We need to explain to them that something really funny is going on here that shouldn’t be happening.”

Wisconsin law has placed strict limits on the sale of prison-made goods. A BSI program may only manufacture articles “for the state and its counties, cities, villages, tax-supported institutions, nonprofit agencies, other states and their political subdivisions and the federal government.”

The state DOC can enter into contracts to make certain approved products for private industry, but there hasn’t been such an employment agreement since 2002, according the Fiscal Bureau.

State Sen. Glenn Grothman, R-West Bend, said Badger State Industries provides an important benefit to the state: Giving prisoners something to do with their time.

“It’s important they don’t undercut the private sector,” he said, “but it’s not safe to have prisoners sitting around all day doing nothing. It’s important having prisoners doing something before they are released.”

Contact M.D. Kittle at [email protected]

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M.D. Kittle is national First Amendment reporter at Watchdog.org. Contact him at [email protected]

  • Related story on prison labor being used in Nevada: http://www.vltp.net/prvt-prsn-sys/4212 and though you are correct that there are currently no private sector agreements since 2002, Wisconsin remains an active certificate holder in the federal PIECP program.

  • Lizette Mullen

    And so the BIG name giants are also contracting with prisons for use of the cheap labor…I guess that’s one way to bring the jobs back from overseas. Lord knows we certainly have more prisoners than small countire have for totol populations! But hey…c’mon PAY THEM SOME MONEY so they can at least TRY to start their lives over again; they aren’t yours for life!