Today Nevada Workers Lose Jobs to Inmates – Next it Could be your Turn

Third and final segment of the series on Nevada’s situation involving unfair competition by use of prisoner labor
by Bob Sloan, Executive Director, VLTP.net
Jan. 25th 2013

“Insourcing”..: there is no current definition for this word in our Urban Dictionary or Websters. I plan to change that by defining in detail the concept of insourcing and who is responsible for the practice of it. First we must compare the word to its cousin, Outsourcing.

Society today is familiar the term “Outsourcing.”  When used in connection with manufacturing it means a company sending work outside the business and having it performed utilizing the labor or expertise of others.  Since the mid ‘80’s most realize to American workers, it really meant sending millions of our jobs overseas where foreign labor was cheap and plentiful.

Not so well understood is the term “Insourcing” – Insourcing is is widely used in production to reduce costs of taxes, labor and transportation.  Insourcing describes the process used by corporations to remove jobs from private sector labor markets and “Insource” them to prison industry operations here in the U.S.  This allows for profits more in line with outsourcing, but eliminates the necessity for expensive transportation costs to return the finished goods to U.S. consumers – it also allows manufacturers to attach labels to their goods marked “Made In The U.S.A.”

Insourcing of jobs is the “quiet” elimination of private sector jobs by transfer to prison industries.  Corporations wishing to participate in using prison labor, partner with prison industry operations under the federal Prison Industries Enhancement Certification Program (PIECP or Pie Program).  18 USC 1761(c) is the controlling federal statute of PIECP. Though private sector corporations are prohibited from closing private sector operations in favor of prison operations, they do so without consequence. There are other mandatory requirements that must be followed in order to participate in PIECP, but those also are rarely enforced.

The way these prison partnerships typically work is that a manufacturer wanting to increase profits moves their equipment, technology, materials and unfinished goods to a factory setting within a prison industry facility.  Once up and running, the same products come off the assembly lines and are shipped as before. The difference is this, private sector employees of the company have been terminated or laid off. A handful of employees are usually kept on long enough to train inmates and prison supervisors in the manufacturing used to make the products. Once that is accomplished, they are also eliminated and their positions taken over by a prison industry supervisor.

This Insourcing of labor creates quite a number of unemployed citizens. Burdens are placed on state and community social help programs, unemployment compensation, etc. So while the corporation saves lots of money in labor costs – no more unemployment insurance premiums, less expenses in lease of facilities (usually leased by the prison operators at $1.00 per year), and no more employee benefits such as medical insurance, vacations or paid time off – the communities they vacated are left to fund the displaced unemployed workers. In addition the local government loses taxes that were paid by the corporation, previous landlords of the facilities once leased to the corporations are left with vacant property and local shops and other businesses suffer a drop in sales due to the newly unemployed workers left behind.
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In the two previous segments I have talked about the current situation in Las Vegas involving the discovery of prison labor used in the manufacture of products used in the construction of major projects. The developers and or investors involved in these new construction projects in Las Vegas are all influential, well connected; Andre Agassi, SPB Capital Partners, family members of Thomas & Mack Center and the Bulloch family – all well known to the citizens of Nevada.

To many this was a “new” discovery – the use of prisoners as a cheap labor force.  But this practice has been ongoing now for years, and in particular since 1998 when major movers and shakers in the world of politics, finance, manufacturing and prison operations converged in Washington to discuss “innovative strategies for Prison Industries” and “Policies and Programs in Prison Industries.”

Participants included: the CEO of Prison Rehabilitative Industries and Diversified Enterprises (PRIDE), the first private corporation formed to operate Florida’s entire prison industries; U.S. Attorney General, Janet Reno; Florida Representative Bill McCollum, Texas Representative Ray Allen and a business owner of Genoex, one of the first private corporations to eliminate American workers, replacing them with prisoners.
PRIDE’s CEO was Pamela Jo Davis, the darling of Florida’s newest Governor-elect Jeb Bush, and she also “just happened to be” the Chairwoman of the National Correctional Industries Association (NCIA), a trade group representing prison industries, industry vendors, suppliers, workers and companies using prisoner labor in manufacturing.  Representative Allen (R-TX) was soon to become Chairman of the House Committee on Corrections– and also “just happened” to be a member of the American Legislative Exchange Council (ALEC), serving on their criminal justice task force.  Allen again, “just happened” to also be a registered lobbyist for the NCIA.

This NCIA also “just happened to be” the private association the U.S. government had outsourced oversight of the PIECP to in 1995.

It was this happy group of industrialists, politicians, lobbyists, program regulator and prison industry authorities who met in DC in ’98 to discuss just how prison labor could be exploited – legally, of course – to reduce wages to American private sector workers and increase profits to business owners.  First thing was to find a way to make their actions legal and in order to expand; a means was needed to propose such legislation in every state.  These were the responsibility of ALEC.  With more than 2,000 legislative members representing every state, ALEC had a proven track record (going back more than two decades) of enacting and passing model legislation written by their corporate members.

How about federal laws?

Read the rest here: http://www.vltp.net/rape-of-americas-workers-crime-victims-now-prisoners-given-their-jobs/

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From Voters Legislative Transparency Project: Las Vegas: Prison Labor Used to Beat the Odds

This research article comes from the weblog: Voters Legislative Transparency Project. We are glad that they have investigated this:

Jan. 11th 2013, by Bob Sloan

Thousands of tourists, businessmen, CEO’s and executives from all over the world mix with citizens of Nevada in the luxury and splendor of Las Vegas’ many hotels and casinos.  Most come to this beautiful city for the gambling and incredible shows found everywhere one turns.  Inside the cool confines of casinos visitors can trust that every slot machine, roulette table and blackjack shoe is checked and monitored to guarantee fair play – no magnets under the roulette table, no dealer manipulating the cards or slots rigged to never pay out. Those trying to shave the odds are not welcome and at the first hint of cheating, find themselves on the sidewalk, banned or worse.

Each casino has a multitude of surveillance cameras to guarantee play is fair and the odds are understood by all who play the quarter slots or sit down at the high roller poker table.  To ensure such fairness, the Nevada Gaming Commission regulates every aspect of gambling in the entire state.  Strict penalties for violation of gaming regulations by casino operators keep each in line and playing by the rules.

Outside the casinos, locals find the guarantees of fair play and manipulation of odds are not so well regulated. State agencies responsible for overseeing and enforcing specific state laws and regulations have lost their vigilance.  In at least one case a state regulation involving the Nevada Department of Corrections is providing one company an unfair advantage over competitors.  The prize sought isn’t a hundred dollar hit on quarter slots, its millions in profits.  An important aspect of this advantage provided to a single company, is an increase in Nevada’s already high 10.8% unemployment rate.

The issue is an ongoing battle being waged over the use of inmate labor by a private company, Alpine Steel operating out of Las Vegas, NV.  Alpine is competing directly against other Nevada companies in the field of structural steel fabrication.  Alpine’s competitors pay fair wages, benefits, provide unemployment insurance and vacation pay, while Alpine avoids all those costs.

It is not illegal for companies to be allowed to use prison labor under current laws but there are strict state and federal regulations involved that must be met before allowing direct competition with prison made products:

Mandatory Criteria for Program Participation

Corrections departments that apply to participate in PIECP must meet all nine of the following criteria:

1. Eligibility. Authority to involve the private sector in the production and sale of inmate-made goods on the open market.

2. Wages. Authority to pay wages at a rate not less than that paid for work of a similar nature in the locality in which the work is performed.

3. Non-inmate worker displacement. Written assurances that PIECP will not result in the displacement of employed workers; be applied in skills, crafts, or trades in which there is a surplus of available gainful labor in the locality; or significantly impair existing contracts.

4. Benefits. Authority to provide inmate workers with benefits comparable to those made available by the federal or state government to similarly situated private-sector employees, including workers’ compensation and, in some circumstances, Social Security.

5. Deductions. Corrections departments may opt to take deductions from inmate worker wages. Permissible deductions are limited to taxes, room and board, family support, and victims’ compensation. If victims’ compensation deductions are taken, written assurances that the deductions will be not less than 5 percent and not more than 20 percent of gross wages and that all deductions will not total more than 80 percent of gross wages.

6. Voluntary participation. Written assurances that inmate participation is voluntary.

7. Consultation with organized labor. Written proof of consultation with organized labor prior to program startup.

8. Consultation with local private industry. Written proof of consultation with local private industry prior to program startup.

9. National Environmental Policy Act (NEPA). Written proof of compliance with NEPA requirements prior to program startup. (emphasis mine, source BJA PIECP program overview)

In the instant case, most of the above mandatory regulations are being ignored – entirely. Prevailing wages paid by most in the steel fabrication industry in Las Vegas are in excess of $17.00 per hour.  The inmates manufacturing components for Alpine are paid less than half that scale at minimum wage or less.

By having access to and using inmate labor provided by Nevada’s Silver State Industries (SSI), Alpine Steel, is able to underbid competitors for structural steel construction projects.  This company is just one of several businesses in Nevada (and 150 others nationwide) enjoying increased benefits and profits derived from inmate labor.  Other Nevada companies enjoying similar access to inmate labor include; Vinyl Products, Inc., (vinyl waterbeds), Thomson Equipment Company (Silver Line Industries trailer manufacture and remanufacturing) and Jacobs Trading Company (repackaging).

Alpine Steel is currently manufacturing and installing prison made structural steel components at three locations in Las Vegas; the SkyVue (Ferris Wheel developed by Howard Bulloch), Staluppi Automotive Group’s Planet Mazda and Wet ‘n’ Wild Las Vegas (financed by Andre Agassi; his wife, Steffi Graf; Dr. Steven and Karen Thomas, members of the Thomas family of Thomas & Mack Center fame; and Roger and Scott Bulloch, of SPB Capital Partners).  Companies competing with Alpine Steel for these contracts, were totally unaware they were competing against a company with such a distinct and hidden advantage.

While the Staluppi and water park projects are actively being constructed, the Sky Vue job appears to be abandoned, though developer Howard Bulloch assures the absence of activity is due to plan revisions – and not a lack of funding.

Read the rest here and plz read part 2 and 3 too when they are published