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Prison Labor in US – Unicor, the Hidden Face of Federal Commerce

The Federal Prison Industries have been around for decades without attracting much notice from the public, as all its work happens behind the federal government’s curtain. Production is made on prison labor, something hidden from the public eye, and again sale is made to government organizations through channels that bypass private competition, again in the process successfully avoiding much public scrutiny.


So, what’s so wrong about it? Prisoners have committed crimes and they should be doing time, and if the law decreed that they undergo terms with labor, then that is justified.


Absolutely. There’s no debate upon such a point, but the debate is upon the manipulation of the value of labor. The debate is upon how that devaluation of prison labor helps the government to claim public funds and taxpayers’ money that should not have been claimed. The debate is upon whether companies whose work system is supported by federally funded prison labor should be allowed to compete on equal footing with private companies, or whether at all, as is the current practice, they should be allowed the privileges they enjoy including rules that make government organizations buy prison supplied products mandatorily ignoring the existence of cheaper or better alternatives.

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The taxpayer loses on all counts.


Currency is just labor converted to exchangeable form. While the federal government is crying itself hoarse over china manipulating currency, back at home the same government goes one step further and directly manipulates the value of labor rather than manipulating currency.




For a beginning, consider that the Federal Prison Industries pays prisoners an average of 23 cents to $1.15 an hour. That’s too much below minimum wages. Prisoners are doing time for their crimes; the value of their labor does not decrease for that reason.


While beneficiaries of the practice argue that prisoners should be paid less because taxpayers are paying for their upkeep, the logic and the system of accounts is wrong. It creates a smokescreen over balance sheets and the actual economy behind prison bars.


If prisoners were paid minimum wages at going rates for the kind of labor they do, then their upkeep could easily be deducted from their earnings without saddling taxpayers further by accounts created by devaluation of labor.


Predetermined and abnormally low rates of labor allow prison administration to manufacture books showing poor income and an artificially created need for taxpayers’ money. The actual accounts can be found only if prison workers received going minimum wages and then the amount for their upkeep was deducted from their justified earnings. That would show actually how much federal fund/taxpayers’ money a prison needs to run. Something bureaucracy would like to avoid at all costs. So this is the first kick to the taxpayer by the Federal Prison Industries – manipulation of the value of labor and creating unfair demand of federal funds in prisons.


The second kick to the taxpayer that the Federal Prison Industries provides is by competing with private companies while backed by prison labor thus creating unfair competition. A big number of private companies have gone out of existence being unable to compete with prison labor.


A recently reported case is that of Tennier Industries in Tennessee backwaters that lost a $45 million contract of the Defense department to Unicor leading to the layoffs of close to 100 workers in a really poor part of the state. The owner, Steven Eisen, told the media “Our government screams, howls and yells how the rest of the world is using prisoners or slave labor to manufacture items, and here we take the items right out of the mouths of people who need it.”


The third kick to the taxpayer is by unfair competition clauses that force government agencies to buy from Unicor, even if their items cost higher than that of private competitors.


A group of Republicans have been moving against the FPI trying to garner support. Last month, Senate minority leader Mitch McConnell said under pressure that the FPI would stop competing in a heavily disputed contract because it could damage the prospects of a particular private company.


The sentiments among lawmakers have given rise to a bipartisan coalition who is trying to create and pass a bill to regulate the way the prison manufacturing company does business. In a separate move, Senator McConnell has introduced a bill to bring the Bureau of Prisons and its manufacturing company, Unicor under closer Congressional supervision.


Representative Bill Huizenga, a Republican from Michigan told the media, “If China did this – having their prisoners work at subpar wages in prisons – we would be screaming bloody murder.”


But the practice has been going on since 1934. Instead of properly valuing labor at going market rates and making a prisoner accountable for his/her upkeep, a system has been created where instead of high value of labor being produced, poor accounts are shown in the books, and private citizens losing jobs to prisoners.

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Posted by on March 16, 2012. Filed under Public Policy. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.
  • David Leavitt

    Wow! I complain about Unicor ALL THE TIME. They are a billion-dollar industry stealing away work from private enterprise, such as my company, A1 Assets, Inc. Here is my own personal experience with them:

    - We had the federal contract (won through a public competitively bid process) with NASA to recycle their computer equipment for a couple of years, with 3 more years remaining.
    - President Obama signed Executive Order 13514 which stated that any company recycling electronics for the Federal Government should be R2 or e-Steward certified.
    - At the time the executive order was being drafted, only a handful of ‘companies’ were either R2 or e-steward certified, as these were very new certifications.
    - One of those companies was – UNICOR!
    - We received a letter from the GSA stating that because we were not R2 certified that they are canceling our contract. No notice to get certified or anything like that. A simple letter stating they are canceling our contract because of Executive Order 13514.
    - As it turned out, we were in process of being R2 certified (because we felt like it would be good for our business) for about two months when we received the notice (it’s a 4 to 6 month process and VERY EXPENSIVE).
    - We faxed over to the GSA a certification process letter from the R2 organization which clearly showed we were in progress on the R2 certification.
    - We received back a response indicating that ‘in-progress’ was not good enough and consider our contract cancelled. They would not wait for us to be certified.
    - We lost tens of thousands of dollars because of the cancellation. It hurt us deeply.
    - We inquired about who was handling the recycling now and guess who? That’s right – Unicor. With no competitive bidding.
    - We also learned that the exact same thing happened to dozens of small electronics recyclers all over the US – their contracts were canceled and handed over to Unicor.

    Feel free to share this with anyone you want.

    David Leavitt
    A1 Assets, Inc

  • David Leavitt

    The other problem with the federally owned ‘business’, Unicor is the over-population of our prisons with non-violent and victimless inmates who feed the labor pool of Unicor. For example, if we cease the war on drugs, our prison population labor pool would decrease to the point it effects the Unicor lines of businesses to the extent they will not be able to fulfill contracts they signed up for. Think about it. Now ask yourself why the government does not want to end the war on drugs.