Will a Federal Prisoner Steal Your Job?

Sept. 19, 2012 -- It's hard to compete with workers willing to take pay as low as 23 cents an hour. Do we mean workers in Mexico or China? No. We mean Americans in federal prisons.

An Alabama clothing-maker recently found out just how hard, according to the Myrtle Beach Sun-News: American Apparel of Selma had to lay off 225 workers after it lost a contract for U.S. Army jackets to UNICOR, a $900 million behemoth with 89 factories around the U.S. Its workforce consists entirely of convicts.

If you thought prisoners made only license plates, think again.

UNICOR's workers, according to the government-owned corporation's website, make custom draperies and curtains, mattresses and bedding; furniture, lighting systems, catwalks; fences, towels, shelving, eyewear (both safety and prescription), and trophies. They run help desks and call centers. They process credit cards and provide fleet management services. Oh, and they make license plates.

Federal law requires government agencies to buy products from UNICOR without competitive bidding.

The company, also known as Federal Prison Industries (FPI), is enjoying the kind of growth that might make some for-profit companies envious.

Created by Congress in 1932, it historically has been forbidden from selling goods and services to any customers except federal agencies and departments (e.g., UNICOR-made jackets to the Army). But company spokesperson Julie Rozier explains to ABC News that these strictures have lately been relaxed.

"In December, we obtained new authorities," she says. "Under very limited circumstances, if an item is being made off-shore, we can compete for that."

In some cases, UNICOR now can manufacture and sell items to private customers in competition with private companies. The list of permissible items, Rozier says, includes tents, aprons, fabric shopping bags and baseball caps.

Congressman Bill Huizenga, Republican of Michigan, is one critic among many who find the situation outrageous. "Somehow, we have landed in the middle of Oz," he says, referring to the private sector's loss of jobs to a government-owned conglomerate that pays its workers between 23 cents and $1.15 an hour.

At a time when unemployment is running above 8 percent, he says, "It's got people scratching their heads and wondering, 'How did we ever get into this?'"

As for UNICOR's using criminals to process credit card transactions, Huizenga says, "Giving criminals credit card data? Let's put the gas can closer to the fire."

Legislation he has introduced—H.R. 3634—seeks not to do away with UNICOR but to reign it in. It would subject the company's contracts, for example, to competitive bidding. Prison workers would be subject to OSHA and all the other workplace rules and costs that apply to private employers. Prisoners' salaries, over time, would rise to the minimum wage.

The net effect, he says, would be a leveling of the playing field.

Support for the bill, he says has been "very bipartisan." It has some 20 co-sponsors, including Republican Senator John Thune and Democratic Representatives Carolyn Maloney and Barney Frank. "There isn't much that Chairman Frank and I agree on," says Huizenga, "but we agree on this. We're hoping to get something done in the lame-duck session."