"In" Sourcing vs "Off" Shoring"

I have written a few things about companies exporting jobs out of the country. This is a big issue even though some pundits have been trying to minimize it. Now Fox News has "discovered" that there is "in" sourcing as well - Telemarketing Jobs Go to Jail (04/04/04). Corporate contracting to prisons is not a new phenomenon. In These Times was on this in 1997 with an article by Kristin Bloomer Prisons - America's Newest Growth Industry.

I did a presentation on the FTAA and Prison Privatization in 2001 (see presentation notes at Prison Privatization and Sovereignty) which came at the issue from a globalization impact approach. Examples of contracting prison labor include (both from Bloomer and from my presentation):

- Inmates in Vermont, make snowshoes for Stowe Canoe and Snowshoe Co.

- Prisoners in California raise pigs for D.R. Ranch of Avenal.

- Oregon Prison Industries, which goes by the name of UniGroup, markets a line of convict-made blue jeans called "Prison Blues.

- TWA has used inmate labor to break strikes. During a flight-attendant strike in 1986, TWA turned its reservation clerks into flight attendants and put inmates to work on the phone. The airline company still pays $5 an hour to inmate reservation clerks at a juvenile facility in Ventura, Calif. That same work, when unionized pays $18 an hour.

- San Francisco-based Data Processing Accounting Services moved U.S. assembly jobs to a maquiladora in Tecate, Mexico. But increased competition sent the company back to the United States in 1992—to San Quentin State Prison."Some of the work went to China and some of the work we sent to San Quentin," DPAS owner Bob Tessler says. "Our objective is to find low-cost labor." The company left San Quentin in 1996 because of high prisoner turnover, but it's looking for an alternative site, ideally at another prison.

The ultimate function of both off-shoring and contracting prison labor are the same - reduce labor costs to increase corporate profits. Both cost-saving strategies also remove public and private sector jobs from the US open labor pool.

However, there is a pernicious side to the use of prison labor that plays into a complex web of dynamics. First, the wars on crime and drugs in the US have dramatically increased the prison population (and those under corrections control). Second, the implementation of madatory sentencing and "three strikes you're out rules" have increased both the duration of incarceration, and dramatically expanded the prison population.

Keeping people in jails and prisons is a very expensive proposition which is paid for at tax payer expense. Increasing prison populations also requires the building of new prison facilities - also at tax payer expense. The solutions posed to this manufactured prison population explosion is two-fold. First, requiring prisoners to work and opening up internal prison industries that compete with the private sector; second, privatizing prisons to corporations. These two strategies work hand in hand and both are promoted to reduce the costs to tax payers of maintaining an extensive (and filled to capacity) incaraceration system. There is no study that I have seen that shows that private facilites are less expensive than public , and actually they usually cost tax payers more. Since many private facilites are also contracting their prisoners, they are getting paid by the tax payers for incarceration costs, and earning big buck from contracting companies through the use of the prisoners under their control.

This makes the private corrections industry very profitable, but it also creates a truly "captive" labor force - a labor force that can (and does) compete with some of the cheapest and most exploited labor on the planet.

There is another major concern that folks should consider - in any corporation the growth imperative prevails. In other words, corporations are based upon the foundation that lack of growth equals death. Therefore, private corrections industries have every incentive to try and extend their market reach which requires additional laborers under their control. This creates an environment where there is no incentive to reduce the number of prisoners held, nor to "turn over" their workforce. In other words, the pressure is to increase the prison population and to increase how long that workforce is "captive" to their "employer."

I am glad that Fox took notice of the situation though they hardly offered a detailed analysis. They do point to the cheapness of this labor force:

Businesses say the inmates make good, hard-working employees in an industry plagued by high turnover. The prisoners are never late, absent or on vacation — and do the job for only about $130 a month, or less than $1 an hour. Companies also don't have to offer them benefits.

Ah yes, the profit motive. But where does the "extra" money go - straight to the corrections agencies coffers is where. Businesses are certainly not contracting to prisons for $130/mo.

So there you have it - the solution to "expensive" US labor in an exploited global labor market - lock folks up. One might wonder when someone will suggest just locking up the poor and the unemployed (for safety's sake of course). It will make them "productive" citizens and teach them important job skills.

Posted by rowan at April 4, 2004 12:06 PM | TrackBack | [eMail this article!] |