I

----------i

t l11ikd St at.<"s Ge1wral A<·cmrnt in~ Of'f1<'e

GAO

l{eport to the llonorablc
1Tarry Flcid, lJ.S. Senate

PRISONER LABOR
Perspectives on Paying
the Federal Minimum
Wage

GAO/G<i D-H:l-H8

.--------·-;

GAO

United States
General Accounting Offtce
Washington, D.C. 201548
General Government Division

B-253226

May20, 1993
The Honorable Harry Reid
United States Senate
Dear Senator Reid:
In your October 1, 1992, letter, you requested information on potential
effects on prison work programs and potential fiscal impacts if the
nation's prisons were made subject to the Fair Labor Standards Act (FLSA) 1
and required to pay minimwn wage for prisoner work. Your interest was
based on the recent decision by the U.S. Court of Appeals for the 9th
Circuit that certain prisoners are subject to the minimum wage provisions
of FLSA.2 This infonnation was requested to aid congressional
decision-making on whether prisoners should be specifically excluded
from FLSA coverage.
In order to respond to your request, we (1) compared inmates' labor wages
to minimum wages; (2) obtained views of federal and state prison officials
on how the minimum wage would potentially affect prison systems; and
(3) obtained views of organized labor and other organizations likely to
have perspectives on paying prisoners minimum wage. Our data are not
projectable to all prison systems, opinions on impact are subjective, and
projections for cost impacts are approximations.
Our information was obtained from officials of the Federal Bureau of
Prisons (BOP) in Washington, D.C., and four state prison systems-Arizona,

Florida, Nevada, and Virginia. We also visited a federal and a state prison
in each of the four states. At each location, we sought data on inmate work
and pay and views on potential effects of minimum wage. We also
telephoned officials from 15 other state prison systems and solicited their
views. Further, we interviewed officials from other organizations, such as
the American Federation of Labor and Congress of Industrial
Organizations (AFlrCIO) and The Brookings Institution, that have
expressed views on inmate pay. We did not verify the data or evaluate the
views provided to us. Our objectives, scope, and methodology are
discussed in more detail in appendix I. A summary of the inmate work and
pay information provided by each prison system we visited is presented in
appendix II.

1Fair

Labor Standards Act of 1938, as amended (29 U.S.C. 201·19).

2Hale

v. Arizona, 967 F.2d 1356 (9th Cir. 1992).

GAO/GGD-98-98 Minimum Wage for Prisoners

Page 1

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B-253226

Results in Brief

If the prison systems we visited were required to pay minimum wage to
their inmate workers and did so without r~ducing the number of inmate
hours worked, they would have to pay huritdreds of millions of dollars
more each year for inmate labor. Consequ~ntly, these prison systems
generally regarded minimum wage for p~oner work as unaffordable, even
if substantial user fees (e.g., charges for r]om and board) were imposed
on the inmates.

Prison systems officials consistently iden fled large-scale cutbacks in
inmate labor as a likely and, in their view, ~angerous consequence of
having to pay minimum wage. They believed that less inmate work means
more idle time and increased potential forlviolence and misconduct. They
also noted other potentially adverse consequences for prison operations
1
(e.g., routine maintenance performed less frequently) and generally saw
few advantages to paying minimum wage.J
On the other hand, some of the organizati ns we visited had a different
perspective on inmate pay, based on the idea that prison work experiences
should be more like those in the general p~blic. Minimum or prevailing
wages are a part of the "factories with fen{es" concept that many criminal
justice, private industry, and other official$ supported in the 1980s. That
concept called for improved irunate work and training opportunities by
( 1) making greater use of prison industri~, particularly those operated by
the private sector, and (2) operating the in~ustries under normal business
and pay practices. Some organizations als@ believed that by not paying
inmates minimum or prevailing wages, pri~on industries gain an unfair
competitive advantage and/or displace wotkers who are not imprisoned.

B~ckground

Inmate work is a major part of the correctlons profession's effort to
operate prisons safely and constructively J.nd to reduce prison costs. 3
Prison work (1) reduces irunate idleness ahd thus the potential for prison
security problems; (2) provides opportunitlies for inmates to improve or
develop job skills, work habits, and expen::"bnces that can assist in
ure that maintenance
post.release employment; and (3) helps to
necessary for day-to-day operation of the rison is completed. Inmate
labor also reduces prison costs. For exam le, irunates perform functions
1

3Correctional standards promulgated by the American co.!rectional Association provide that sentenced
inmates, who are generally housed in maximum, medium, minimum securicy prisons, be required to
work and be paid for that work. These standards also provide that pretrial and unsentenced inmates,
who are generally housed in jails, not be required to work.jFederal and state prisons house about
860,000 inmates while jails have an average daily inmate pipulation of over 400,000.

pr

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GAO IGGD-93-98 Minimum Wage for Prisoners

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B-258228

such as cooking that would otherwise have to be perfonned by higher paid
civilian staff.
Generally, sentenced inmates are expected to perform some type of
institution maintenance or industrial work on a full-time (6 to 8 hours a
day, 5 days a week) or part-time basis.4 Exceptions include those who are
medically unable to work, a security risk, or involved full time in an
approved educational or vocational training program. Maintenance work
includes cooking inmate meals, laundering inmate clothing, repairing
boilers, performing clerical work, and maintaining the grounds and
buildings as well as many other functions necessary for the day-to-day
operation of the prison. It also sometimes includes public works projects
such as assisting local communities in repairing roads and assisting
forestry departments in clearing land and planting trees. Inmates may also
do industrial work for the prison or private companies. This work may
include manufacturing products (e.g., office furniture, mattresses, and
automobile tags) and providing services (e.g., data entry and automobile
repair) for sale to government agencies and sometimes to the private
sector. 5 The goods or services are sold at prices usually designed to
recover costs, including manufacturing and overhead. The revenues may
be used for business or prison operations.
Most inmates are assigned to maintenance rather than prison industries
jobs. A nationwide American Correctional Association survey in 1991
reported that about 8 percent of the federal and state prisoners had
industry type jobs.
Whether inmates are paid or the amount paid varies among the individual
federal or state systems. For example, BOP and the states generally provide
some compensation to prisoners for their maintenance and industry work.
However, some states (e.g., Texas) do not pay for any inmate work, while
some states (e.g., Florida) may generally pay only those inmates doing
industry jobs. Inmate pay may be based on a rate per hour; cover a specific
time period ( e.g. 1 monthly); or be based on piece work. Under some
systems, inmates may also earn extra pay for overtime work and length of
time employed (longevity), receive paid vacations and holidays (remain in
4
Some inmates work in the community under a work-release program, where they typically are
employed during the day and return to the institution at night. These inmates are employees of private
or public sector organizations outside of the prison system and thus their entitlement to minimum
wage would depend on whether their work for these organizations meets the criteria for FLSA
coverage. Consequently, these Inmates were excluded from our review.

liSome prison systems (e.g., BOP) are precluded by law from selling their products and services to the
private sector.

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GAO/GGD-93-98 Minimum Wage tor Prisoners

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B-2153228

prison but do not work), and receive paYinents under a workers (accident)
compensation program. Some prison systems may also pay inmates for
their participation in vocational training ' rograms and in literacy or other
educational programs.
Over the years, the courts have held that mmates may be required to work
and are not protected by the constitution~ prohibition against involuntary
servitude. They have also consistently held that inmates have no
constitutional right to compensation and [that inmates are paid by the
"grace of the state." However, some stater (e.g., Virginia) have laws
requiring that inmates be compensated for their work.
Under federal law, 18 U.S.C. 176l(c), 50 jonfederal prison pilot projects
may produce products for sale in interstaite commerce, provided that,
among other things, inmates employed inJ these projects are paid the
prevailing wage for their work. These prdjects, referred to as the Prison
Industry Enhancement (PIE) Program, ar~ approved by the Bureau of
Justice Assistance. The Bureau requires that PIE industries pay at least the
minimum wage if a prevailing wage cannbt be detennined. As of
December 1992, PIE industries employed
1,000 inmates nationwide.

rut

Under FLSA, employers are generally reqmred to pay employees at least the
I
minimum hourly wage set by federal law for up to a 40-hour workweek.
The overtime rate for all hours worked ofer the 40 hours is set at one and
one-half times the employee's regular rateI of .pay. Generally, the courts
have held that prisoners are not employees as defined under the act and
thus not subject to the FLSA requirements 6

Shbstantial
Differences Existed
Between Pay and
Minimum Wage

For the most part, inmates in the five pri~on systems we visited either
were not paid or were paid at rates that are substantially less than the
federal minimum wage of $4.25 an hour. Table 1 summarizes the basic pay
policy for maintenance and industries wdrk at the five prison systems.

zn

0

q.s.

Hale v. Arizona, however, a three-judge panel of the
Court of Appeals for the 9th Circuit held
that the involved inmates, who worked for a "private en~ rise" component of Arizona's prison
industries, were "employees" of the state and thus subj
to the FLSA requirements. That case was
"""""'m"""' by the Comtl• N~em00d992. bnt • d
.. . . , . . , " " ' " " " " " ' " '

Page 4

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GAO/GGD-93-98 Minimum Wage for Priaoners

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Table 1: Basic Inmate Pay Polley at
Visited Prison System•

Prison system

Maintenance pay ratee

BOP

Generally 12 to 40 cents an
hour; outstanding work could
result In a bonus of up to
one-half an inmate's monthly
pay. Some inmates are paid
only $5.25 a month because of,
for example, budget problems.
10 to 50 cents an hour.

Arizona

Florida

Nevada

Virginia

Only pays a few inmates (e.g.,
inmates working in canteen
operations receive $50 to $75
monthly).
Prison officials decide who is to
be paid and how much; pay is
generally less than $1 an hour.

20 to 45 cents an hour.

Industries pay rates
23 cents to $1.15 an hour with
up to 40 additional cents an
hour on the basis of work
considered outstanding and
length of time employed.

40 to 80 cents an hour, but
inmates involved with private
sector industries earn minimum
wage ($4.25).
15 to 45 cents an hour with
increases, based on length of
time employed, of up to 15
cents an hour.
Minimum wage ($4.25) for
private sector-operated
industries. For prison-managed
industries, pay is based on
piece rates that could exceed
minimum wage.
55 to 80 cents an hour. a

•These rates were being Implemented at the time of our visit. Full implementation was not
expected until June 1993.

As table 1 indicates, of these five systems only some Arizona and Nevada
inmates had the opportunity to earn minimum wage or more. In Arizona,
about 60 of the approximately 650 inmates working in prison industries
were involved with private sector operations and could earn minimum
wage. In Nevada, about 150 inmates worked in PIE industries and were
being paid minimum wage. The other half worked in industries operated
by the Nevada prison system and were paid on the basis of a piece rate pay
system. Nevada officials believe that piece rate pay provides more
incentive for inmates to be productive than a regular hourly wage. In
January 1993, the piece rate inmates earned an average of $2.82 an
hour-actual earnings ranged from 75 cents to about $5 an hour.

Many inmates at the five systems were paid at the lower rates of the
established pay scales. For example, BOP policy for nonindustry inmates
provides that about 55 percent of the inmates are to be paid an hourly rate
for maintenance work at pay grade 4 (12 cents), 25 percent at grade 3 (17
cents), 15 percent at grade 2 (29 cents), and 5 percent at grade 1 (40
cents). Our review of prisoner payroll records at the four federal prisons

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GAO/GGD-93-98 Minimum Wage for Priaonen

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B-2153226

we visited indicated that the inmates wert generally being paid at the
lower pay grades.
Our analysis of data from the Justice Department and others indicated that
the nation's other prison systems had sinflar pay rates for their inmate
workers. For example, a nationwide survey done by the Justice
Department indicated that prison industi1r inmates were generally paid a
regular rate ofless than $1 an hour during 1991.
I

Cost of Paying for Existing
Work Levels at Minimum
Wage

All five prison systems would face a substantial increase in costs in the
hundreds of millions if existing inmate w~rk levels had to be paid at
minimum wage. If required to pay minimrtm wage, officials at these
systems noted that they would likely impbse substantial user fees and
reduce their inmate labor levels.
P

f

BOP officials told US that their industries
d 15,300 prisoners average
rates of 87 cents an hour for 27.2 million ~egular hours worked and $1.75
an hour for 1.8 million overtime hours w9rked during fiscal year 1992. This
amounted to about $26.9 million for lnmafe compensation---$100 million
less than what paying the minimum wage1would have cost for the same
number of hours. Although overall data wi,ere not available, our review of
payrolls at the four federal prisons we vis~ted indicated that the difference
in pay for maintenance work would hav~·een substantially greater than
the difference for industrial work had the inmates been paid minimum
wage. This is because wages for mainte
ce work were substantially less
than the wages for industrial work and because most inmates work in
maintenance jobs.
1

At the state level, for example, Arizona officials noted that their industries
paid about $614,000 in inmate wages for the year ending June 30, 1992, as
compared with about $3. 7 million they w~uld have paid for the same
number of hours at minimum wage. Ariz~~a officials did not have
statewide information on how much inm~te maintenance would have cost
at minimum wage. However, at the Arizona prison we visited officials
estimated that for the year ending June 3 , 1993, they will pay inmate
wages of about $458,000 (average of 26 c nts an hour) for maintenance
work compared with about $7.5 million if the estimated number of hours
were paid at minimum wage.
These hypothetical differences between e1 ·sting and minimum wage
payrolls do not include the cost of emp!Jri>aid benetlt. that inmateB

Pacel

G

rD-....

&-.....w... .,,...._...

I

..

B-233228

may be entitled to if considered to be employees. For example, prison
systems may be subject to paying, along with the inmates, social security
truces amounting to 7.65 percent of the inmates' eamings.7
On the other hand, the differences between existing and minimum wages
do not include potential charges such as user fees and taxes which could
result in some of the additional wage costs being returned to the federal
and st.ate governments. For example, officials at the prison systems we
visited generally believed that if inmates were to receive the minimum
wage, the prison systems would be forced to assess substantial user fees.
Of the five prison systems we visited, only Nevada imposes a room and
board charge on its maintenance and industry inmate workers who earn
less than minimum wage-24.5 percent of their weekly wages in excess of
$18. Nevada also charges nonindigent inmates $4 each time they report on
sick call.
BOP has been directed {P.L. 102-395, Oct. 6, 1992) to charge new inmates
for their cost of incarceration for up to a year (which is now about
$20,800). These funds are to be used for drug and alcohol abuse treatment
programs. Since BOP has not yet developed procedures for implementing
this charge, it is not known how much, if any, of the cost will be recovered
through deductions from inmate earnings or assessments on other
resources available to the inmate. Presently, BOP inmates who are
employed in the corrununity or who have other means of financial support
and who reside in halfway houses pay 25 percent of their earnings to the
operators of the halfway houses in accordance with BOP policy.

Victim restitution and child support payments are examples of other
possible deductions from inmates' pay. Unlike room and board charges,
however, these deductions represent funds that would be paid to members
of the general public and not recovered by federal and st.ate treasuries.
However, some payments may result in reduced government expenditures.
For example, if the inmates paid child support and their children are
supported by government aid programs, the net effect may be to reduce
the amount paid by federal and st.ate governments.

Contacted Prison
Systems' Vi~ws on
P$ying Minimum
Wages
I

Because there is little available research or studies on the potential impact
of prisoners being covered under FL.5A's minimum wage provisions, some
ramifications are unknown. Nevertheless, the prison systems we contacted
generally believed that paying minimum wage would adversely affect
prison work, job training programs, and prison security. They also noted
7We

did not determine what taxes inmates are required t.o pay.

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GAO/GGD-93-98 Minimum Wage for Prieoner1

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.:··

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B·21S3Z26

other potential issues associated with tre ting inmates as employees and
identified few benefits of paying inmates r:um wages.
Officials did not believe that they would ~be able to continue to employ the
same number of inmates if they had top minimum wage. For example,
Arizona officials said it was unlikely that ey would be given the
additional funds to pay minimum wages, ffVen if the increased pay amount
was substantially reduced by imposing user fees. Therefore, Arizona
officials maintained that they would be fo~ced to substantially reduce the
inmate workforce.
The four other prison systems we visited told us that they would have to
also substantially reduce the number of i~ates who work if minimum
wages had to be paid. Officials from the prison systems we surveyed by
telephone also said that fewer irunates w3~1d be permitted to work.
Further, 13 of the 20 prison systems con~ted believed that the inmates
who remained employed would work fewer hours, while 3 thought they
would work more, and 3 thought they woJld work the same number of
hours. One system did not know how the bumber of hours inmates worked
would be affected.

If

Other Potential Impacts of
Paying Minimum Wage

The prison systems provided similar resp~nses to questions about
potential impact on (1) inmate idle time, ( ) prison security, (3) efforts to
teach good work habits and job skills, ( 4) :'ndustries' earnings, (5) routine
institution maintenance, and (6) public w ,rlcs. (See app. III for their
detailed responses.)
All 20 prison systems told us there would
increased inmate idle time
and more inmate rule infractions or secWity problems if minimum wages
had to be paid. Officials at both the pri~~ system headquarters offices and
at the specific prisons we visited consiste!tly noted that reduced inmate
work means more inmate idle time, whic contributes to more inmate
disorder and violence and makes their p · ns more dangerous. For
example, the warden and others at the Neyada prison noted that any
substantial cutback in inmate jobs would be a security and administrative
nightmare and that they could not implem~nt programs to reduce the
resultant idle time. They said that some eJ~ting work details are
overcrowded and involve little actual wo;kbut pointed out that even these
jobs aid their efforts to maintain an orderir prison. According to BOP, the
reduced employment "would seriously jeopardize the security of federal
penal and correctional facilities, as idleness and boredom multiplied
1

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GAO GGD-93-98 Minimum Wage for Prisoners

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B-2153228

among an irunate population serving significantly longer sentences, with
virtually no prospects for early release."
All 20 prison systems thought that efforts to teach good work habits and/or
job skills would also be reduced. BOP's prison industry officials said that
the reduced employment would deprive thousands of inmates of the
opportunity to learn the basic work skills that are so essential to success
in the outside world. Officials from three systems also told us that those
irunates who end up working would receive better training.
Nineteen of the 20 prison systems we contacted had prison industries. Of
the 19, 17 responded that having to pay minimum wage would eliminate or
substantially reduce earnings from those industries. One said profits
would decrease, and one noted that they operate without profits. Officials
at the five prison systems we visited noted that they would have to
eliminate or substantially alter their industrial operations. For example,
BOP said that paying minimum wage would result in a substantial increase
in product cost, to the point that their products would not be competitive.
Consequently, BOP told us that it would have to automate much of its
industrial production and reduce inmate employment drastically in order
to control labor costs, continue to offer products to federal agencies at
current market prices, and remain self-sufficient.8 BOP noted that if inmate
employment was not substantially reduced, economic viability would
require much greater specialization and automation, leading to a
concentration in a few industries. BOP said that would be in violation of its
statutory mandate to diversify industrial operations so as to minimize
impact on any single private industry. BOP officials noted that even after
instituting these fundamental changes in their industrial operations, they
still might not be able to remain competitive because, unlike the private
sector, they have security costs, employ a workforce that has minimal
education and few work skills, and work within the constraints imposed
by a prison's physical layout.
Regarding the impact on institution maintenance, 19 prison systems
thought minimum wage would lead to less frequent routine maintenance.
The other thought that maintenance efforts would be enhanced because
only the most motivated and able inmates would be filling the fewer jobs
available.
In response to our final survey question, 17 prison systems told us they
had inmates who performed public service projects. Of the 17, 12 thought
8BOP officials also

Page9

noted that they do not have the funds to automate their industries.

GAO/GGD-93-98 Mbalmwn Wage for Pri80nen

B·2H228

that mfuimum wage would result in such ~rojects being abolished and 5
said that fewer projects would be done. Fbr example, a Nevada official
told us that they would have to stop mucl~ if not all, of the roadwork and
other public service now done by approxirtely 1,500 work camp
inmates.

1

Officials at the five systems we visited als© expressed various other
concerns about the minimum wage. Two had concerns about the Wlknown
ramifications of classifying inmates as emrloyees under the FI.SA because
historically they have not been viewed as employees. They wondered if
inmate workers would be allowed to join ~ons or would become eligible
for Wlemployment compensation or sick ~ay. Other concerns included
(1) having to employ more administrative ~taffto handle additional payroll
matters (e.g., tax withholding) and/or mor~ security staff to oversee
increased inmate idle time; (2) being unable to afford overtime work and
incentive pay; and (3) having inmate dissehsion over the fewer jobs
available.

Few Advantages Seen for

Paying Minimum Wage

Others' Perspectives
oilt Paying Minimum
Wage for Prisoner
Work

The prison systems we contacted generallf saw few advantages to paying
minimum wage. We asked officials of the five systems we visited to
identify possible advantages of higher wa~es for inmates. Some officials
(e.g., Virginia) noted that there was a scho~l of thought that inmates
should be paid minimum wage or more as ivart of an overall effort to make
prison work more like the "real world." Otif1cials noted that irunates would
also have more funds to pay for victim res 'tution and child support.
Some organizations and studies had a diffJrent perspective on irunate pay
than the prison officials we contacted. Sorlte generally favor improving
inmate work programs and inmate pay thrbugh greater use of prison
industry programs. These programs could be operated by, or operate like,
fences" approach. Some also
private sector businesses, the "factories
support paying irunates the prevailing wag~ so that prison industries do
not have an unfair competitive advantage ver businesses that do not have
access to prison labor.9

vJtl.

fJ

The "factories with fences" approach had ~ts roots in Justice Department
efforts in the mid-1970s to assist states in coping with the problems of
inmate idle time and inefficient work
The Justice Department

pror.

1

8In our discussions of this matter with BOP officials, they J....inted out that federal prison industries are
,_,,_,. omree ofp---fornthe<fedond

Page JO

iGD-93-98 Mlnlmum Wage for Priaonen

provided funds and other support to implement a prison industry model in
participating states. The model was based on private sector concepts such
as productivity-based wages. In 1979, Congress authorized seven PIE
projects that allowed the seven participating correctional agencies to sell
the products of private sector-operated prison industries across state lines,
provided, among other things, that inmates be paid the higher of the
prevailing wage in the free market or the minimum wage and be assessed
charges such as room and board. (The Justice Department was given
responsibility for certifying that a project or correctional agency met the
PIE criteria.) Through subsequent amendments, Congress raised the
number of authorized PIE projects to 50.
In the 1980s, then-Chief Justice Warren Burger, working with
representatives from the corrections, business, labor, legal, and academic
communities, further promoted the idea of greater private sector
involvement in prison industries. It included having those industries pay
prevailing wages, sell products to the public, and generally operate like
free-world industries. Under the program, deductions were to be taken
from the inmates' pay for such items as room and board, taxes, and victim
restitution.

Our review showed that the "factories with fences" concept was expected
to apply to industries work. Also, according to representatives from The
Brookings Institution and the now-defunct National Center for Innovation
in Corrections involved in developing the concept, it was anticipated that
because of budgetary and other problems, many prison systems would not
extensively pursue the concept. A 1989 Justice Department survey found
that only about 5,000 inmates were working in PIE and non-PIE private
sector-operated industries.
Concerning the issue of unfair competition, prison industries, like BOP's,
have long faced criticism from labor groups and businesses about the low
wages paid to inmate workers..The AFL-CIO's position is that prison labor
programs should pay wages that are not less than the prevailing wage for
similar work in the private sector to avoid unfair competition and
displacing workers who are not imprisoned. The AFL-CIO also says that
inmates should pay room and board, taxes, victim restitution, and, where
necessary, dependent support. However, the AFlrCIO opposes the sale of
prison-made goods and services to the public.

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Agency Comments

I

We discussed this report with officials of the five prison systems we
vlslted, who generally agreed with the lnflon presented.
As arranged with your office, we plan no ft.u.ther distribution of this report
until 30 days after its issue date, unless y~I publicly release its contents
earlier. At that time, we will send copies each of the prison systems and
other organiutions we contacted and oth r interested parties. We will also
make copies available to others upon requ st.

The major contributors to this report are Jsted in appendix IV. Should you
need additional information on the contents of this report, please contact
me on (202) 566-0026.
Sincerely yours,

Henry R. Wray
Director, Administration
of Justice Issues

•

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GAO/GGD-93·98 Minimum Wage for Prisoners

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GAO/GGJ>..93-98 Minimum Wage for Prhlonen

Contents

Letter

1

Appendix I
Objectives, Scope,
and Methodology
Appendix II
Information on
Inmate Work and Pay
at the Five Prison
Systems GAO Visited

16

19
Federal Bureau of Prisons
Arizona Department of Corrections
Florida Department of Corrections
Nevada Department of Prisons
Virginia Department of Corrections

19

20
22
23
23

Appendix III
Responses of the 20
Contacted Prison
Systems to GAO's
Questions on
Potential Impacts of
Minimum Wage

25

Appendix IV
Major Contributors to
Tltls Report

27

'

Table

5

Table 1: Basic Inmate Pay Policy At VisiJd Prison Systems

Page 14

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{GGD-93-98 Minimum Wage for Prl8onen

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CoDteDOI

•

Abbreviations
ACI
AFlrCIO

BOP
FLSA
PIE
PRIDE

UNICOR

VCE
WIPP

Page 15

Arizona Correctional Industries
American Federation of Labor and Congress of Industrial
Organizations
Federal Bureau of Prisons
Federal Fair Labor Standards Act
Prison Industry Enhancement Program
Prison Rehabilitative Industries and Diversified Enterprises
(Florida)
BOP's Federal Prison Industries (Trade Name)
Virginia Correctional Enterprises
Work Incentive Pay Plan (Arizona)
GAO/GGD-93-98 Mbdmum Wage tor Priaonen

Appendix I

Objectives, Scope, and Methodology

Our objectives were to (1) compare inma es' labor wages to minimum
wages; (2) obtain the views of federal and state prison officials on how the
minimum wage would potentially affect p · on systems; and (3) obtain the
views of organized labor and other seleciJd organizations likely to have
perspectives on paying prisoners minimlwage. To accomplish these
objectives, we agreed with Senator Reid's office to
• visit five prison systems to obtain info11ll3i~ ·on on inmate work and pay
policies, actual hours worked and wages paid, what existing work would
cost if paid at minimum wage, and potentiklal effect.s of minimum wage on
prison work and operations;
• survey 15 other prison systems on potenti effect.s of minimum wage on
prison work and operations; and
]
• contact selected organizations represent~g various groups likely to have
perspectives on the issue of minimum wage for inmate work.

Joor)

We visited the Federal Bureau of Prisons
in Washington, D.C., and
four state prison systems-Arizona, Florida, Nevada, and Virginia.
We selected BOP because of its convenient location and the experience and
information gained from other federal pri on work we have done, and it.s
size-it has the nation's second largest ·
te population and has a
substantial number of inmates employed · industries and maintenance
work. Arizona was selected because of its ]involvement in the court case
that led to our work and because it conse<luently had developed some
opinions and data on the minimum wage ikue. Nevada was conveniently
located near our work in Arizona and also]had some information on the
potential effects of minimum wage. Floridr and Virginia represent,
respectively, a large and a medium size irutnate population prison system
located in the eastern section of the Unite States. All four states had
industry and maintenance work and a stat prison and a federal prison
located near their prison system's central ffices.
At each of the state prison systems, we int] !Viewed officials and reviewed
documents at their central office and at a ' earby prison. We did the same
at BOP's central office in Washington, D.C., and at a federal prison located
in each of the four states.
We also judgmentally selected the 15 statl to be surveyed. We included
states with small inmate populations (Mo tana, North Dakota, Vermont,
Wyoming, and Washington); medium size mnate populations (Georgia,
Louisiana, New Jersey, and Pennsylvania), and large inmate populations

GAO GGD-93-98 Minimum Wage for Priaonen

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Appendb: I
Objecdvea, Scope, and Methodology

(California, Illinois, Michigan, New York, Ohio, and Texas). The selected
small systems had inmate populations of under 10,000, the medium size
systems had imnate populations of 16,000 to 24,000, and the large size
systems had inmate populations of 37,000 to 104,000. Justice Department
statistics showed that these 15 states, along with BOP and the 4 states we
visited, had about 598,000 inmates-70 percent of the nation's prison
population as of June 1992. However, our results cannot be generalized to
all of the nation's prison systems on the basis of the 20 systems contacted.
We did not verify the data or evaluate the views that were provided to us.
We asked each of these 15 states as well as the 5 prison systems we visited
about the potential impact, if any, of paying minimum wage on (1) the
number of inmates who work, (2) the number of hours that would be
worked by employed inmates, (3) inmate idle time, (4) prison security,
(5) efforts to teach good work habits and job skills, (6) industries'
earnings, (7) routine institution maintenance, and (8) irunate public works
projects. For each question, we asked if they thought minimum wage
would cause no change, an increase, a decrease, or some other change.
They could also answer that they did not know. In addition, we asked for
any other comments they might have on the minimum wage issue.
We provided the survey questions to the 15 states and then obtained their
views through either telephone conversations or written responses. The
views of the five prison systems we visited were obtained during our
meetings with their officials.
We contacted the following organizations to obtain any views or
information they might have on the issue of paying minimum wage for
prisoner work: .AFL-CIO, American Bar Association, The Brookings
Institution, Correctional Industries Association, Institute for Law and
Justice, National Council on Crime and Delinquency, National Association
of Manufacturers, Council of State Governments, National Conference of
State Legislatures, National Federation of Independent Business, and the
U.S. Chamber of Commerce. We also contacted (1) the former executive
director of the now-defunct National Center for Innovations in
Corrections, which in the 1980s served as a focal point for efforts to
enhance prison work programs, and (2) one of the authors of the federally
funded issue publication Work in American Prisons: The Private Sector
Gets Involved (National Institute of Justice Issues and Practices in
Criminal Justice, May 1988). We also reviewed the American Correctional
Association's standards on inmate work and pay.

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Appendix I
ObJeetlvu, Seope, and MethodolollJ

These organi7Jltions were selected becausf of (1) their lmown interest in
prison work or pay issues, (2) the possibihty that they would have an
overall perspective on the ability of states fund existing irunate work at
minimum wage, or (3) the recommendati9ns of some of the organizations
we initially contacted. Some did not have ~position or any views regarding
the payment of minimum wages. We did nbt meet with human or civil
rights organizations because these issues ere not a part of our review.

Ito

We reviewed published articles on priso and prison work and
interviewed officials and reviewed selecte material on prison work and
pay at the Justice Department's Bureau of Justice Assistance, Bureau of
Justice Statistics, National Institute of Co~ecti. ons, and National Institute
of Justice. We also interviewed officials at the U.S. Marshals Service about
pretrial federal offenders housed in contr ct jails, and the Department of
Labor's Wage and Hour Division about the Fair Labor Standards Act
(FLSA).
We did our work between November 1992 and March 1993 in accordance
with generally accepted government auditmg standards.

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,,
Appendix II

Information Dn Inmate Work and Pay at the
Five Prison E~ystems GAO Visited
1

The five prisons systems provided infonnation that was readily available
on inmate work and pay. Thus, the summaries below vary with respect to
the range and amount of data.

Federal Bureau of
Prisons

BOP housed about 80,000 inmates in about 70 federal prisons and various
contract facilities throughout the United States and in Puerto Rico. All
able-bodied sentenced prisoners were required to work, except those who
participated full time in education or other treatment programs or who
were considered security risks. BOP's policy is to pay all inmates who
perfonn satisfactory work, and BOP officials set the pay rates. BOP does not
now charge inmates who perform maintenance and industries work a
room and board charge; however, Public Law 102-395 directed BOP to
assess new inmates for their cost of incarceration for up to a year (which
is now approximately $20,800).

Maintenance Work

BOP officials estimated that about 60,000 inmates work in the maintenance
area. Generally, maintenance jobs, which are referred to as institution
work assignments, are paid at one of four hourly pay grades: grade 1, 40
cents; grade 2, 29 cents; grade 3, 17 cents; and grade 4, 12 cents. The
inmate workers may also receive bonus pay of up to one-half of their
monthly pay for work considered outstanding. Because of budgetary
restraints, BOP policy is to employ the largest number of irunates at the
lower paying grades. Also, some inmates are not given a pay grade but are
paid $5.25 a month because of limited position allotments or for failure to
participate in certain critical programs. BOP refers to pay for institution
work assignments as performance pay.
Information provided by officials at the federal prisons we visited revealed
a perspective on what existing institution work would cost at minimum
wage. For example, at the federal prison camp in Nevada, 456 prisoners
received about $6, 700 in perfonnance pay in November 1992 for about
51,900 hours of work, or an average of about 13 cents an hour.

Industries Work

BOP's prison industries, operating under the trade name UNICOR, employed
more inmates and had more sales than any other prison system in the
United States. UNICOR operates factories in 47 different prisons and
produces a wide range of product.a and services such as office furniture,
military helmets, and data entry for sale generally to other federal
agencies. For fiscal year 1992, UNICOR had about $417 million in sales to

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Appendix II
Information on Inmate Work ud Pq at the
Five PrlHD 8,.tema GAO Vlaited

federal.agencies and an average employmttof 15,300 inmates, about 25
percent of the inmate population BOP offic
considered employable.
UNICOR's jobs tend to be more labor inte] e than those in the private
sector and thus overemploy inmate produ, tion workers when compared
to private finns. They do this, according BOP officials, to employ as
many inmates as possible while remaining self-sufficient and meeting their
statutory mandate to diversify their products and not unduly compete with
any single private industry.
BOP officials

believe that UNICOR provides orthwhile training in good work
habits and skills and favorably affects inm tes' chances for postprison
success. They noted that UNICOR's success reducing recidivism has been
documented in research on 7,000 inmates eleased from 1983to1987. The
study found that inmates who participate in UNICOR work, or other
vocational training, showed better adjus ~ent while in custody and when
released were less likely to have their par le revoked. While we have some
methodological concerns such as the abse. ce of random selection of
study inmates, we believe that the study ~as a well-designed and
ambitious effort, and the results generally ~upported the conclusion of a
coITelation between UNICOR work experielce and postrelease outcomes, at
least for the population studied.
1

The UNICOR inmate employees' hourly pay ates ranged from 23 cents to
$1.15. They may also earn incentive and lohgevity pay of up to 40 cents an
hour and are paid double time for overtim~ work. UNICOR officials
estimated that their inmate employees wotked 27.2 million regular hours
and 1.8 million overtime hours during fiscAf year 1992 and were paid about
$26.9 million. They said those same numb1.r of hours would have cost
$126.9 million if paid at minimum wage.

•
Arizona Department
of Corrections

The Arizona Department of Corrections wk; responsible for
approximately 16,000 inmates, housed in 110 prison complexes throughout
the state. State law requires that all able-bodied inmates work 40 hours a
week or at least 20 hours if involved in tre~tment programs. Maintenance
workers cannot be paid more than 50 cen~ an hour. The pay of industries
workers is to be determined by Corrections Department officials, except
that any inJnates working for private com-danies are to be paid at least at
minimum wage. Inmates who make · · ~b wage or more are to pay 50
cents per hour plus 10 percent of earnings over 50 cents per hour into a
fund that is to be used to offset their room and board costs and to pay

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GAO GD-93-98 Minimum w_,e for Prisoners

Appendlxll
lntonaatlon oa Inmate Work ud Pay at the
Five Prt.on 819tehll GAO Vlalted

support to their dependents. Also, under state law Corrections Department
officials may assess room and board charges on inmates earning less than
minimum wage, but they do not do so.

Maintenance Work

About 10,000 inmates (62 percent) have a maintenance work assignment,
referred to as the Work Incentive Pay Plan (WIPP). Under WIPP, inmates
earn from 10 to 50 cents an hour and generally are expected to work 6
hours a day and not more than 40 hours a week. About $3. 7 million was
allocated for WIPP for the fiscal year ending June 30, 1992. Since Arizona
officials did not have overall data on the number of hours inmates worked,
we could not estimate how much that maintenance work would have cost
systemwide if it had been paid at minimum wage.
We obtained a perspective on existing versus minimum wage pay from
otlicials at the Arizona prison (Perryville) we visited. According to prison
otlicials, they expect to pay WIPP inmates wages of about $458,000 for the
fiscal year ending in June 1993 and would have to pay another $7 million if
that same number of hours were to be paid at minimum wage.

Industries Work

About 650 inmates (4 percent) work for the Corrections Department's
self-supporting industry component, Arizona Correctional Industries (ACI).
Inmates working in ACI jobs earn from 40 t.o 80 cents an hour and are
expected to work 8 hours per day, 5 days a week. There were 8 inmates in
Prison Industry Enhancement Program (PIE)-certified industries and 49
inmates working under private sector contracts, earning minimum wage.
sells to federal and other state agencies and nonprofit organizations a
range of products, including otlice furniture, picnic tables, park benches,
mattresses, license plates, signs, and services such as data entry. Gross
sales for the fiscal year ending in June 1992 were about $6 million with
inmate labor costs amounting to about $614,000. Arizona otlicials
estimated that the same amount of inmate labor would have cost an
additional $3. 7 million at minimum wage and a total of $4.1 million after
including expected employer payroll costs (social security, unemployment
insurance, and workers compensation) and the cost of one additional staff
member to handle the increased payroll activity.
ACI

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Appendix JI

Infonnadon on Inmate Work and Pq at tbe
Five Prt.on S19teJU GAO Vlalted

Florida Department of
Corrections

Responsible for approx:imarely 48, 700 + s , the Florida Department of
Corrections housed them in 46 major ins~tutions, 5 road prisons, 3
forestry camps, 21 work camps, and 32~community correctional cenrers.
State law requires that all able-bodied ·
tes work, with compensation
being left to the discretion of the Correcti ns Department. lnmares were
generally expecred to work 8 hours a day, 5 days a week. According to
Florida officials, work can include partici ation in treatment programs.
I

Maintenance Work

About 39,200 inmates (81 percent) work ~t maintenance jobs and/or
participare in treatment programs, but on1ly a few are paid. About 350
inmares worked for contractors who pro~ded food service in some
Florida prisons. These inmates earned about 20 cents an hour. Another 300
inmares who worked in the prison cantetwere also paid. These inmates
were to be paid $50 to $75 a month from
reen revenues. Inmates are
not to be assessed any room and board c ges.
Overall information was not available on &e number o.f hours actually
worked by inmates with institutional jobsl

Industries Work

in~es

operated by Prison
About 2,400 inmates worked in prison
Rehabilitative Industries and Diversified nterprises, Inc. (PRIDE). They
were generally expected to work 8 hours day, 5 days a week and were
paid 15 to 45 cents an hour, with longevit · increases of up to 15 cents an
hour. PRIDE makes a variety of products ( .g., laundry care products and
custom signs) and offers services (e.g., c nverting hand-drawn plans to an
electronic computer file) that are general y sold to stare and local agencies
and the federal government. Annual sales If'or 1992 were about $68 million.

PR~DE

For the fiscal year ending in June 1992,
inmates worked about
4.4 million hours and received about $1.5 humon in wages, an average of
34 cents an hour. PRIDE officials estimate~ that had they paid the
4.4 million hours at the minimum wage, ttleir labor cost would have
increased to about $26.1 million, includinf benefits of about $7.5 million.
inmates are not charged for room a+,d board. PRIDE does, however,
annually pay 1.5 percent of gross sales to the stare to offset the cost of
inmate incarceration. PRIDE also pays 15 c nts for every inmare dollar
earned to the Corrections Department fo victim restitution purposes.
PRIDE

1

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fGGD-93-98 Minimum Wage tor Prisoners

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Appendix II
Jntormadoa oa Imnate Work and Pay at the
Five Pmoa 81•tema GAO Vblted

Nevada Department
of Prisons

The Nevada Department of Prisons' 6,000 irunates were housed statewide
in 18 facilities, including 6 prisons, 2 restitution centers, and 10 prison
camps. According to a Prisons Department representative, inmate work
assignments were voluntary. Inmates who worked receive sentenced
credits (time off their sentences), and some were also paid. Nevada
imposed a room and board charge on its maintenance and industry
workers of 24.5 percent of their weekly wages in excess of $18. PIE
industry inmates are to be assessed an additional 5 percent of earnings for
victims compensation. Nevada also charged nonindigent inmates $4 each
time they reported on sick call.

Maintenance Work

About 1,500 irunates were housed in prison work caIUps and were paid by
Nevada's Department of Forestry. These inmates were being paid up to
about $1 an hour. Decisions regarding maintenance pay for inmates at
other Nevada prisons were made by the warden at each prison, subject to
the Prisons Department's approval of the prison's budget.
We obtained a perspective on existing pay at the Nevada prison (Southern
Desert Correctional Center) we visited. Data provided by Prisons
Department and prison officials showed that 950 of the prison's 1,480
prisoners had maintenance work assignments. Data for November 1992
showed that about 200 inmates' pay rates ranged from $10 to $72 a month.

Industries Work

About 300 inmates worked in Nevada's prison industries. About half
worked in PI&certified industries making minimum wage. All other
irunates worked in prison system-operated industries under a piece rate
pay plan with opportunities to earn more than minimum wage. According
to a Nevada official, the piece rate inmates received, on average, $2.82 per
hour worked during January 1993, ranging from the lowest paid inmate
who averaged 75 cents to the highest who averaged about $5 an hour.
Nevada industries' annual sales amounted to about $3 million and involved
enterprises as diverse as antique automobile restoration and making
waterbeds. Sales are made to other state agencies and private sector firms.

Virginia Department
ofl Corrections

The Virginia Department of Corrections was responsible for
approximately 17,000 inmates housed in 23 major institutions and 28 road
camps. State law requires that inmates be provided opportunities to work

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Appendlz II
hllormatlon oa hunate Work and Pq at the

nwi Prl8oa Sptelm GAO Vlatted

I

to the extent feasible and that they be p~d, with the pay rates to be set by
the Corrections Department The
did not pay for room and board

Maintenance Work

About 10,300 irunates (61 percent) were ~igned to maintenance jobs,
referred to as institutional work assigrun~nts. These inmates were paid at
rates ranging from 20 to 45 cents an hour and were expected to work
ab.out 24 hours each week. (A bill pendin before the state legislature
would require inmates to work 40 hours er week.) For the fiscal year
ending June 30, 1992, the Corrections Deiartment paid about $5.6 million
for the institutional work.
1

Wonnation provided by officials at the ~pwhatan State Prison we visited
provided a perspective on what existing ipstitution work would have cost
at minimum wage. For example, for JanupY 1993, 577 inmate workers
received about $17,300 In wages for abour 57,300 hours. On average, that
amounts to about 30 cents an hour.

Industries Work

Prison industries in Virginia are referred l~ as Virginia Correctional
Enterprises (VCE). They employed about l,400 inmates who may earn from
55 to 80 cents an hour. The inmates were !generally expected to work 6
hours a day, 5 days a week. VCE makes vattous products (e.g., shoes, office
furniture, and vehicle license plates) and pffers services (e.g., printing and
data entry) that are generally sold to gov rnment agencies.
.
For the year ending June 30, 1992, VCE ha about $21 million in sales and
paid about $1.2 million for inmate wages. Officials at the Powhatan prison
said that for January 1993, 93 inmates we e paid about $7,680 for 14,521
hours worked. On average, that amounts · about 53 cents an hour.

/GGD-93-98 Mlnlmwn W111e for Prl10nera

•

Appendix Ill

Responses o the 20 Contacted Prison
Systems to G O's Questions on Potential
Impacts of M·nimum Wage
Que•tlon

Response

1. What change, If any, do you expect to
happen to the size of your Inmate labor
force?
2. For Inmates who will be working, what
change, If any, do you expect to happen to
the number of hours they work?

All 20 said that fewer inmates would be
permitted to work.
(a) No change: BOP, New York, and Texas.
(b) Will work more hours: Nevada, Ohio,
and Virginia
(c) Will work fewer hours: Arizona,
California, Florida, Georgia, Louisiana,
Michigan, Montana, New Jersey, North
Dakota, Pennsylvania, Vermont,
Washington, and Wyoming.
(d) Other: None.

3. Part 1: Do you sell prison made
products/services? (non-PIE)
Part 2: What, If anything, do you believe will
happen to the profits derived from sale of
prison-made products/services?

{e) Don't know: Illinois.
Nineteen said yes, 1 (Wyoming) said no.
The 19 with industries:
(a) No change: None.
(b) Will be eliminated: BOP, California,
Georgia, Illinois, Louisiana, Montana, North
Dakota, Ohio, Pennsylvania, Texas,
Vermont, Virginia, and Washington.
(c) Will be substantially reduced: Arizona,
Florida, Michigan, and New Jersey.
{d) Will increase: None.
{e) Other: Nevada (will be decreased) and
New York (operates on a break-even
basis).

4. What, if anything, do you believe will
happen to Inmate idle time?
5. What, if anything, do you believe will
happen to the number of inmate rule
infractions or security problems?
6. What, if anything, do you believe will
happen to normal institution maintenance
work (such as minor repairs or janitorial
work)?

Page 25

(f) Don't know: None.
All 20 said that inmate Idle time would
increase.
All 20 said that inmate rule infractions or
security problems would increase.
Nineteen thought that the work would be
done less frequently, and one (Virginia)
thought the maintenance work would
improve since only the more motivated and
qualified inmates would be assigned to
work.
(continued)

GAO/GGD-93-98 Minimum Wage for Prisonen

•

Appendlxm
Be.poneu of the ZO Contact.ed Priaon
S:yetema to GAO'• Queedou on Potentt.1
lmJ*W ol M!aJmwa w.,e

Qu11tlon
7. Part 1: Do your inmates perform public
works projects?
Part 2: What, if anything, dolyou believe will
happen regarding your inmates' public
works projects?
8. What, if anything, do you believe will
happen regarding your efforts to teach
inmates good work habits and/or job skills?

Retpon"
Seventeen said yes, and 3 (Montana,
Penrtsylvania, and Wyoming) said no.
Of t ~e 17, 12 said the projects would
cea$e, and 5 (California, Louisiana,
Mic 1igan, Nevada, and Washington) said
the• would be done, but at a lower level.
All 2o thought that efforts would be
red ced.

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Maj~r Contribut~rs to This Report
-

General Govemmen~
Division, Washingto~,
D.C.

James Blume, Assistant Director, Administration of Justice Issues
Carl Trisler, Evaluator-in-Charge
Allan Mascarenhas, Evaluator
Terri L. White, Secretary

Office of the Genera.I
Counsel

Jan Montgomery, Senior Attorney

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or Release on Delivery
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ICtober 28. 1993

United States General Accounting Office

Testimony

Before the Committee on Labor and Human Resources, United
States Senate

PRISONER LABOR
Perspectives on Paying the
Federal Minimum Wage
Statement of
Lynn H. Gibson
Associate General Counsel

OS'l5:2fl/ i 5019 J
GAOIT-GGD-94-8

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PERSPECTIVES ON PAYING
PRISONERS MINIMUM WAGES
SUMMARY OF STATEMENT OF
LYNN H. GIBSON
ASSOCIATE GENERAL COUNSEL
U.S. GENERAL ACCOUNTING OFFICE
GAO's testimony is based on its report--Prisoner Labor:
Pers ectives on Pa in the Federal Minimum Wa e (GAO/GGD-93-98,
May 20, 1993). I , ate work is a major part of the corrections
system's effort to operate prisons safely. Inmate labor also
reduces prison cos s. Generally, sentenced inmates are expected to
perform some type bf institution maintenance work (e.g., cooking
inmate meals, laundering inmate clothing, and maintaining the
grounds) or indust~ial work (e.g. manufacturing office furniture
and automobile tagk) for sale to government agencies and sometimes
to the private sector. According to an American Correctional
Association survey~ about 8 percent of the federal and state
prisoners had industry type jobs.
.
The Fair Labor Stahctards Act, which generally requires employers to
pay at least the s~atutorily-mandated minimum hourly wage to
employees, does no specifically address whether prisoners
performing work ar "employees" entitled to the minimum wage.
However, the court have generally held that prisoners working in
prison are not entttled to the minimum wage.
For the most part,j inmates in the five prison systems--BOP,
Arizona, Florida, Nevada, and Virginia--GAO visited either were not
paid or were paid ~t rates that were substantially less than the
federal minimum wage of $4.25 an hour. For example, BOP generally
pays its maintenan~e inmates 12 to 40 cents per hour and its
industry inmates 2 cents to $1.15 per hour. Our analysis of data
from the Justice D partment and others indicated that the nation's
other prison systems had similar pay rates for their inmate
workers. For exam le, a nationwide survey done by the Justice
Department indicat d that prison industry inmates were generally
paid a regular rat of less than $1 an hour during 1991.
1

If the five prh ..)n systems GAO visited were required to pay minimum
wage to their inma e workers and did so without reducing the number
of inmate hours worked, they would have to pay hundreds of millions
of dollars more each year for inmate labor. Consequently, these
prison systems gen rally regarded minimum wage for prisoner work as
unaffordable, even if substantial user fees (e.g., charges for room
and board) were i osed on th~ inmates. Officials from the 20
prison systems GAO contacted consistently identified large-scale
cutbacks in inmate labor as a likely and, in their view, dangerous
consequence of having to pay minimum wage. They believed that less
inmate work would ean more idle time and increased potential for
violence and misconduct.
On the other hand, some of the organizations GAO visited had a
different perspec ive on inmate pay, based on the idea that prison
work experiences should be more like those in the general public.
Some organizations also believed that by not paying inmates minimum
or prevailing wagds, prison industries gain an unfair competitive
advantage and/or lisplace workers who are not imprisoned.

Mr. Chairman and Mrmbers of the Committee
I am pleased to be here to discuss our recent report to Senator
Reid entitled Prispner Labor: Perspectives on Paying the Federal
Minimum wage (GAO/fGD-93-98, May 20, 1993).
Senator Reid reque1ted information on potential effects on prison
work programs and rotential fiscal impacts if the nation's
prisons were requifed to pay minimum wage for prisoner work. His
request was promptrd by a decision of a three-judge panel of the
U.S. Court of Appe ls for the 9th Circuit which held .that certain
prisoners were sub"ect to the minimum wage provisions of the Fair
Labor Standards Ac (FLSA). 1 This decision was subsequently
reversed by the fu l court. 2
In response to Sen tor Reid's request, we (1) compared inmates'
labor wages to min!l·mum wages; (2) obtained views of federal and
state prison offic"als on how the minimum wage would potentially
affect prison syst ms; and (3) obtained views of organized labor
and other organiza ions likely to have perspectives on paying
prisoners the mini um wage. To do this, we (l) visited five
prison systems--Fe eral Bureau of Prisons (BOP), Arizona,
Florida, Nevada, a d Virginia--to obtain information on inmate
work and pay policies, actual hours worked and wages paid, what
existing work woul cost if paid at the minimum wage, and
potential effects of payment of the minimum wage on prison work
and operations; (2) surveyed 15 other prison systems on potential
effects of payment of the minimum wage on prison work and
operations; and (3) contacted selected organizations representing
various groups li~ely to have perspectives on the issue of
payment of the mi imurn wage for inmate work. In each of the four
states we visited, we also visited a state and a federal prison.
Our data are not r rojectable to all prison systems. The opinions
we obtained on im~Jact are subjective and projections for cost
impacts are appro imations.
1

If the federal an four state prison systems we visited were
required to pay ttte minimum wage to their inmate workers and did
so without reducirtg the number of inmate hours worked, they would
have to pay hundr,ds of millions of dollars more each year for . .
'Fair Labor Standatds Act of 1938, as amended (29
2

u.s.c.

201-19).

The three-judge p nel held, in Hale v. Arizona, 967 F.2d 1356
(1992), that the inmates, who worked for a component of Arizona
prison industries. were 11 employees" of the state and thus were
subject to FLSA r quirements. However, this case was reheard en
bane by the Ninth Circuit in November 1992. Subsequent to the-completion of our work, the full court reversed the three-judge
panel and af f irme the decision of the lower court that the state
prisoners were no entitled to the minimum wage under FLSA. Hale
v. Arizona, 993 F 2d 1387 (1993).
~~

!I
1

inmate labor. Consequently, these prison systems generally
regarded minimum wage for prisoner work as unaffo~dable, even if
substantial user fees, such as charges for room and board, were
imposed on the inmates.
~
Prison systems officials consistently identified large-scale
cutbacks in inmate labor as a likely and, in thei view,
·
dangerous consequence of having to pay minimum wages. They
believed that less inmate work, would mean more id~e time and
increased potential for violence and misconduct. They also noted
other potentially adverse consequences for prison operations,
such as routine maintenance being performed less requently.
On the other hand, some of the organizations we v'sited had a
different perspective on inmate pay, based on the'r view that
prison work experiences should be more like those in the general
public. Some organizations also believed that by not paying
inmates minimum or prevailing wages, prison indus· ries gain an
unfair competitive advantage and/or displace work&[rs who are not
imprisoned.
BACKGROUND
Inmate work is a major part of the corrections sy tern's effort to
operate prisons safely and constructively and to ~educe prison
costs. Prison work (1) reduces inmate idleness atd thus the
potential for prison security problems; (2) provi es
opportunities for inmates to improve or develop j b skills, work
habits, and experiences that can assist in postre~ease
employment; and (3) helps to ensure that maintena ce necessary
for day-to-day operation of the prison is perform.d. Inmate
labor also reduces prison costs. For example, i~ates perform
functions such as cooking that would otherwise hate to be
performed by higher-paid civilian staff.
·
Generally, sentenced inmates are expected to perf rm some type of
institution maintenance or industrial work on a fill-time (6 to 8
hours a day, 5 days a week) or part-time basis.s Maintenance
work includes cooking inmate meals, laundering in ate clothing,
repairing boilers, performing clerical work, and aintaining the
grounds and buildings as well as many other funct 1 ons necessary
for the day-to-day operation of the prison. lt also sometimes

'some inmates work in the community under a

work-~elease

program,

where they typically are employed during the day and return to
the institution at night. These inmates are emplfyees of private
or public sector organizations outside of the pri~on system and
thus their entitlement to minimum wage would depe~d on whether
their work for these organizations meets the crit~ria for FLSA
coverage. Consequently 1 these inmates were excluded from our
review.
2

includes public works projects such as assisting local
communities in re~airin9 roads and assisting forestry departments
in clearing land 5nd planting trees. Inmates may also do
industrial work fqr the prison or private companies. This work
may include manufacturing products (e.g., office furniture,
mattresses, and a~tomobile tags) and providing services (e.g.,
data entry and au omobile repair) for sale to government agencies
and sometimes to he private sector.
·
Most inmates who 11ork are assigned to maintenance rather than
prison industries jobs. A nationwide American Correctional
Association surve in 1991 reported that about 8 percent of the
federal and state prisoners had industry type jobs.
Whether inmates a~e paid or the amount paid varies among the
individual federa~ or state systems. For example, BOP and the
states generally 1rovide some compensation to prisoners for their
maintenance and i dustry work. However, some states (e.g.,
Texas) do not pay for any inmate work, while some states (e.g.,
Florida) generally pay only those inmates doing industry jobs.
Inmate pay may bejbased on a rate per hour; cover a specific time
period (e.g., men hly); or be based on piece work. Under some
systems, inmates ay also earn extra pay for overtime work and
length of time em loyed (longevity), receive paid vacations and
holidays (remain in prison but do not work}, and receive payments
under a workers c4mpensation program. Some prison systems may
also pay inmates ~or their participation in vocational training
programs and in ll'teracy or other educational programs.
Under federal law 18 u.s.c. 1761(c), 50 nonfederal prison work
pilot projects may produce products for sale in interstate
conunerce, provided that, among other things, inmates employed in
these projects ar~ paid the prevailing wage for their work.
These projects, r4ferred to as the Prison Industry Enhancement
{PIE) Program, ar+ approved by the Bureau of Justice Assistance.
The Bureau requires that PIE industries pay at least the minimum
wage if a prevailtng wage cannot be determined. As of December
1992, PIE industries employed about 1,000 inmates nationwide.
Under FLSA, emploters are generally required to pay employees at
least the minimum.lhourly wage set by federal law for up to a 40hour workweek. T'e overtime rate for all hours worked over the
40 hours is set a~ one and one-half times the employee's regular
rate of pay. While the vast majority of employers, including
state governments! are subject to the requirements of FLSA, there
are a number of w rkers who are not covered by the law's minimum
wage and overtime provisions. Prison inmates are not
specifically exclpded from the definition of "employee" under
FLSA. However, tre courts have generally held that prisoners
performing work behind prison walls for prison-operated industry
or for a prison i self are not entitled to minimum wage under
1

3

FLSA because they are not in an ernployer-ernploye
with the prison. 4

relationship

SUBSTANTIAL DIFFERENCES EXISTED
BETWEEN PAY AND MINIMUM WAGE
For the most part, inmates in the five prison sy. terns we visited
either were not paid or were paid at rates that tere
substantially less than the federal minimum wage of $4.25 an
hour. (See Appendix). For example, BOP generall pays its
maintenance inmates 12 to 40 cents per hour and tts industry
inmates 23 cents to $1.15 per hour. Of these fiye systems only
some Arizona and Nevada inmates had the opportun ty to earn the
minimum wage or more. For example, about 60 of "he approximately
650 Arizona inmates working in prison industries were involved
with private sector operations and could earn mi imum wage.
Many inmates at the five systems were paid at th lower rates of
the established pay scales. For example, BOP policy for
nonindustry inmates provides that about 55 perceft of the inmates
are to be paid an hourly rate for maintenance wo k at pay grade 4
(12 cents), 25 percent at grade 3 (17 cents), 15 percent at grade
2 (29 cents), and 5 percent at grade 1 (40 cents~. our review of
prisoner payroll records at the four federal prisons we visited
indicated that the inmates were generally being paid at the lower
pay grades.
_

1

1

l

Our analysis of data from the Justice Department and others
indicated that the nation's other prison systems had similar pay
rates for their inmate workers. For example, a ationwide survey
done by the Justice Department indicated that prtson industry
inmates were generally paid a regular rate of less than $1 an
hour during 1991.

j

4

See Hale v. Arizona, 993 F.2d 1387, 1393-95 (9t Cir. 1993)
(inmates working in prison programs structured Ufder Arizona law
requiring prisoners to work at hard labor were n<pt "employees" of
the prison under FLSA); Harker v. State Use Indus. Envelope Shop
Inmates, 990 F.2d 131, 135-36 (4th Cir. 1993) (FLSA does not
apply to prison inmates performing work at priso~ workshop within
the penal facility as part of rehabilitative program); Vanskike
v. Peters, 974 F.2d 806, 807-9 (2d Cir. 1992} {inmate who worked
in Illinois prisons as a maintenance worker and ~nit shop line
worker was not entitled to minimum wage under FLSA). It should
be noted that some courts have found inmates to ~e entitled to
minimum wage under FLSA when the inmates are performing work for
private, outside employers. See, e.g. carter v.lnuchess
Community College, 735 F.2d 8 (2d Cir. 1984) (ho~ding that FLSA
might apply to an inmate working as a community allege tutor for
classes taught inside a prison).
4

Work
Levels at Minimum
All five prison systems would face a
costs in the hundr ds of millions if
had to be compensa ed at the minimum
the minimum wage, officials at these
would likely impose substantial user
labor levels.

substantial increase in
existing inmate work levels
wage. If required to pay
systems noted that they
fees and reduce their inmate

BOP officials told us that their industries paid 15,300 prisoners
average rates of 87 cents an hour for 27.2 million regular hours
worked and $1.75 a hour for 1.8 million overtime hours worked
during fiscal year 1992. This amounted to about $26.9 million
for inmate compens tion--$100 million less than what paying the
minimum wage would have cost for the same number of hours.
Although overall data were not available, our review of payrolls
at the four federal prisons we visited indicated that the
difference in pay for maintenance work would have been
substantially grea er than the difference for industrial work had
the inmates been p id minimum wage. This is because wages for
maintenance work were substantially less than the wages for
industrial work an because most inmates work in maintenance
jobs.

At the state level, for example, Arizona officials noted that
their industries p id about $614,000 in inmate wages for the year
ending June 30, 1992, as compared with about $3.7 million they
would have paid for the same number of hours at minimum wage.
Arizona officials ldid not have statewide information on how much
inmate maintenance would have cost at minimum wage. However, at
the Arizona prison we visited officials estimated that for the
year ending June 30, 1993, they will pay inmate wages of about
$458,000 (average of 26 cents an hour) for maintenance work
compared with about $7.5 million if the estimated number of hours
were paid at mini um wage.
These hypothetical differences between existing and minimum wage
payrolls do not i elude the cost of employer-paid benefits that
inmates may be entt"tled to if they were considered to be
employees. For e ample, under certain circumstances prison
systems and the i ates both could be subject to paying social
security taxes am]lunting to 7.65 percent of the inmates'
earnings.
On the other hand, the differences between existing and minimum
wages do not incl de potential charges such as user fees and
taxes which could result in some of the additional wage costs
being returned to the federal and state governments. For
example, officials at the prison systems we visited generally
believed that if inmates were to receive the minimum wage, the
prison systems wo ld be forced to assess substantial user fees.
5

Of the five prison systems we visited, only Nevad imposes a room
and board charge on its maintenance and industry ·nmate workers
who earn less than minimum wage--24.5 percent of heir weekly
wages in excess of $18. Nevada also charges noni digent inmates
$4 each time they report on sick call.
Victim restitution and child support payments are examples of
other possible deductions from inmates' pay. Unl"ke room and
board charges, however, these deductions represen~ funds that
would be paid to members of the general public ane not recovered
by federal and state treasuries. However, some p yments may
result in reduced government expenditures. For e ample, if the
inmates paid child support and their children are supported by
government aid programs, the net effect may be to reduce the
amount paid by federal and state governments.
CONTACTED PRISON SYSTEMS' VIEWS
ON PAYING MINIMUM WAGES
Because there is little available research or stu ies on the
potential impact of prisoners being covered under FLSA's minimum
wage provisions, some ramifications are unknown. Nevertheless,
the 20 prison systems we contacted generally beli ved that paying
minimum wage would adversely affect prison work, "ob training
programs, and prison security. They also noted o~her potential
issues associated with treating inmates as employ· es and
identified few benefits of paying inmates minimum wages.
Officials did not believe that they would be able ta continue to
employ the same number of inmates if they had to ay the minimum
wage. For example, Arizona officials said it was unlikely that
they would be given the additional funds to pay minimum wages,
even if the increased pay amount was substantiall reduced by
imposing user fees. Therefore, Arizona officials maintained that
they would be forced to substantially reduce the inmate
workforce.
The four other prison systems we visited told us hat they would
also have to substantially reduce the number of inmates who work
if minimum wages had to be paid. Officials from he 15 prison
systems we surveyed by telephone also said that fewer inmates
would be permitted to work. Further, 13 of the 20 prison systems
contacted believed that the inmates who remained employed would
work fewer hours, while 3 thought they would work more, and 3
thought they would work the same number of hours. One system did
not know how the number of hours inmates worked ould be
affected.

6

Potential Impacts of
The prison systems provided similar responses
potential impact o (1) inmate idle time, (2)
(3) efforts to teach good work habits and job
industries' earnings, (5) routine institution
(6) public works.

to questions about
prison security,
skills, (4)
maintenance, and

All 20 prison systems told us there would be increased inmate
idle time and mor inmate rule infractions or security problems
if minimum wages ad to be paid. Officials at both the prison
system headquarte s offices and at the specific prisons we
visited consisten ly noted that reduced inmate work would mean
more inmate idle ime, contribute to more inmate disorder and
violence and make their prisons more dangerous. For example,
according to BOP, the reduced employment "would seriously
jeopardize the se urity of federal penal and correctional
facilities, as id eness and boredom multiplied among an inmate
population serving significantly longer sentences, with virtually
no prospects for jarly release."
·
All 20 prison sys
habits and/or job
industry official
thousands of inma
skills that are e

ems thought that efforts to teach good work
skills would also be reduced. BOP's prison
said that the reduced employment would deprive
es of the opportunity to learn the basic work
sential to success in the outside world.

Nineteen of the 2 prison systems we contacted had prison
industries. Of t e 19, 17 responded that having to pay minimum
wage would elimin te or substantially reduce earnings from those
industries. For xample, BOP said that paying minimum wage would
result in a subst~fntial increase in product cost, to the point
that their produc~s would not be competitive. Consequently, BOP
told us that it w uld have to automate much of its industrial
production and re uce inmate employment drastically in order to
control labor cosls, continue to offer products to federal
agencies at curre t market prices, and remain self-sufficient.

1

Regarding the imp,ct on institution maintenance, 19 prison
systems thought mJnimum wage would lead to less frequent routine
maintenance. The~other thought that maintenance efforts would be
enhanced because nly the most motivated and able inmates would
be filling the fe er jobs available.

In response to ouf final survey question, 17 prison systems told
us they had inmat's who performed public service projects. Of
the 17, 12 thought that minimum wage would result in such
projects being abJlished and 5 said that fewer projects would be
done. For exarnpl , a Nevada official told us that they would
have to stop much if not all, of the roadwork and other public
service now done 'Y approximately 1,500 work camp inmates.
7

OTHERS' PERSPECTIVES ON PAYING

MINIMUM WAGE FOR PRISONER WORK
Some organizations and studies had a different p
inmate pay than the prison officials we contacte
generally favor improving inmate work programs a
through greater use of prison industry programs.
could be operated by, or operate like, private s
the ,,factories with fences" approach. Some also
inmates the prevailing wage so that prison indus
an unfair competitive advantage over businesses
access to prison labor. 5

rspective on
. some
d inmate pay
These programs
ctor businesses,
support paying
ries do not have
hat do not have

The "factories with fences" approach had its roo s in Justice
Department efforts in the mid-1970s to assist st tes in coping
with the problems of inmate idle time and ineffi ient work
programs. The Justice Department provided funds and other
support to implement a prison industry model in articipating
states. The model was based on private sector c ncepts such as
productivity-based wages. In 1979, Congress aut orized seven PIE
projects that allowed the seven participating co rectional
agencies to sell the products of private sector-operated prison
industries across state lines, provided, among o her things, that
inmates be paid the higher of the prevailing wage in the free
market or the minimum wage and be assessed charges such as room
and board. (The Jµstice Department was given res onsibility for
certifying that a project or correctional agency et the PIE
criteria.) Through subsequent amendments, Congress raised the
number of authorized PIE projects to 50.
In the 1980s, then-Chief Justice Warren Burger, orking with
representatives from the corrections, business, labor, legal, and
academic communities, further promoted the idea of greater
private sector involvement in prison industries. It included
having those industries pay prevailing wages, sell products to
the public, and generally operate like free-world industries.
Under the program, deductions were to be taken fr m the inmates'
pay for such items as room and board, taxes, and ictim
restitution.
Our review showed that the "factories with fences" concept was
expected to apply to industries work. Also, acco ding to
representatives from The Brookings, Institution an the nowdefunct National Center for Innovation in Corrections involved in
developing the concept, it was anticipated that b cause of
budgetary and other problems, many prison systems would not

5

In our discussions of this matter with BOP officfals, they
pointed out that federal prison industries are a mandatory source
of procurement for other federal agencies.
8

extensively pursue the concept. A 1989 Justice Department survey
found that only a out 5,000 inmates had worked in PIE and non-PIE
private sector-operated industries.
Concerning the issue of unfair competition, prison industries,
like BOP's, have long faced criticism from labor groups and
businesses about the low wages paid to inmate workers. The
American Federati n of Labor and Congress of Industrial
Organizations' (A L-CIO) position is that prison labor programs
should pay wages that are not less than the prevailing wage for
similar work in the private sector to avoid unfair competition
and displacing wo kers who are not imprisoned. The AFL-CIO also
says that inmates should pay room and board, taxes, victim
restitution, and here necessary, dependent support. However,
the AFL-CIO opposes the sale of prison-made goods and services to
the public.
This concludes my prepared statement.

I would be pleased to
answer any questi ns the Committee may have.

9

APPENDIX

APPENDIX

Basic Inmate Pay Policy At Visited Prisoj- Systems
Prison system

BOP

Maintenance pay rates
Generally 12 to 40 cents
an hour; outstanding work
could result in a bonus
of up to one-half an

inmate's monthly pay.
Some inmates are paid
only $5.25 a month
because of, for example,
budget problems.

Ipdustries pay
r13-tes
cents to

2r

!t.t~su~nt~o~~

afditional cents
a~1

hour on the

basis of work
c~nsidered

outstanding and
l'ngth of time

errployed.
Arizona

10 to 50 cents an hour.

4~) to 80 cents
aib hour, but
itnates involved
w th private

SHCtor
ii~dustries earn
m nimum wage

Florida

Nevada

Only pays a few inmates
(e.g., inmates working in
canteen operations

{ ~;4. 25) •
15
45 cents

to

att hour with
i'creases, based

receive $50 to $75

o~

monthly).

t~me

Prison officials decide
who is to be paid and how
much; pay is generally
less than $1 an hour.

length of

employed,

of up to 15
c~nts an hour.
Minimum wage

(i4.25) for

p ivate sector01 erated
i~dustries.

For
pl.·ison managed
i4dustries, pay
is based on

~~:~: ~=~==dthat
m!nimum wage.
to 80 cents
ar hour.•
These .rates were being implemented at the time o= our visit.
Virginia

10

20 to 45 cents an hour.

51

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