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Microsoft cheap labor in prisons { March 19 2001 }

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MARCH 19, 2001


The Perils of Prison Labor

The tiny town of Haynesville lies on Virginia's Northern Neck, the peninsula that separates the Potomac and Rappahannock Rivers as they enter Chesapeake Bay. The Northern Neck hasn't shared in the economic boom that has benefited much of the state. Its primary industries--truck farming, crabbing, and oystering--have been in decline for years. Haynesville itself is a burg of 500-odd with a post office and not much else. Fishermen and farmers drive slowly by in pickups, heading for nearby Warsaw to shop. Roadside vendors along Route 360 fill the air with the aroma of boiled crabs, but that's about the extent of the activity in town.

Except for the jail. It was built in 1993, and as one might expect in a depressed rural area, the Northern Neck is pleased as punch with the presence of the Haynesville Correctional Center. This medium-security, 1,000-bed unit provides jobs for 500, making it by far the largest employer in Richmond County. It also has featured in the past--and may continue to do so--a controversial system of using prisoners as a labor pool for private companies. This, you might think, would spark concern about unfair competition among local outfits not included in the scheme. Yet so vital is the prison to the town, you also get the feeling no one around here is going to complain if something questionable is going on behind the razor wire.

But things have in fact gone wrong with Haynesville prison's for-profit labor system, and what happened shines a light on the perils of for-profit prison labor, not only in Virginia but in the rest of the country.

After all, these days, prison labor is as close as your cell phone. Jail-based customer-service centers have fielded 800-line requests for airline reservations. According to news reports, prisoners have also wrapped software for Microsoft, produced electronic menu boards for McDonald's, and stitched clingy lingerie for a manufacturer. Historically, inmate labor hasn't been allowed to compete directly with free enterprise, since federal law barred prison-made goods from interstate commerce. But in 1979, Congress created the Prison Industries Enhancement program. PIE--administered by the Justice Dept.--permits for-profit relationships between correctional institutions and the private sector. Tough rules accompany these contracts, with the goal of protecting both ordinary businesses and prisoners' rights. Organized labor and private industry within the affected area must be consulted before startup; written assurances must document that non-inmate workers will not be displaced; prisoner participation must be voluntary; and convicts must be paid minimum wage. It all sounds squeaky clean, and the election of George W. Bush virtually ensures that such arrangements will become even more commonplace. According to PIE Executive Director Gwyn Smith Ingley, the new Administration reauthorized the program during its first few weeks in office. Based on the enthusiasm shown by the President when he was governor of Texas, says Ingley, "we expect to continue with at least our present level of support."

Many others, though, are having second thoughts. One problem is the difficulty of furthering the intent as well as the letter of the federal law. Instances of this difficulty have cropped up in Ohio, Michigan, California--and Bush's home state. In Lockhart, Tex., a prison privately operated by Wackenhut Inc. successfully wooed a company called LTI Technologies Inc. to the facility to run an assembly plant for electronic circuit boards. For LTI, it was the kind of sweetheart deal cost-cutting consultants drool over. Wackenhut arranged tax incentives from the town, provided a captive labor force, and in 1992 built the factory, a 2,300-square-meter workspace that Wackenhut rented out for $1 a year. But the deal turned out to be not so sweet for workers at LTI's home base in Austin. That plant was closed down two months before the Lockhart facility opened, spilling 150 workers onto the unemployment rolls.

ANGRY MEDIA. Whatever the difficulties of furthering PIE goals, they're compounded by the typically closed nature of state correctional departments. Virginia is a case in point. The state's prisons have essentially been off-limits to journalists, since anyone wishing to pursue a story must get permission from the Corrections Dept., and that is rarely granted. The state's practice of limiting journalists' access to prisons has so annoyed the media that the state's largest newspaper, Norfolk's Virginian-Pilot, in 1998 called for the resignation of Corrections Dept. Director Ronald Angelone. The call was not heeded.

Yet Virginia's public-private prison-labor system could have used media scrutiny from the word go. The issue first cropped up in 1994, when Republican Governor (now U.S. Senator) George Allen started the PIE bandwagon rolling with an aggressive attempt to fire up more partnerships between prisons and private enterprise. Virginia Correctional Enterprises (VCE), the arm of the Corrections Dept. that supervises inmate labor, was given an open-ended mandate to expand. Glossy brochures were produced and mailed nationwide. Their covers proclaimed the new slogan: "Virginia Prisons--Wide Open to Business!" They hawked "willing, experienced workers" and promised "no employee benefit packages to fund. No pensions, health insurance, vacations, or sick leave."

The plan backfired. PIE arrangements entered into by VCE lost money, and more than one associated company went belly-up; a classic case of what happens when you put bureaucrats behind the cash register.

Worse than that, though, was the potential for illegality. It was an issue in Texas--where Bush's former criminal justice director, James A. Collins, is under indictment for taking kickbacks in a program that involved prison work projects. Collins has denied the charges. Here in Virginia, misconduct did surface. Given then-Governor Allen's enthusiastic endorsement of prison labor, and a prison chief who keeps the department out of the glare of the media spotlight, it is not surprising that the potential for misconduct was enhanced.

And the law certainly was broken. In Virginia, state and federal authorities began an investigation of the prison programs in 1996, in Haynesville and elsewhere. In January, 1997, the officials finally raided and shut down the illegal elements of the VCE system, working as silently as a multi-agency task force possibly could. It was, after all, an election year, and the outgoing gubernatorial administration would not have been eager to trumpet something that might reflect poorly on its hand-picked successor, Attorney General Jim Gilmore (now Republican National Committee chairman). State law enforcement dumped everything on the federal attorneys, who took 18 months to deliver an indictment. In the end, only one individual was named, an out-of-state contractor. He pled guilty to a single count of violation of interstate commerce laws, and received a fine and probation.

No Virginians were ever indicted. The Virginian-Pilot published details of the operation in 1998, but response was sadly predictable. A few Democratic state legislators halfheartedly called for a probe, while Governor Gilmore simply appointed a committee to study how to make VCE more cost-effective. This was laudable, considering that documents filed in court showed instances of questionable business acumen, to say the least. For instance, according to those documents, vests that cost $13 to make in a Virginia prison returned only $1.10 to the state. But concerns published in the press about potential misconduct inside the Dept. of Corrections were not responded to.

In Haynesville today, the prison's VCE unit continues to operate; it is listed as working "in the clothing industry" on the Corrections Dept.'s Web site. Questions about what companies now participate in PIE schemes were rebuffed or ignored by corrections officials. Requests to visit the prisons involved were denied. The director of VCE, D.R. Guillory, refers everyone to the Corrections Dept.'s director of communications, Larry Traylor, who claims not to know the answer to these questions. On Haynesville's main street, people drive pickups, stop to buy a crab dinner, shoot the breeze about the oyster crop or the price of fertilizer. A photographer sent by Business Week to take shots of the prison was escorted off the premises by guards.

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