Bringing the jobs back home to prisons

A weekly presentation of downloadable charts and short analyses designed to graphically illustrate important economic issues. Updated every Wednesday.

Snapshot for August 21, 2002.

Bringing the jobs back home to prisons
Amid a labor market recession, the U.S. Congress is proposing to increase the competition between extremely low-wage workers in the U.S. labor market. The Federal Inmate Work Act of 2001 would create an experimental program that would allow private companies to employ federal prisoners to produce goods currently made outside the United States. As of December 2001, over 3,700 inmates in 36 states worked in private-sector companies. In addition, approximately 23,000 federal prisoners presently work for Federal Prison Industries (FPI) in various production and service capacities. Although currently representing only a small percentage of the 157,000 federal inmates in the United States, this number would likely increase significantly if the aforementioned bill becomes law.

FPI pays federal prisoners between $.23 and $1.15 per hour, with the average federal prisoner making $.92 per hour. Inmates, however, keep only a fraction of their wages, as approximately 80% is withheld for restitution, to offset incarceration costs, and to support their families, among other things. Thus, the average "take home" wage of a federal prisoner is around $.18 per hour. State prisoners' wages range from $.23 per hour to $7.00 per hour, depending upon the state and the company for which they work; they also only take home only 20% of their wages. Federal prisoners' hourly wages, even before deductions, do not compare favorably to either the federal minimum hourly wage of $5.15, or the average hourly production wage of $14.32. Furthermore, FPI receives preferential status when bidding for federal contracts, as there is a mandatory sourcing requirement to sell to the federal marketplace.

The Federal Inmate Work Act of 2001 would enable private companies to manufacture goods not currently produced in the United States. Thus, production jobs that were typically held by unionized American workers and paid at least the minimum wage-if not the average production wage-but were shipped overseas to take advantage of low-wage locales, could now relocate back to the United States and pay prisoners as little as $.23 per hour.

This week's Snapshot by research assistant Laura Singleton and EPI economist Heather Boushey.

Check out the archive for past Economic Snapshots.