For the tycoons who have invested in the prison industry, it has been like finding a pot of gold. They don't have to worry about strikes or paying unemployment, health or worker's comp insurance, vacation or comp time. All of their workers are full time, and never arrive late or are absent because of family problems; moreover, if prisoners refuse to work, they are moved to disciplinary housing and lose canteen privileges. Most importantly, they lose "good time" credit that reduces their sentence.Bonanza! Now one might reasonably wonder whether this captive, ultra-cheap labor force might be pulling down wages and standards for everyone else. After all, while inmates making goods for domestic consumption must be paid a "prevailing wage," that law doesn't apply to exports. So companies can outsource production to the local penitentiary and pay their "workers" next to nothing:
Prisoners now manufacture everything from blue jeans, to auto parts, to electronics and furniture. Honda has paid inmates $2 an hour for doing the same work an auto worker would get paid $20 to $30 an hour to do. Konica has used prisoners to repair copiers for less than 50 cents an hour. … Clothing made in California and Oregon prisons competes so successfully with apparel made in Latin America and Asia that it is exported to other countries.The whole racket seems rather perverse—prisons have effectively become domestic sweatshops. But what should be done about it? Well, the government could obviously require that prisoners who manufacture exports be paid a prevailing wage too. That could result in fewer companies contracting with prisons altogether, which might be bad for prisoners, seeing as how these programs are popular and purportedly help them build job skills and the like. But this sounds exactly like the standard argument against raising the minimum wage, a fear that sounds sensible in theory but almost never pans out in practice. Plus, who says prison sweatshops are the best way to "help" prisoners out anyway?