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National Institute of Justice

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Work in American
Prisons:
Joint Ventures with
the Private Sector

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PROGRAM FOCUS

Work in American Prisons: Joint
Ventures with the Private Sector
by George E. Sexton

breakfast, but he’s already running behind
and can’t afford to be late for work. It’ll
just have to be coffee and a quick donut
on the run.

I

t’s 6 o’clock on Monday morning, still dark outside, when the alarm goes off and John Doe struggles
out of bed. He’s in and out of the shower in a minute
and then nearly cuts himself shaving, he’s in such a
hurry. He promised a couple of the other guys on
the company softball team that he’d meet them for
Highlights
Prison industries, using inmate labor to manufacture goods for private firms, were thriving
enterprises in the first quarter of this century.
However, the sale of open market prisonmade products was banned in the 1930’s and
1940’s by Congress and the States, in response to protests from both competing industries and labor unions. In 1979 legislation
was enacted to restore private sector involvement in prison industries to its former status,
provided certain conditions of the labor market are met.
This Program Focus describes how companies in South Carolina, California, and Connecticut have formed successful partnerships
with State and local correctional agencies.
Some positive features of these collaborations include:
• A cost-competitive, motivated work force,
which can continue to work after release
from prison.
• The proximity of a prison-based feeder
plant to the company’s regular facility.
• Financial incentives, including low-cost industrial space and equipment purchase subsidy, that are offered by corrections officials.
• Safe work environment due to the presence
of security personnel and a metal detector
that keeps weapons out of the shop area.

2 National Institute of Justice

• The partial return to society of inmate earnings to pay State and Federal taxes, offset
incarceration costs, contribute to the support of inmates’ families, and compensate
victims.
Challenges encountered include:
• Absenteeism and rapid turnover of
employees.
• Limited opportunities for training.
• Logistical problems, such as appropriate
access for deliveries.
Representatives of companies interested in
joint venture arrangements should consider
such issues as:
• Federal and State laws regulating the markets, types of permissible business relationships, and rights and responsibilities of
inmates, staff, and private companies.
• Appropriate goals for the joint venture that
are consistent with the mission of the corrections agency.
• Support of the warden of the host prison.
• Qualification of the joint venture manager,
who should have prior experience in
corrections as well as an understanding of
business operations.

Just after he has punched in at 7 a.m.,
Denise Loftus, the Section Three supervisor, calls John and the other members of
his work team to go over the day’s production schedule. Northern Telecom just
put in a rush order for a thousand co-axial
cables, so they’ll have to work with Section Five if they’re going to make the Friday shipping date.
After the meeting, John sets up the work
team’s hand tools and production boards,
while some of his crew rush off with the
bill-of-materials to get the parts they need
for the job. As soon as they get back, the
whole team will start assembling the
cables. They want to get started by 7:30
a.m.
By 8 a.m. the shop is humming, and it
will stay that way until noon, when everyone breaks for lunch. After lunch, an industrial engineer from the company’s
main plant stops by to ask the team what
they think about the design for a new IBM
cable the company is bidding on. Roberto
Kelly, the team’s quality control honcho,
recommends a change that will allow
cable to fit more easily into the team’s
hand tools. The engineer agrees and alters
the design. That’s one of the things that
John likes about the company—they listen.
When the final whistle blows at 3 p.m.,
John knows he’ll be tired, but he figures
that comes with the job—that and taxes.
With taxes, rent, and child support payments, there isn’t much left for the car
he’s been saving for. He’ll need it for
commuting next month when he’s transferred to the Myrtle Beach plant.

PROGRAM FOCUS

Federal Regulation of Prison-Based
Joint Ventures
In 1979, Congress enacted Public Law
96-157 (codified at 18 U.S.C. 1761(c)
and 41 U.S.C. 35), which created the
Private Sector/Prison Industry Enhancement Certification Program (PS/PIEC).
The program authorizes correctional
agencies to engage in the interstate shipment of prison-made goods for private
business use if:
• Inmates working in private sector prison
industries are paid at a rate not less than
the rate paid for work of a similar

At the end of the day, John shows the new
man on the team how to do his final inspection and product count, while the
other men clean up their work area. After
they all punch out, they wait in line to go
through the metal detector before leaving
the shop and walking across the prison
yard to their cells.
John (a fictitious name but true-to-life inmate) and the other 250 inmate-workers
who assemble wire harnesses for Escod
Industries are part of an innovative joint
venture inside the Evans Correctional Facility in South Carolina. To be sure, when
prison work programs are mentioned,
most people still think of one product and
one customer—license plates made for
State governments. However, a small but
growing number of private companies
like Escod are paying inmates to produce
a wide variety of products and services
from inside the penal institution.
Joint ventures between a private company
and a prison, like the partnership in South
Carolina that employs John, are not yet
common. But in the last decade, company
executives in an increasing number of
States have begun forming joint ventures
with prison officials who are eager to

nature in the locality in which the work
takes place.

and the States prohibited the open market
sale of prison-made goods.

• Prior to the initiation of a project, local
unions are consulted.

The current revival of private sector
prison industries was made possible in
1979 when Congress lifted its ban on the
interstate transportation and sale of
prison-made goods for prisons that met
the conditions of a specially created Private Sector Prison Industry Enhancement
Certification Program (PS/PIEC). This
program requires participating correctional agencies to certify that inmate
workers are paid local prevailing wages
and that the interests of other parties that
could be adversely affected by the joint
venture are protected. (See “Federal
Regulation of Prison-Based Joint Ventures.”) The new legislation was an essential first step in motivating private
companies to use prison-based work
forces, since most business markets today
cross State borders.

• The employment of inmates does not
result in the displacement of employed
workers outside the prison, does not
occur in occupations in which there is
a surplus of labor in the locality, and
does not impair existing contracts
for services.

branch out from their traditional stateuse
prison industries to produce goods and
services for the private sector.
After offering a brief overview of the history and current status of prison industries, this Program Focus examines how
three companies have developed successful and mutually beneficial partnerships
with prisons in South Carolina. Two other
joint ventures in California and Connecticut are also described briefly to illustrate
successful partnerships that companies
and correctional agencies have formed in
other States.

The Federal
Government Takes
the Lead
Private sector involvement in prison industries is not new. During the early decades of this century, prison factories
making products for private companies
flourished. But the unregulated use of
prison labor led to complaints of unfair
competition from organized labor and
competing manufacturers. As a result,
during the 1930’s and 1940’s Congress

As of March 1993, the U.S. Department
of Justice, which administers the PS/PIEC
Program, had certified 32 correctional
agencies to operate private sector prison
industries similar to the enterprises described in this report. According to the
department, approximately 1,000 inmates
are employed in these joint ventures. Private companies now use prison-based
work for data entry and information processing, electronic component assembly,
garment manufacturing, contract packaging, metal fabrication, telemarketing, and
handling travel reservations.
Everyone benefits from joint ventures.
Companies are attracted to working with
prisons because inmates represent a
readily available and dependable source
of entry-level labor that is a cost-effective
alternative to work forces found in
Mexico, the Caribbean Basin, Southeast
Asia, and the Pacific Rim countries. “Do-

Program Focus 3

PROGRAM FOCUS

mestic content is an important benefit of
using a prison-based work force compared with using an offshore labor market,” says one industry executive. “We
can put a Made-in-the-U.S.A. label on our
product. In fact, our sales staff told us that
the retention of these jobs in the United
States influenced purchasing agents at
two large organizations to buy our product rather than a competitor’s whose product is made offshore.” The executive adds
that “keeping the jobs in the country
helped line workers in our other plants accept the idea of a prison-based work
force.”

Correctional administrators report that
joint ventures provide meaningful, productive employment that helps to reduce
inmate idleness, considered to be a common cause of prisoner disruptions. Correctional administrators also indicate that
the existence of private sector jobs can be
used to motivate positive behavior and
good work habits on the part of inmates
throughout the prison. According to Richard Bazzle, Warden of the Leath Correctional Facility in South Carolina, “the
inmate who realizes that an initial assign-

ment in the kitchen might some day lead
to a higher paying job in our garment
plant is more likely to work hard and stay
out of trouble in order to get that better
job tomorrow.”
The general public, too, tends to endorse
productive employment for inmates when
they are assured that prison-based jobs
will not displace law-abiding citizens. For
example, although in 1990 California voters rejected a $450 million bond issue for
prison construction, they approved a
change in the State’s constitution to allow

NIJ-NIC Collaboration on Private Sector Prison Industries
and Other Offender Programs
The National Institute of Justice (NIJ) and
the National Institute of Corrections (NIC)
have cooperated on a number of projects.
The following reflects these continuing
efforts.
In 1978, the National Institute of Justice
and the National Institute of Corrections
entered into a memorandum of understanding (MOU) that included identifying opportunities for the two agencies to serve
the field better through collaborative efforts. Earlier this year we revisited the
MOU and renewed our commitment to
work together on a number of joint initiatives.
More recently the Office of Correctional
Job Training and Placement (OCJTP) was
created within the National Institute of
Corrections. With its creation as a catalyst,
a new joint agency effort has begun to
explore ways to assist incarcerated and exoffenders to become gainfully employed.

4 National Institute of Justice

This initiative will give us the opportunity to
engage other Federal agencies, State and
local governments, business and industry,
private and not-for-profit organizations, educators, and educational institutions in identifying solutions to this systemic problem.
Both NIJ and NIC have had a long history of
supporting programs for offenders including vocational training, corrections education, as well as State-use and private sector
industries. This Program Focus on private
sector prison industries is but one indication
of our continued commitment in this area.
Given our collective histories of accomplishment in the area, it seemed logical and
appropriate for our agencies to share our
talents and resources to further the goals of
OCJTP. While we will continue to work
together to support the field through research, evaluation, development, information dissemination, training, and the provision of technical assistance to State and local

agencies, staff from our respective agencies have been tasked with taking a fresh
look at traditional approaches.
As a result of several brainstorming and
information-sharing sessions, a number of
potential joint NIJ/NIC initiatives are already under consideration. We are determined to move quickly on a number of the
more promising ideas. At the same time,
however, our staff will be calling on you
for recommendations as to how best to
achieve the mission of the Office of Correctional Job Training and Placement.

Jeremy Travis
Director
National Institute of Justice
Morris Thigpen
Director
National Institute of Corrections

PROGRAM FOCUS

Photo by Jack Owen

the operation of private sector prison industries when they were assured by the
governor that such jobs would not result
in the layoff of civilian-workers.

South Carolina Takes
the Initiative
The opportunity for the private sector to
use inmate labor in South Carolina
opened up when Tony Ellis became Director of the Division of Correctional Industries in 1990. Ellis’ division is charged
with employing as many inmates as possible in each of the State’s prisons. However, meeting this mandate was becoming
increasingly difficult because of two ongoing developments. First, South Carolina
was faced with a dramatic increase in its
inmate population. From 1989 to 1993
alone, the number of prisoners in the State
jumped from 13,004 to 17,294—an increase of 33 percent. Second, because the
State budget was shrinking as part of the
nationwide recession, State agencies had
less money with which to purchase inmate-produced goods and services. As a
result, the capacity of stateuse industries
to productively employ inmates also
diminished.
Ellis decided to tackle this predicament
by expanding inmate employment opportunities to include working for private
companies manufacturing products for
sale on the open market. In the past 3
years, Ellis’ move into the private sector
has paid off for everyone; three companies have set up successful joint ventures
that employ over 400 inmates in South
Carolina’s prisons. Major companies and
institutions like IBM, Victoria’s Secret,
and Emory University purchase products
manufactured in South Carolina’s prisons.

At the Evans Correctional Facility in South Carolina, Escod Industries employs inmates to assemble
electronic cables involving the use of assembly boards.

Escod Industries—
Rewiring Europe’s
Telephone System
Escod Industries, a division of Insilco
Corporation, a Fortune 500 conglomerate
based in Columbus, Ohio, operates seven
manufacturing plants in the United States.
One plant is in South Carolina’s Evans
Correctional Facility, a 1,100 bed maximum/medium security prison. Last year,
inmate-workers at Escod’s prison plant
assembled $16 million worth of electronic
cables that were purchased by corporations like IBM and the Canadian-based
Northern Telecom Corporation. Northern
Telecom uses Escod’s products in the
telephone cables it sells to several Eastern
European countries that are upgrading
their communication systems to meet the

latest European Economic Community
standards.
How the partnership began. Pat Timms,
Escod’s Vice President of Operations,
learned about the availability of South
Carolina’s prison-based work force when
he received a letter from Tony Ellis suggesting that if the company were thinking
of expanding its operations, it should take
a serious look at South Carolina’s prisonbased work force to meet its growing employment needs.
Ellis’ letter was timely because it arrived
when Escod’s top management was looking closely at what the company would
have to do to maintain its position in the
increasingly competitive electronics industry. One of the options being considered
by top managers was the operation of a
satellite plant in Mexico that would use

Program Focus 5

PROGRAM FOCUS

the country’s highly productive and lowcost Maquiladora work force. But Timms,
who had previously worked for the Alston
Wilkes Society—a prison volunteer organization—was intrigued by Ellis’ letter
because he thought that a domestic feeder
plant located near his principal customers
and staffed with a cost-competitive work
force would better fit the company’s justin-time delivery schedules than a plant located nearly 1,000 miles away in Mexico.
Furthermore, he made some calculations
that showed only an insignificant difference in labor costs between South
Carolina’s prison-based work force, with
a total burdened rate of $6.04 per hour,
and the comparable rate of a Mexico
based plant that included transportation
costs for finished products.

pattern, tie the wires into bundles, and finish them into electronic cables. Inmates
perform their jobs in teams. Each team,
composed of from 5 to 25 workers, depending on the complexity and the size of
a given product, is responsible for the entire production process, including setting
up the tools and equipment required to
complete the job order, assembling and
inspecting the wire harnesses, and packaging the finished products.
Motivated inmates make good workers.
Escod’s plant manager at the Evans facility, Bert Christy, says, “The productivity
and quality of this work force is as good

as, if not better than, any that I’ve ever
worked with.” To prove his point, Christy
points to the quality control award that the
Evans plant won from IBM for being one
of the 10 feeder plants (of a total of 500)
to deliver 25,000 cables to the computer
giant with zero defects.
Christy attributes the inmates’ superior
work to their high motivation, pointing
out: “Any person here has a strong desire
to work because this is by far the best
game in town. They want this place to be
a success. And so do we.” Christy says
that it is important to build on the inmates’ intrinsic motivation to do well by

Photo by Jack Owen

Armed with these figures, Timms was
able to convince his colleagues at Escod
that the company should open a plant inside the prison. South Carolina correctional officials also helped to sway
Escod’s decision by offering the company
financial incentives that included low-cost
industrial space and a $250,000 subsidy
for equipment purchases.
Current operations. Today, 10 civilian
Escod staff—including two female floor
managers—supervise over 250 inmates at
the Evans Correctional Facility. The company operates a two-shift schedule in the
prison: 190 inmates are employed on the
7 a.m. to 3 p.m. shift, and 60 inmates
work on the 3 p.m. to 11 p.m. shift. The
prison superintendent would like to see a
third shift and a total employment of 300.
Escod’s prison-based work force hand assembles a wide variety of wire harnesses
for electronic cables. Inmates unreel
color-coded wires from large spools, individually lay them out on large sheets of
plywood that outline the correct assembly

6 National Institute of Justice

Escod’s plant in the Evans Correctional Facility in South Carolina won an award from IBM for being
among the 10 out of 500 feeder plants to deliver 25,000 cables with zero defects.

PROGRAM FOCUS

Photo by Jack Owen

treating them consistently and fairly and
by rewarding good work. If a work team
attains productivity, quality, and on-time
delivery goals for a week, the team is rewarded with a fast food lunch. If the plant
achieves its quality and efficiency goals
for a month, members get a dinner catered
by a local restaurant.
Christy maintains that the inmate work
force has higher education test scores and
more extensive work experience than
many individuals applying for jobs at the
company’s main plant. Indeed, he believes many inmate workers are overqualified for the jobs they hold, which
might be expected to reduce morale. On
the other hand, these inmates might simply be satisfied that they have something
meaningful to occupy their time in prison.
Escod management has also built success
into the Evans plant by funneling the
company’s least complex products into
the prison. Pat Timms says, “Now we
concentrate in the prison our simpler,
labor-intensive products that are susceptible to customer demand spikes, and we
put most of our higher-cost products in
our nearby civilian plant. This strategy
buffers our regular employees against layoffs and rehirings caused by fluctuating
customer demand cycles, and, at the same
time, it lowers our unemployment compensation rate. As a result, we’re more
cost-competitive in the long run.”
Prisons are not trouble-free work environments. Escod has had to work closely
with correctional officials at Evans to
overcome a number of problems, especially absenteeism and turnover. Absenteeism on the shop floor during Escod’s
first year of operations disrupted the
company’s work teams and increased
overtime costs. Escod reduced unexcused

An inmate employed by Jostens, Inc., at the Laurens Correctional Facility in South Carolina,
sews a graduation gown for a major university.

absences by working closely with Evans
staff to introduce and enforce its standard
absentee policy that results in the termination of any worker after five unexcused
absences over any 6-month period.
Turnover in the work force, however,
continues to be a nagging problem. As a
result, company and correctional managers are exploring the possibility of opening a second feeder plant in a new
minimum security prison under construction near one of the company’s principal
plants. This new facility would enable
Escod workers at Evans to continue to
work for the company after they receive a
lower custody status and are transferred
out of Evans. With plants in both prisons,
trained inmates could work for the company throughout their period of confinement and, after release, continue their
employment at its nearby plant if jobs are
available.
After only 2 years in operation, the Evans
plant has already become a vital link in

Escod’s domestic manufacturing system.
Pat Timms says, “Strategically, Evans is
very important to us, and it will probably
grow in importance because the prison
gives us access to a cost-effective work
force that meets our customers’ needs.
IBM managers like the arrangement because it enables them to meet their domestic content product requirements.
Northern Telecom likes it because it
meets its just-in-time delivery schedules.
And we like the setup because it helps our
regular plant avoid cycles of hiring and
laying off extra workers to handle the unpredictable upswings and downturns in
demand for this particular product.”

Jostens, Inc.
The next time you go to a graduation exercise, notice the colorful gowns the participants are wearing: they may have
been made in a South Carolina prison by
Jostens, Inc. A Fortune 400 company,
Jostens is the largest manufacturer of

Program Focus 7

PROGRAM FOCUS

graduation gowns in the country. It has 43
offices and manufacturing plants throughout the United States, Mexico, and the
Caribbean Basin. The company’s main
gown plant is in Laurens, South Carolina,
about 25 miles from the Leath Correctional Facility, a 350-bed prison for
women.
How the joint venture was arranged. In
1991, Jostens received one of Tony Ellis’
recruitment letters, but at that time the
company was not interested in expansion.
A year later, however, when the market
for graduation gowns grew and the company needed a feeder plant to operate in
conjunction with its Laurens facility, the
facility manager remembered the letter
and gave Ellis a call.
Because of the lack of readily available
labor in the rural area surrounding
Laurens, the company had considered
Mexico as a site for a feeder plant. But
the Leath Correctional Facility, less than
an hour’s drive from Laurens, seemed like
an attractive alternative. Jostens’ production manager, Frank Burton, met with
Ellis and liked what the prison industries
administrator had to offer: a local work
force, quality industrial space tailored to
meet the company’s production needs,
capitalization of equipment, and a joint
venture arrangement that would enable
Jostens to concentrate on production and
quality control, while correctional industries staff handled all the work related to
personnel and payroll.
Jostens began operations inside Leath in
late 1992. The company now supervises
40 women who sew, inspect, sort, and
package graduation gowns. The women
work a 40-hour week, 8 1/2 hours a day
Monday through Thursday, and 6 hours
on Friday.

Again, everyone benefits. Linda Knight,
the onsite production manager for Jostens,
reports that initially quality was a problem. However, Knight and the Division of
Correctional Industry improved production quality by incorporating into the
prison’s 8-week industrial sewing training
program a new module that provides the
women with instruction in Jostens’ inprocess inspection procedures.
Knight reports that turnover and absenteeism are no different at Leath than at the
company’s Laurens plant, and productivity is good; but the sewing done in the
prison is uncomplicated and repetitive.
Safety? Knight claims, “I feel safer in
here than I would in an outside shop. Security personnel are always nearby, and I
know that weapons are not going to be
brought into this shop because there’s a
metal detector outside.”
Burton would like to expand work orders
in the prison without having to invest in
additional equipment. As a result, he is
thinking of starting a second shift, although this expansion of operations will require new negotiations with prison officials.

Third Generation, Inc.
Third Generation, Inc., a contract garment
maker with two plants in South Carolina,
also operated a garment manufacturing
plant inside the Leath Correctional Facility until a recent downturn in the
company’s orders led management to
complete, but not renew, its existing contract with South Carolina Correctional Industries. Third Generation employed 35
inmates who sewed a variety of leisure
wear garments and lingerie that were purchased by J.C. Penney, Victoria’s Secret,
and other retail apparel firms. Last year
the company’s Leath plant produced more

than $1.5 million worth of garments.
How the partnership began. Like many
other small firms in the contract sewing
industry, Third Generation had considered
handling its expanding business by opening plants in Mexico and the Caribbean
Basin, but the company found the correctional agency’s economic development
package more attractive than the incentives offered by offshore business locations. Merv Epstein, Third Generation’s
President, says, “We could not find
enough qualified industrial sewers in rural
South Carolina, and the prison solved a
real problem for us in that respect. These
women were good workers, they took
pride in the products they made, and I
would like to hire 80 percent of them after
they get out of prison in my other two
plants.” Indeed, Third Generation has
hired several women released from Leath
who worked for the company as inmates.
Quality and productivity. Judy Johnson,
Third Generation’s plant manager at
Leath, says the quality achieved by the
prison work force was at a level as high as
that attained by its nonincarcerated employees, and turnover was much lower in
the prison. Productivity, however, was
initially a problem. Johnson believes that,
due to limited training, the workers were
not able to efficiently handle the
company’s frequent style changes. Productivity suffered as workers learned how
to sew each new style. As a result, the
company reduced the number and frequency of style changes at its prison
plant. Merv Epstein warns that other garment manufacturers that consider hiring a
prison-based work force should “keep it
simple—put the least complex sewing
jobs you have inside the prison, and don’t
make frequent style changes.”
The key to supervising inmate workers,

8 National Institute of Justice

PROGRAM FOCUS

according to Judy Johnson, is to realize
that inmates will play games and that,
from the start, the plant manager must be
firm in responding to their attempts at manipulation. But, she adds, supervisors also
have to be fair and reward good performance. For example, the company provided a dinner for its Leath workforce at
Thanksgiving and gave group bonuses for
consistently high quality work. The company also tried to build a sense of cohesiveness and corporate identity by giving
workers T-shirts imprinted with the company logo to wear on the job.

Trans World Airlines
and the California
Youth Authority

pool, which could be quickly tapped to
process excess call volume from its Los
Angeles reservation center. However,
Ventura has now become one of the
company’s five major reservation outlets
handling calls on a regular basis from
around the country.
Current operations. In addition to
processing routine domestic airline
reservations, the Ventura center provides a specialized service on a regular
basis for the company’s other reservation centers. Ventura agents alone now
schedule all of the airline’s round-theworld itineraries because the small
size of the work group (other centers

employ as many as 500 agents,
whereas Ventura’s work force typically consists of 70 agents) allows
TWA’s supervisory staff in the facility
to monitor the complex pricing of
round-the-world tickets more closely.
Jeff Black, TWA’s Director of Area
Reservations, says:
We’ve found that a number of
specialized desks performing
functions like round-the-world
itineraries are harder to staff in
larger work environments. Here,
at Ventura, once we’ve trained
an agent in this kind of specialized service we know that he is

Photo by Jack Owen

“Thank you for calling TWA. This is Anita
Gomez. How can I help you?” Most of
the more than 500,000 callers probably
did not realize that the agent delivering
this greeting was a youthful offender
employed in the California Youth
Authority’s Ventura Training School for
youthful offenders.
How the partnership began. Influenced
by the success of Best Western
International’s hotel reservation center,
which operated at the Arizona Correctional Facility for Women in Phoenix
from 1981 to 1992, TWA began employing male and female youthful offenders in
the beginning of 1986. Since then, TWA
has hired nearly 300 agents at the training
school, 55 of whom have continued their
employment at the company’s Los Angeles reservation center after their release
from prison.
TWA established its reservation center at
the Ventura School to take advantage of
the institution’s readily available labor

An inmate at the California Youth Authority’s Ventura Training School, where inmates schedule all of
TWA’s around-the-world itineraries, talks with a customer about a European vacation.

Program Focus 9

PROGRAM FOCUS

more likely to show up regularly
for work because the job carries
a great deal of status among the
Ventura agents. Besides, we
know that they are not going to
be late for work because of a
traffic jam on the freeway. That
kind of dependability is important to us.
Win-win for everyone. The 1992
civil disturbances in Los Angeles
highlighted the dependability of the
Ventura center for TWA when the
company was forced to close its Los
Angeles reservations office. Over a 2day period, 61 youthful offenders
worked 718 hours processing calls
from travelers who would have otherwise been lost to TWA’s competitors.
In a letter of appreciation to the
Ventura School, the TWA area reservations manager wrote, “We have
shown our company how we can respond in a crisis.” Frederick F. Mills,
Administrator of the Free Venture
Program, wrote back that, “This public-private partnership is a great example of how working together can
create a win-win solution for
everyone.”

Chesapeake Cap
Company and the
Connecticut
Department of
Corrections
How the partnership began. The
Maryland-based Lyon Brothers Manufacturing Company, the country’s
largest manufacturer of embroidered
emblems, holds the license for manufacturing the emblems of all the teams
in the National Football League and

10 National Institute of Justice

Major League Baseball. In 1990, Lyon
Brothers established its new Chesapeake Cap Company division in the
Connecticut Correctional Institution at
Somers. The company contacted the
Connecticut Department of Corrections because, of all State agencies
certified by the U.S. Department of
Justice to sell prison-made goods in
interstate commerce, Connecticut’s
was situated closest to Lyon’s Maryland location.

ers with an affordable way to enter a
new market that is directly related to
its principal product line of emblems.

Different Types of
Partnerships Can Be
Successful

Companies and correctional agencies
have developed different types of business relationships to meet their common workforce needs. In South
Carolina, the companies that operate
The company employs 18 inmates in
Somers, the State’s maximum security feeder plants in the Evans and Leath
prison, to make baseball caps that are correctional facilities supervise inmate
sold to private companies, government workers with their own staff. However,
the prisoners are employed by the State
agencies, and retail sporting goods
Division of Correctional Industries,
stores. The baseball caps worn by
which in turn charges the companies a
Midas Muffler mechanics, police ofburden rate for their labor. This apficers in St. Louis, and Little League
proach, often called the Manpower
World Series players are all made by
Chesapeake Cap’s inmate employees. Model because of its similarity to the
nationwide temporary personnel serCurrent operations. Chesapeake Cap vice company of that name, reflects a
growing trend in which companies
hires its prison workers from a pool
lease rather than employ their prison
of inmates employed in the prison’s
workforces. (See exhibit 1.)
sewing plant, which makes inmate
uniforms for the State’s prison population. Unlike some of its joint venture By contrast, Trans World Airlines in
counterparts in South Carolina, Chesa- California and the Chesapeake Cap
peake Cap has not experienced a turn- Company in Connecticut own and
operate their prison-based businesses,
over problem because the lengthy
sentences served in Somers enable the and they directly supervise and employ
company to limit its hiring to inmates their inmate workforce. Prison officials
in these two States provide only the
with a minimum of 5 years left to
space in which the companies operate
serve on their sentences.
and a qualified labor pool from which
Benefits to all. According to Somers’ the companies hire their inmate emwarden, the joint venture with Chesa- ployees. This approach is frequently
peake Cap has been good for the insti- called the Employer Model because the
company employs the inmates.
tution because it gives inmates a
positive goal to shoot for. Renate
Hellin, Chesapeake Cap’s plant man- Several companies and correctional
agencies in other States have adopted a
ager, reports that the prison-based
work force has provided Lyon Broth- third partnering approach, frequently

PROGRAM FOCUS

Exhibit 1.
Model

Principal Characteristics of Three Types of Joint Ventures
Workers
Employed
By

Workers
Supervised
By

Workers
Trained
By

Manpower

Prison

Company

Prison

Employer

Company

Company

Company

Customer

Prison

Prison

Prison

called the Customer Model, in which
the company contracts with a prison or
jail to provide a finished product at an
agreed-upon price. In this model, the
correctional agency owns and operates
the business that employs the inmate
workforce. For example, the Hennepin
County Adult Correctional Facility in
Minnesota operates a job shop, employing 50 inmates, that provides a
variety of light assembly, sorting,
packaging, and warranty repair services for dozens of private firms in the
Minneapolis-St. Paul area.
Different models, different risks.
The degree of risk and reward shared
by the company and the correctional
agency varies by model. In general,
the customer model exposes the company to the least risk, because the
firm’s involvement is limited to purchasing finished products or services.
However, the customer model involves the most risk for the correction-

Benefits for
Company

•
•
•
•

Workforce
Rent/utility
Money for equipment
Administrative support

Benefits for
Prison

•
•
•
•

Employment
Overhead rate
Wage deductions
Payback on equipment

• Workforce
• Rent
• Utilities

• Employment
• Wage deductions

• Product or service

• Payment for finished
goods

al agency, since prison administrators
must operate a competitive business
within the constraints of a government
bureaucracy. In the employer and
manpower models, the risks and rewards of the joint venture are shared
by the company and the correctional
agency, with each partner required to
dedicate significant resources to the
venture for it to succeed.
Shared commitment the key. Private
sector executives and correctional
administrators agree that no matter
which model is adopted, success is
built on a mutual commitment to meet
each other’s needs. “Operating a private business inside a correctional
institution is almost a contradiction in
terms,” says Jeff Black, Vice President
of TWA. “A prison is not necessarily
the best environment for every company. It takes a lot of dedication, communication, and cooperation on the
part of the institution and the company
to make the arrangement work.”

Prison officials demonstrate this commitment by going the extra mile to
solve the practical, everyday problems
with the partnership that invariably
arise. In Connecticut, for example, the
prison superintendent modified the
institution’s standard security procedures to enable parcel service delivery
trucks to come inside the institution’s
chain link fence to pick up Chesapeake Cap’s finished goods. Before
this exception to the rules was made,
common carriers had to pick up and
deliver packages at the prison’s main
gate, located a quarter mile away at
the opposite end of the complex from
the industrial area. This simple change
in procedure helped the company meet
its delivery schedules in a more timely
manner.
In South Carolina, correctional industry managers at the Evans and Leath
prisons placed their offices inside the
company’s plants as the best location

Program Focus 11

PROGRAM FOCUS

from which to serve the needs of the
company. From this strategic vantage
point, managers handle inmate worker
personnel issues, process payroll,
work with the company’s supervisory
staff to design employment training
programs, and serve as the liaison
between the company and the prison’s
other departments.
In California, the Ventura School
brought in a pre-employment training
program taught by the local community college in order to familiarize
offenders with the operation of computer terminals and provide basic geographical instruction required by the
travel industry. Offering this program

Exhibit 2.

allowed TWA to concentrate on the
more complex technical aspects of
airline reservations and ticketing during its in-service training program for
Ventura’s agents.

• Jostens’ prison-based workforce
expands its ability to sew a Madein-the-USA label on its product, a
strong selling point with many of its
customers.

Everyone benefits. In summary, private sector prison industries provide
substantial benefits to companies that
need entry-level labor to staff simple
production or service processes. As
discussed earlier, inmate labor can
meet a number of special needs that
companies may have:

• In California, TWA’s Ventura reservation facility was a godsend
when civil disturbances forced the
company to close its Los Angeles
facility.
Wardens report that private sector jobs
are valuable to them because the work
productively employs inmates who
might otherwise be idle. Furthermore,
joint ventures motivate inmates who
are waiting for jobs to stay out of

• In South Carolina, Escod Industries
uses its prison feeder plant to help
meet its customers just-in-time delivery schedules.

Earnings and Contributions of Joint Venture Workers
1979–1992
(in millions of dollars)

35

Wages

30

$28.70

25
20

Deductions

15
10

$5.07

5
0

$3.24

$1.86

Fa

Ta

Ro

xe

om

s

/B

oa

rd

SOURCE: Bureau of Justice Assistance, PS/PIEC Program
SOURCE: Bureau of Justice Assistance, PS/PIEC Program

12 National Institute of Justice

$1.71

Vi

ct

m

ily

Su

im

sP

ro

pp

or

t

gr

am

s

PROGRAM FOCUS

Prison-Based Joint Ventures Are Not Free of Controversy
Although the number of inmates working
in prison-based joint ventures remains relatively small, the recent emergence of private sector prison industries has caught the
attention of interest groups beyond the
prison walls. The AFL-CIO, which has
had a long-standing interest in prison work
(for example, it has sponsored apprenticeship programs in prisons), considers joint
ventures a challenge to unionized and
nonunionized civilian work forces. A statement by the AFL-CIO Executive Council
on Prison Labor Programs issued in 1991
states:
There are good reasons to let prisoners work as part of skills-training
programs that could have a rehabilitative effect and thereby lower rates
of recidivism. But badly conceived
programs often provide unfair competition and take jobs from the general population. It is outrageous to
deliberately encourage prison labor
that leads to job loss in the larger
economy. In light of these consider-

trouble, since a good disciplinary
record is a prerequisite for employment.
Joint venture workers have to show up
for their jobs on time and work hard
throughout their shifts. This experience develops valuable work habits.
These inmates also learn how to meet
private sector productivity and quality
standards. As a result, TWA, Third
Generation, and other companies have
hired, after their release, inmates who
worked for the companies while in
prison. Such stable post-release employment may reduce the chances that
these ex-convicts will return to a life
of crime.

ations, the AFL-CIO supports prison
labor programs that:
• Provide training for work likely to
be available to convicts after their
release.
• Produce goods and services that
are exclusively for government use
and may not be sold to the public.
• Pay wages that are no less than the
prevailing wage for similar [work]
in the private sector, with appropriate deductions for room and
board, taxes, and contributions for
victim restitution funds....
• Prohibit the use of prison labor to
replace strikers or provide services
that may prolong a strike.
• Prohibit the displacement of existing jobs by prison labor.

Between 1979 and 1992, inmates employed in joint ventures certified by
the U.S. Department of Justice earned
$28,668,450. However, during that
time, deductions from their wages (see
exhibit 2) also resulted in contributions of:
• $5,068,909 to offset the cost of
their incarceration.
• $3,243,011 in Federal and State
taxes.
• $1,713,043 in victim compensation.
• $1,862,867 toward the support of
their families.
These combined wage deductions of
$11,887,830 represent a return to soci-

Federal law also addresses these points—
but in the context of private sector jobs for
prisoners, something that the AFL-CIO
opposes. (See “Federal Regulation of
Prison-Based Joint Ventures.”)
The increased visibility of prison-based
joint ventures has contributed to a vigorous debate about the proper role of inmates in today’s workforce. The policy
issues underlying this debate go beyond
the scope of this report. But many business and labor groups are watching the
development of these partnerships to see
whether they compete fairly in the marketplace. In the past, these groups have
not hesitated to oppose prison-based
work programs that they believed were
not competing fairly. As a result, the
manner in which individual correctional
agencies and companies operate their
joint ventures may have consequences
far beyond their jurisdictions in terms of
furthering or retarding the future development of prison-based joint ventures
nationwide.

ety of $.41 for every dollar these inmates earned.

Starting a Joint Venture?
Company executives and correctional
administrators considering the development of a prison-based joint venture
should consider the following
guidelines.
Know the law. Federal and State laws
regulate the markets available to participating companies, the types of
business relationships that may be
developed, and the rights and responsibilities of inmates, staff, and private
companies. Individuals creating joint

Program Focus 13

PROGRAM FOCUS

ventures should be particularly attentive to how local statutes may regulate
the following:
• Type(s) of partnership permitted.
• Market(s) in which products or
services may be sold.
• Employment status of inmate workers.
• Wages paid to inmate workers.
• Benefits provided to inmate workers.
• Deductions taken from the wages
of inmate workers.
• Protection of civilian jobs.
• Lease of prison property.
• Incentives for private sector
participation.
Set appropriate goals. The joint
venture’s goals should be consistent
with the overall mission of the correctional agency. Goals should provide
clear guidance to both agency staff
and private sector partners. For
example, the California Youth Authority has published its goals for the Free
Venture Program in a handy pamphlet
that the program administrator gives to
prospective companies when he meets
with them for the first time.
A worthwhile goal established for any
joint venture is to act fairly toward
every person and group that will be
affected by the partnership. This is
critical because joint ventures do not

14 National Institute of Justice

operate in a political vacuum. Outside
interest groups may effectively oppose
any venture they believe is not competing fairly in the marketplace. (See
“Prison-Based Joint Ventures Are Not
Free of Controversy.”) It is also essential to choose the right kind of product
or service for the prison-based enterprise. The lesson learned by Escod
Industries and Third Generation is:
Keep it simple!
Choose the host prison carefully.
Joint ventures are not meant for every
prison. They are best suited for institutions where the warden has expressed a strong interest in participating in their planning and development.
As Jeff Black of TWA points out, it
takes a great deal of dedication to establish and operate a business inside a
prison, because changes may have to
be made in the prison’s classification,
assignment, disciplinary, security, or
call-out procedures. The leadership of
the warden is essential for making
these changes. Other critical factors to
consider when choosing a prison for a
joint venture include the availability of
suitable space for an industrial operation and a trained, motivated inmate
work force.
Choose the joint venture manager
carefully. Establishing a joint venture
is an intensive process that usually
requires the full-time attention of a
manager whose responsibilities frequently include developing, marketing, implementing, and maintaining
the program.

In addition to being energetic and
task-oriented, the manager needs to
have:
•

Prior experience in corrections.

•

An understanding of how to get
things done in a government
bureaucracy.

•

An understanding of the problems
of running a business and how a
prison workforce can address those
problems.

•

An ability to interact comfortably
and effectively with business people.

The corrections agency’s state-use
industry program is a good place to
find a manager for a joint venture program, since industry staff already
know the prison and understand the
problems of business. Other State
agencies or community-level service
organizations (like the Salvation Army
or Goodwill Industries) that create
jobs for alternative labor forces, may
also be good sources for managers.
Joint ventures between private companies and prisons are not suited to every
type of business, but their numbers are
increasing as the benefits become
known. Prison workplaces employing
alternative workforces boast of reduced labor and overhead costs,
speedy delivery, and product quality—
while preserving American jobs, usefully occupying inmates, and
satisfying the consumer.

PROGRAM FOCUS

About This Study
This Program Focus was written by
George E. Sexton, President of
Criminal Justice Associates (CJA).
Mr. Sexton is the co-author, along
with his colleagues at CJA, of Private Sector Involvement in PrisonBased Businesses, NIJ Research
Report, November 1985, and Work
in American Prisons: The Private
Sector Gets Involved, NIJ Issues and
Practices, May 1988.
The field research for this report
was performed during December
1992 and January 1993. The author
interviewed correctional administrators, private sector executives
and supervisors, and inmate-workers in California, Connecticut, and
South Carolina, where he also
observed the operation of prisonbased joint ventures. This study is
part of the National Institute of
Justice’s continuing research in
private sector prison industries.

COVER: At the Evans Correctional
Facility in South Carolina, an Escod
supervisor stationed in the prison
inspects work in progress. (Photo by
Jack Owen)
Findings and conclusions of the research
reported here are those of the author and
do not necessarily reflect the official position or policies of the U.S. Department of
Justice.

The National Institute of Justice is a component of the Office of Justice Programs, which
also includes the Bureau of Justice Assistance, Bureau of Justice Statistics, Office of
Juvenile Justice and Delinquency Prevention, and the Office for Victims of Crime.

NCJ 156215

November 1995

Selected NIJ Publications in Corrections
Listed below are some NIJ publications related to the issue of corrections. These publications can be obtained free, except where indicated, from the National Criminal Justice Reference Service (NCJRS): telephone 800–851–3420, e-mail askncjrs@ncjrs.aspensys.com, or
write to NCJRS, Box 6000, Rockville, MD 20849–6000.
Please note that when free publications are out of stock, they are available as photocopies
for a minimal fee or through interlibrary loan. They are also usually available on the NCJRS
Bulletin Board System, NCJRS World Wide Web site, or on the Department of Justice
Internet gopher site for downloading. Call NCJRS for more information.
Buchanan, R.A. and K.L. Whitlow, Guidelines for Developing, Implementing, and Revising an Objective Prison Classification
System, NIJ Research Report, 1987, NCJ
108408.
Clark, Cheri L., David W. Aziz, and Doris L.
MacKenzie, Shock Incarceration in New
York: Focus on Treatment, NIJ Program Focus, August 1994, NCJ 148410.
Cronin, Roberta C., with assistance of Mei
Han, Boot Camps for Adult and Juvenile Offenders: Overview and Update, NIJ Research
Report, October 1994, NCJ 149175.
Greenwood, Peter W., Three Strikes, You’re
Out: Benefits and Costs of California’s New
Mandatory-Sentencing Law, VHS Videotape,
1994, NCJ 152236, $19, includes postage
and handling.
Inciardi, James, A Corrections-Based Continuum of Effective Drug Abuse Treatment,
Research in Progress Seminar, VHS Videotape, 1995, NCJ 152692, $19, includes postage and handling.

Inside Prisons, Crime File Series, VHS Videotape, 1985, NCJ 100743, $17, includes
postage and handling.
Jacobsen, V.J., R. Miller, and G.E. Sexton,
Making Jails Productive, NIJ Research in
Brief, 1991, NCJ 132396.
MacKenzie, Doris Layton and Claire Souryal,
Multisite Evaluation of Shock Incarceration,
NIJ Research Report, November 1994, NCJ
150062.
McDonald, Douglas, Managing Prison Health
Care and Cost, NIJ Issues and Practices,
March 1994, NCJ 152768.
Prison Crowding, Crime File Series, VHS
Videotape, 1985, NCJ 097229, $17, includes
postage and handling.
Useem, Bert, Camille Graham Camp, George
M. Camp, and Renie Dugan, Resolution of
Prison Riots, NIJ Research in Brief, October
1995, NCJ 155283.

Program Focus 15

U.S. Department of Justice

PROGRAM FOCUS

Office of Justice Programs
National Institute of Justice
Washington, DC 20531
Official Business
Penalty for Private Use $300

16 National Institute of Justice

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