MON MAR 11, 2013 AT 07:47 PM EDT

Nevada Ways and Means Committee Weighs in on Prison Industry Battle

byBob SloanFollow

 
 
 
 
• 10 Comments / 5 New

The Result of Bureaucrats’ Operating as Businessmen

In the continuing saga of Nevada’s Silver State Industries (SSI), the Legislature’s Ways and Means Committee held a hearing this past Friday, March 8th to discuss the budget of the Nevada DOC which includes state prison industry operations.

Critics of the industry program have found traction with the discovery that Alpine Steel, a private company, had access to inmate labor, subsidized facility leases and even with those subsidized benefits owed the state more than $400,000 in accrued debt.  In late 2012 when this story first broke, it was discovered that Alpine also owed inmate workers back wages to the tune of $78,000.  Because inmates are “assigned” to industry jobs by the NDOC, they were prohibited from simply quitting or asking for a reassignment due to not being paid.  They worked for an extended period without receiving any compensation for their labor – or if they were paid the wages did not come from their employer, Alpine Steel.

 

On Friday morning Committee members had an opportunity to question two top NDOC officials, Director Cox and his Deputy Director in charge of prison industries, Brian Connett.  Those in attendance described the meeting as tense between lawmakers and corrections officials.

Once this story broke in the media, Alpine made the necessary back wage payments to the inmate workers – but continues to owe the state for delinquent lease payments and NDOC staff salaries.  One Assemblyman asked the Deputy Director if the state had paid those salaries, and if so had Alpine repaid the outstanding wages.  The response was a half-truth, with Connett responding, “The back wages have all been paid.”  In fact those wages are part of the total $415,000 owed by Alpine.  The wages already paid are those owed to inmate workers – not NDOC staffers, which remain outstanding.

At times lawmakers displayed exasperation as they attempted to extract factual answers from Cox and Connett, who had difficulty answering direct questions related to prison industry operations; failing industry programs, financial losses and low cost leases of public facilities to private companies.

Cox and Connett were even less open about the situation involving Alpine Steel’s use of inmate labor to compete against other businesses in Southern Nevada, or the huge sum owed by Alpine to the NDOC for back lease and DOC staff payments.

Though lawmakers voiced concerns of the impact upon workers in the private sector and competing businesses, Cox and Connett did not seem to share those concerns, instead advocating that inmates need training while incarcerated to help reduce recidivism.  The irony of turning prisoner training over to a company with a history of questionable business practices - IRS tax liens ($668,000+), $415,000 in back lease and DOC staff salary obligations, unpaid state taxes (new Nevada Dept. of Taxation lien for $37,000 filed within the past month against Alpine’s owner, Randy Bulloch), lawsuits for money owed to creditors (F&M Steel and Pierce Aluminum) and is in litigation over unpaid worker’s compensation claims ($84,716 owed to Explorer Insurance Co.) – was apparently lost on Director Cox.

After all the controversy, debt owed to the state and concerns of both Nevada’s organized labor, workers and private businesses, Cox appeared openly insensitive to both issues by advising Committee members if Alpine’s business picked up, he would reopen the metal fabrication shop at High Desert State Prison to the company! This is indicative of a bureaucrat who genuinely believes he can make such decisions without consulting higher government or legislative authorities.

The general attitude of both was that inmate training was more important than the possible loss of jobs to Nevada’s unemployed steel workers, the potential for lost tax dollars or the impact upon businesses competing with Alpine Steel – or any of the half dozen other companies operating under joint venture contracts with Silver State Industries.

At one point Connett indicated that some of those complaining had been offered a chance to “partner” with the prison industry and had declined, seeming to suggest those businesses shared responsibility for any damage resulting from competition from prison industry operations…because they didn’t take him up on the offer.

Some answers provided to the Committee were enlightening, if incomplete.  Director Cox stated,”the cold hard facts are now that we have to aggressively look at what industries are not turning a profit.”

In addition to losses sustained by prison industry operations, the administrative office is operating in the red ($165,000+ over past two years), the industries’ furniture and metal, auto, upholstery and drapery shops have lost hundreds of thousands of dollars during the past few years.  Collectively Silver State Industries lost $81,597 in 2011 and $237,793 last year overall.

In 2010 the prison industries turned over more than $800,000 in accounts receivable to a collection agency and currently SSI’s past due AR account is in excess of $600,000.  In the budget discussion it was disclosed that the prison industry arm of the NDOC had a reserve fund of $1.5 million which due to continuous losses has been reduced to half a million.  If forced to absorb Alpine’s debt, the reserve fund will be exhausted.

In response to the dwindling reserve, Assemblyman David Bobzien, D-Reno voiced concern that when that reserve is exhausted, the prison industry would begin to dip into the general revenue fund, saying, “This is a clear track into the dirt, and without substantial retooling, it’ll be in the hole”

Bobzien and Assemblyman Michael Sprinkle, D-Sparks, questioned Cox about whether industry programs would be cut and what the department would do to get its industry program on a sustainable track.

Cox said he’s “very pessimistic” about future revenues and that “when resources go, of course programs will go.”  They were unable to get Cox to provide them with definitive responses or propose solutions to cure the industry’s financial woes.

“It appears that at some point the reserves are going to run out, but in the meantime, it’s a loss-loss across the state,” Assembly Speaker Marilyn Kirkpatrick, D-North Las Vegas, said, weighing in.

Kirkpatrick also had difficulty getting straight answers to some of her questions on business management issues and as to whether the prison industry program is really about training or rather a work program, putting inmates to work for privately owned companies at the expense of non-inmate workers.

In supporting the prison industry operations, Connett pointed to the “Big House Chopper” program.  An industry created by Howard Skolnik when he was in Connett’s position.  While using that program as an indicator of the work inmates were capable of and alluding that this industry was successful, he failed to advise the Committee thathe closed that program two years previously:

“Mr. Magnani said some time ago the motorcycle production was shut down, there was some motorcycles that Prison Industries was attempting to sell online. Mr. Magnani requested an update to the status of the built motorcycles. Mr. Connett informed the Committee that three motorcycles were for sale. Prison Industries was looking at reducing the price based on the current market. The motorcycle operation has been discontinued.”

Prison Industries manufactured a total of five motorcycles.  Two of those were sold in a “sweetheart deal” to one of Connett’s other prison industry companies, Thomson Equipment.  Despite vigorous advertising on eBay and other outlets, the remaining three have now sat for several years without any interest shown by potential buyers.  Another example of funds wasted to advance a prison project that has eaten away at the profits generated by other industries – both in dollars spent for materials as well as advertising.

Clearly referring to the motorcycle industry, the Deputy Director exhibited these half-truths to the Ways and Means Committee in an attempt to justify the need and usefulness of continued “training” of prisoners – whether the industry providing the training is viable or not.  In the case of Big House Choppers, it is long gone.

Examinations of the financial statement(s) for SSI for 2011-12 reflect that traditional prison industries such as farming, ranching, license plates, prison garment(s) and printing were all profitable.  It is the industries operating in partnership with private companies that are failing; metal shop (Alpine), drapery, automotive and upholstery for example.

Not only are these failing industries losing money, they are the ones negatively impacting upon private workers, potential workers and suppressing expansion of competing Nevada businesses.  These are also the industries that have been receiving substantial tax and lease benefits that are denied to competing businesses, resulting in an unfair advantage.  Companies using inmate labor do not appear to be paying Nevada’s Modified Business Tax, which further depletes the tax base while increasing potential corporate profits and disadvantaging their competitors.

Another issue of contention was the lease agreement between SSI and Alpine.  In 2011 Alpine was in arrears yet Connett authorized a lease contract that provided 19,000 square feet of manufacturing space at the unbelievable rate of $.26 cents per square foot ($5,000 per month).  The Nevada average for such space has been depressed due to the recession, but is currently at $.68 cents per square foot.  For the same square footage a private company would pay $12,990 per month in the “free world.”  This saved Alpine as much as $95,000 a year in operating expenses.  Assemblyman Bobzien called the Alpine lease an “unfair subsidy”.  There was no question as to how many of the other companies partnered with SSI were receiving similar low cost leases.

All of the losses described above, lead to more than an “appearance” of total mismanagement.  It is assumed that Greg Cox was chosen as the Director of the NDOC based upon an ongoing career in corrections.  He wasn’t chosen for his business acumen.  Putting him in charge of overseeing contracts, leasing arrangements and other commercial business decisions appears to be well outside his expertise.  Between them, Cox and Connett have made decisions that have negatively impacted taxpayers, private businesses and Nevada’s workers – yet when called before a legislative body to explain those decisions, they exhibited their lack of actual knowledge and experience in business practices.  Making matters worse they demonstrated they were willing to blunder through and by making statements claiming they would reopen the prison metal industry to Alpine Steel…and claiming Alpine Steel deserved a lower lease rate because of the difficulties of getting materials in and out of the prison and transportation logistics.

Again it needs to be said that those are matters for someone higher along the government chain to consider and make the final decision on.  It is unrealistic to allow a Deputy Director or Director to enter into binding contracts and leases that reduce the revenue streams from leasing state owned property or facilities.  It is also unrealistic to give Cox or Connett the authority to waive payments owed for leases, salaries or materials owed to the state.  By assuming these duties, these bureaucrats were gambling with taxpayer money, betting on Alpine Steel and similar companies to ultimately become viable and repay debts owed – debts they allowed to accrue and are now having difficulty justifying.  All can now see they lost that wager, with Alpine Steel and other companies owing NDOC more than $600,000 collectively.

In the public discussion period following the questioning of Cox and Connett, Danny Thompson, executive secretary treasurer of the Nevada AFL-CIO discussed the impact upon non-inmate workers on the outside from contracts such as that between SSI and Alpine.  He brought up the issue of safety to Nevada citizens that travel over or under a bridge spanning Interstate 15 that was constructed using prisoners in a “training program”. He said Alpine Steel produced steel girders for the construction project at the North Fifth Street Bridge in North Las Vegas and he questioned whether strict certification requirements for such projects were complied with in the training of inmate workers.

Thompson also called into question whether the materials used in the project met strict industry, state and federal specifications as to stress, weight and other factors involving materials used in the project – and wanted to know if inspections were conducted properly.  He also expressed concerns over the Wet ‘N’ Wild theme park project where Alpine was the structural steel contractor, saying he worried about the safety of children and families who would be visiting the park where inmates in training made many of the steel components.

A member of the Iron Workers Union, Local 433, Robert Conway also spoke, stating he had three hundred and fifty qualified iron workers without jobs, while the state was helping provide inmate welders for Alpine at wages far below the prevailing wage.  He also voiced concerns over the safety issues raised by allowing inmate steel workers to fabricate steel components used in public projects.

In response to criticism from Committee members and the public, Alpine owner, Randy Bulloch appeared via teleconference from Las Vegas and issued a statement in response to Thompson’s concerns, claiming that inmate workers were in fact certified as required.  He denied the use of structural steel components manufactured by Alpine in the bridge project and added that he had copies of material inspections and specs.  Bulloch spoke about his company in general terms but made no effort to defend the use of prison labor in the manufacture of structural steel used in his business.  It should be noted that Alpine Steel makes no mention on their website of the use of prison labor in manufacturing steel components, or that the company is involved in helping train prisoners.  That factoid is noticeably absent – as it is with TJ Wholesale and Jacob’s Trading, two other companies partnered with SSI and leasing facilities from the NDOC.

What wasn’t posed to Connett and Cox in the questioning by the Assembly Committee was the issue of a potential conflict of interest involving Nevada’s prison industry and compliance oversight.

The trade group,National Correctional Industries Association (NCIA) provides oversight over all prison industries in the U.S. and of late, internationally.  The NCIA does this under a grant from the Bureau of Justice Assistance.

This trade group advocates and lobbies on behalf of companies, corporations and organizations involved in prison industry operations, supplying those operations or benefiting from the labor of inmates.  Connett is currently serving as the Chairman of the NCIA and thus able to make determinations as to whether his actions and thus SSI are in compliance with prevailing laws.

This trade group advocates and lobbies on behalf of companies, corporations and organizations involved in prison industry operations, supplying those operations or benefiting from the labor of inmates.  Connett is currently serving as the  and thus able to make determinations as to whether his actions and thus SSI are in compliance with prevailing laws.

Many of the questions posed to Cox and Connett by the Committee members arose due to a comprehensive study I conducted for the non-profit Voters Legislative Transparency Project(VLTP) organization. As Executive Director with an interest in prison industries, I have been involved in researching and investigating prison industry programs for more than a decade.  In January VLTP submitted the studyof Nevada’s prison industries to members of the Nevada legislature, Governor Sandoval, AG Masto and Secretary of State, Ross Miller.

In that report many of the deficiencies and issues discussed Friday were presented along with documentation supporting the conclusions and recommendations made.  The questions posed by Committee members indicates they had all read the study and wanted answers to the questions raised by the research.

One observation made during the research phase of compiling the study, is that it appears that Cox, Connett and the NDOC are attempting to run the state department of corrections as a “business” rather than a state agency.  Partnering with businessmen and women who deal daily in matters of profit/loss and market share, the NDOC is woefully unprepared, as the accounts receivable and low-cost lease to Alpine demonstrate.  Director Cox, Connett and the NDOC seem not to understand that any losses arising from these partnerships between SSI and private companies are ultimately borne by Nevada’s taxpayers.  This already happened in 2010 when Cox’s predecessor, Howard Skolnik applied for a Supplemental appropriation from the Legislature due to losses incurred from recession and reductions in prison industry income.

With more than a million in uncollected debt since 2010 and lost streams of revenue due to sub-par leases, industries losing hundreds of thousands of dollars annually, the NDOC is being critically mismanaged.  As a state agency, it is the taxpayer who will be left making up the lost revenue from this lack of management.

One recommendation made directly to the Governor was that Nevada adopts the in-place mandatory guidelines of the Prison Industries Enhancement Certification Program (Pie Program).  This program allows joint ventures between private companies and state prison industries.  It provides a way for private enterprise to have access to inmate labor and to distribute products across state lines, sell to the U.S. government in amounts exceeding $10,000 and to sell those goods in consumer markets.

The Pie Program has nine mandatory requirements and four of those developed by Congress for this program include:

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.

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.

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

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

Nevada is already participating in this program and has Pie Program operations running in the prison industry.  Those businesses appear to be operating without financial losses to the state or SSI, in compliance with the mandatory requirements and thus, not exhibiting any of the problems the non-Pie Program involving Alpine is.

Adopting these regulations would ensure consultation with competing businesses, labor groups, and unions ensuring inmates are paid the required prevailing wage.  Since the NDOC deducts 24.5% of the gross wages paid to inmate workers, the amount taken through this deduction would increase and those funds would be used to offset the costs of incarceration. Combine adopting these guidelines with genuine oversight provided by the Nevada Board of Prison Commissioners, chaired by Governor Sandoval and I believe this is a solution to the existing problems experienced by the NDOC.

Continuing to allow a private non-profit trade association to oversee the state’s prison industries in the face of the controversy that has erupted while they had such oversight duties, is asking for more trouble.  As the head of the NCIA Connett has demonstrated he lacks the desire to enforce compliance and he is willing to put the interests of that organization above his responsibilities to the state. 

------------------------------------------------------------- 

TUE MAR 05, 2013 AT 09:41 PM EST

Thank ALEC For Prison Labor Jeopardizing Small Businesses and Jobs – Nevada Latest Battleground

byBob SloanFollow

 
 
 
 
• 20 Comments / 4 New

I’ve written several articles about the rampant and dismaying practice of state prison industries using prisoners as a labor force for private manufacturers.  Recently this battle has centered in Nevada – a state with slow recovery and an unemployment rate hovering at 10%.  Those supporting the practice of offering companies a labor pool comprised of a captive workforce that receives minimum wage or less – regardless of skill set, knowledge or experience – argue that such industry jobs are “training programs.”  They assert these prison jobs are necessary to provide prisoners with a work ethic and skills that will reduce the chance of re-offending after release. Those of us that openly oppose such exploitation argue that these state owned prison industry operations are nothing more than a way of exploiting the labor of convicted offenders while providing huge profits to companies with access to this labor force.

This is an ongoing practice that is devastating our jobs and disadvantaging hundreds of small business ventures that are competing against other companies with access to cheap prison labor, low cost leases and no requirements to provide the typical employee benefits that companies using non-inmate workers have to provide.  From 2000 through 2005 it was businesses in Florida that were outright stolen from their owners by a prison industry corporation.  In 2004 it was a technology industry in Austin, Tx. that fired 150 employees, closed their facility and reopened two months later in a Geo run prison, using inmates to make the same products.  Later in 2008 it was Lufkin Industries in Lufkin, TX. that was forced to close and displaced another 180 workers due to hidden competition from a company operating out of a Texas prison industry.

 

I have reported each incident, warning that this was going to continue to happen, sucking jobs out of the public and private sectors as more and more industries were coming on line behind prison fences.  Much of this story has gone without notice as more and more jobs disappeared and our unemployment grew steadily.  Finally in Nevada the Governor and key state executives have paused and taken a hard look at the impact prison labor is having upon unemployment and business expansion by non-prison industry companies.  After receiving numerous complaints about losing jobs, contracts and business to companies partnered with Nevada’s Silver State Industries, it appears the Executive branch in Nevada is on the cusp of adopting some much needed regulations to protect workers and small business owners.

To fully comprehend how all this operates we must first realize the power of mass media, the advocates of prison labor, who writes statutes allowing it and how together how they spread disinformation to the public.  At the heart of this pursuit sits the American Legislative Exchange Council (ALEC) funded by corporations benefiting from ALEC's "free markets" philosophy and model legislation such as the "Prison Industries Act."  Through corporate media outlets the public, workers and business owners are fed a continual stream of bogus facts, statistics and propaganda.

Media has reported for decades that crime is rampant, increasing by the month in all categories.  The public is made to live in fear of burglaries, robberies, rapes and murders – and this fear instilled by our media, results in the public sanctioning more and more new laws, stiffer and longer prison sentences for less and less dangerous acts.  We've authorized abolishing parole, mandatory minimum sentences, ever increasing drug laws, mandatory completion of sentences imposed and other harsh sanctions.  All of this has been done in the name of “making our streets safer” and under the catchy phrase of “Tough on Crime.”  This is refutedby facts not reported in the MSM:

"The crime rate for serious crimes, including murder, rape, and assault, has dropped significantly since the early 1990s in part because of changes in technology and policing, experts say.

The last time the crime rate for serious crime – murder, rape, robbery, assault – fell to these levels, gasoline cost 29 cents a gallon and the average income for a working American was $5,807.  That was 1963...:

And here:

"...Even as crime rates have gone down around the country over the last 20 years, our fear of crime hasn't changed much at all. Between 1990 and 2009, the national violent-crime rate was halved, while property crime dropped to 60 percent of its previous rate, according to the National Archive of Criminal Justice Data. But almost every year since 1989, most Americans have told pollsters they believe crime is getting worse."

These claims made by independent non-mainstream media outlets were based upon actual figures put out by the U.S. Department of Justice here.  Take a minute and input your state, years and types of crimes and get your own facts directly.  Yet in the face of this, ALEC continues to pump out "necessary" model legislation increasing criminal laws, imposing longer sentences and the mainstream media meekly goes along with their claims of increasing criminality.

Many think corporations are not behind this scheme, their profiting off of incarceration is simply a byproduct of crime.  More BS...it is no accident corporations funding or holding membership in ALEC and supporting their RW think tanks are involved directly in prison labor; Microsoft and Wal-Mart, 3M, Boeing, McDonalds (uniforms and plastic utensils), Wendy's (uniforms and plastic products), AT&T, IBM (cabling for electronics made by Escod Industries in S. Carolina prisons)

What this has done beyond filling a nation with fear, is to create a huge labor force of 2.3 million convicted prisoners from all classes, with varied technical skills (thanks the drug war for this disparity in vocations).  Through prison industries these men and women are put to work in prison industries run by every state and in most these industries are partnered with private companies.  Products that used to be made for state agencies, schools and non-profits are now openly sold to consumers and shipped from state to state to fill orders received from outside each state.  Products are also exported to other countries – while the U.S. continues to claim we disallow those same countries from distributing their prison made goods to the U.S.

Some “wordsmiths” come up with phrases such as the “Patriot Act,” "Right To Work," “Free Markets” and “Tort Reform” to force feed Americans a diet of wire taps, surveillance, tort reforms that benefit corporate interests, reduce wages to workers and other acts that violate our rights.  By doing this they have the ability to accuse those who oppose such “American” principals as being un-patriotic, un-American or a socialist.  This serves to keep many of us from weighing in or opposing such acts for fear of being singled out as un-American.  

It is no different with prison industries.  They continue to advertise that we should be humane and compassionate once we actively pursue, arrest and convict a “criminal” and support rehabilitating that man or woman by providing them with “training” and help to reduce “violence in prison” and “idleness” by putting prisoners to work in these training programs.  They claim these programs allow released offenders to secure jobs and thus not return to prison.  To be gnarly “this is all pure bullshit.”

In Nevada, Florida, California, Indiana and most other states involved in this prison industry scam, they actively pursue hiring prisoners who already have the skills needed by the industry located at each prison; painters, electricians, heavy equipment operators, lathe operators, medical technicians, metal workers, dental technicians, dog trainers…and the list goes on.  How much training is required when the “trainee” is already skilled?  

Additionally, these prison industry administrators seek out and employ inmates with mandatory life sentences and those serving 20 years or more.  Many of these prisoners will never have an opportunity to use their “training” upon release – as many will never be released.  In Florida the prison corporation successfully lobbied for legislation requiring them to hire 40% of their workforce from inmates serving more than 10 years.  This helps these exploiters to keep production levels at maximum capacity while maintaining shipping schedules.  It isn’t about training it’s about PROFITS, lower operating expenses, less in wages and benefits…in short, it’s about creating and using slave labor to replace non-inmate workers.

Describing an act or program in terms that lend the appearance of something being done that American’s would support has become the norm.  More often than not once you delve into the actual wording of legislation so innocently named, we find the innocuous sounding label has nothing whatsoever to do with the actual content of a bill  Prison industries and the Prison Industries Enhancement Certification Program (PIECP or PIE Program) has become such a situation.  We keep being told these industries are necessary for training, while huge amounts of money and work is diverted from the private sector.  Not surprisingly the participants take great pains to not reveal this “profiteering” to the public and competing companies.

Back in 1979 when enacted, the law was designed to actually promote training of prisoners, helping them reenter society with skills and a way to locate good paying jobs for them following release. Once corporate executives, business entrepreneurs and lawmakers who support those interests discovered PIECP and the existence of prison industries, they determined this could be a literal gold mine for employers; low cost leases of public owned prison facilities, employees with no ability to bargain for wages or complain about working conditions, no requirement to pay prevailing wages, no need for medical or health insurance and no unemployment insurance premiums required.  The perfect work force for manufacturers looking for lower operating and labor costs existed within state prisons in every state in America. Slowly by unerringly the lawmakers and special interest groups took control of all prison industry operations in the U.S. and today have their sights set on establishing similar prison industry operations internationally through the National Correctional Industries Association (NCIA).

This private trade association group has members and Directors who sit at the pinnacle of nearly every state run prison industry in the country – and at the apex of this organization sits the Chairman, Brian Connett who represents Nevada’s Department of Correction’s prison industries – Silver State Industries.  Beneath NDOC Deputy Director Connett sits those representing: North Carolina, Montana, Tennessee(Tricor), Alabama, Indiana, Minnesota, New York,UNICOR(Federal Prison Industries), Florida, Pennsylvania, Arizona, Colorado, Maryland,Arkansas, Michigan, Rhode Island, West Virginia, Utahand Louisiana.  Notice that the majority of these states are Republican controlled by Governor and/or assemblies or legislatures and thus have substantial ALEC lawmakers sitting in those legislatures.

Those on the BOD represent these states and that isn't counting regular members sitting on Committees that represent other states.  The total number of states involved in the NCIA is now in excess of 40 and includes several county jails that are using inmate labor for manufacturing, partnering with private companies.  With the head of this trade association having control over the entire Nevada Prison Industry program, it is no wonder that state’s industries program has recently been subjected to corruption involving, huge industry losses, uncollected leases and payroll (inmate and staff) salaries and wages, failed new industries and is completely lacking in actual state oversight.

Don’t be misled when you read these industries can only sell to state, local or non profits…if they are in the PIE Program, they sell products on open consumer markets.  This linkfrom the NCIA itself provides the industries involved, companies using the inmate labor and products made.  Today the NCIA claims there are 91,000 prisoners working in more than 1,020 separate prison factories in the U.S.  Hundreds of corporations are partnered with them working these prisoners.  How do corporations learn of available prison labor and low cost leases of prison manufacturing facilities?  Prison industries have marketing departments who actively seek new companies for these partnerships.  In their presentations they show professionally produced videos such as this one (distributed by the NCIA) and this one to prospective clients.

Additionally, since the NCIA is the agency chosen by the federal Bureau of Justice Assistance to oversee the PIE Program, oversight over the activities involving the PIECP industries is totally lacking - and this "self oversight" paid for through a government grant.  One would think that with a state having the head of the prison industry oversight authority (NCIA) heading their prison industry programs, Nevada would have the tightest run ship in the fleet – but not so.  Deputy Director Connett’s management skills apparently does not include business knowledge, practice or a policy of adhering to any regulations or federal guidelines.  After all why should he, his NCIA IS the oversight authority, so who will catch him or Nevada’s prison industry violations with he and the NCIA overseeing his activities?

The situation involving Alpine Steel’s use of inmate labor to unfairly compete against other steel fabrication companies in Nevada has apparently been “cured” by disallowing Alpine further access to the Prison Metal Industry at High Desert State Prison.  However during the research on Alpine, other equally serious activities involving Nevada’s Silver State Industries and the NDOC were discovered.  These include an illegal 5% deduction taken from ALL inmate worker’s wages and set aside to expand future prison industry operations; huge accounts receivable totaling more than $1 million dollars have been sent to collections or are pending collection activities from 2008 through 2013; Industries kept open when they are losing money year after year; a expensive motorcycle program that built several custom motorcycles, sold two to one of the prison industry partners and another four have set for years now unsold. Other discoveries included an industry operation used to import foreign water tanks that were used to manufacture water spray vehicles for use on construction sites.  These were distributed by Thomson Equipment company (later Silverline Industries) using inmate labor.  Silverline was a foreign owned company importing the tanks from Hong Kong.  These vehicles were introduced into the Nevada markets at prices far below comparable vehicles made by Nevada private companies, which caused the closure of more than one competing business.  More importantly, as with the Alpine Steel situation, none of the competitors were consulted or even made aware of the open competition by prison made goods.

Adding insult to injury, taxpayers have to absorb the subsidies advanced to companies like Alpine and those who have outstanding debts to Nevada’s Silver State Industries.  In addition taxpayer money built the factory facilities at Nevada’s prison units and they are not getting a good return for these expenditures. As any contractor performing work for prisons and jails will attest, those construction projects are more costly than similar projects undertaken in the private sector.  This higher cost is due to the need for security, more inspections, stiffer code requirements and lockdowns that sometimes slow the projects.

In Nevada the nominal cost of leasing manufacturing space is by the square foot and in 2011 that cost was in excess of $.70 cents per sq. ft (today the cost is down to $.68 cents per).  The contract entered into between NDOC Industries and Alpine in April 2011 leased 19,000 square feet of manufacturing space to Alpine for $5,000 per month, or $.26 cents a sq. ft.  The same space outside the prison at today’s rates would cost $12,900+ per month.  A savings of $7,900.00 every month ($84,800 per year) to alpine and an equal lose in income to the NDOC. Combined with the low cost lease, paying minimum instead of prevailing wages, no health or medical costs, no vacations and no unemployment insurance requirements, Alpine and any other business receiving those benefits have a huge advantage over other businesses in their respective markets.  This is the purpose of the NCIA, increasing profits to corporate interests through low wages, manufacturing space at less than 1/3 the cost of their competitors, a cheap labor force that can’t miss work or take time or vacations off.  NCIA members include the vendors and suppliers of raw materials to prison industries, corporations partnered in “training programs” and joint venture partners. The net result is unfair competition, bids and contracts in the private sector going to companies using inmate labor, depressed wages in the private sector, less possibility of employing the unemployed due to a dwindling lack of jobs – and all along the line taxpayers footing the damn bill!

I've written steadily about this phenomena for years now and as the topic has been ignored by private companies and workers have lost jobs to prisoners, the industry has grown by leaps and bounds.  Texas didn’t hear about this happening in Florida, so Lufkin lost their trailer division.  Nevada didn’t hear about this happening in Florida and Texas, so they were unaware a problem even existed.  More importantly, the business in the private sector in every state has no idea they are competing against prison industry operations using cheap labor and reduced operating expenses.  These competing companies are required by law to be consulted and give their approval prior to starting industries that could impact their labor force or sales, but they aren’t.  Labor groups and unions are required by law to be consulted and give their approval before industries are begun, but they aren’t.  This is a fact borne out by what’s occurring in Nevada now and in Texas previously.  In both cases, operations went on for years before labor or industry discovered the competition from prison industries.

This concludes my “rant” for today.  Next week if time permits I will begin a lengthy expose series that fully covers this topic and will cover all aspects of this corrupt practice.  Hopefully other state authorities will find the expose and learn from it, taking a close look at their state prison operations.  More importantly I am hopeful that small business owners will begin to ask questions of their state authorities to determine if they are being competed against by a prison industry project or product line.

To complain, one must first discover he or she has a reason and need to do so.  If you own, operate, or manage a business which competes with a prison industry product or service, you now have that reason… 

__________________________________ 

MON FEB 11, 2013 AT 05:39 PM EST

Prison Industries - A Huge Win in Nevada?!

byBob SloanFollow

 
 
 
 
• 22 Comments / 0 New

As I wrote previously here and here, there has been great attention concentrated upon Nevada's use of inmate labor to unfairly compete against other Nevada companies.  As a result of this work, big changes have taken place in Nevada - and hopefully will continue next month...

I traveled out to Las Vegas at the end of January to interview owners of companies and in an attempt to discuss prison labor issues with the NV. DOC Director, his Deputy Director in charge of Prison Industries and the owner of Alpine Steel, Inc.  Owners of competing companies were quick to discuss the unfair advantage given to Alpine, but neither Alpine's owner, Randy Bulloch or either of the NDOC officials returned my calls or email requests to speak with them.

Unfortunately, this is typical in instances where those in support of exploiting prisoners have to speak to the merits of program policies involving using prisoner's labor for private companies. This time, their silence did not keep the Governor, Attorney General or Secretary of State for Nevada from voicing their opinions - most of which were surprisingly negative about the prison industry's operations, lack of effective oversight, failure to follow state regulations and statutes and the impact of those industries upon Nevada's small businesses and the unemployed.

 

In the articles linked to above, I wrote about the Wet 'N' Wild theme park and Sky Vue projects taking shape in Vegas.  Individuals with great reputations and well known to the public in America are investors in both of these - as well as other projects involving Alpine Steel.  When I called individuals out for investing in a theme park project that was using inmate labor, I was asked again and again "How do you know of the investors and the use of inmate labor was involved in these projects?  Each has denied to us that is the case...what was your sourcing for these claims?".  

The media who had read my Study and articles here on DK and at VLTP.net, tried unsuccessfully to get a response from investors such as Andre Agassi to confirm that prison labor was being used for these projects.  With strong denials from all involved, the journalists were skeptical of my sources.  Even so, I refused to divulge the names of those who I'd spoken to or provided documents to me that I relied on for the Study and my postings - as I had promised them anonymity.

Sky Vue Wheel

Wet 'n' Wild

Sky Vue from my hotel in Las Vegas - looking abandoned

As I was preparing to tape an interview (click on Feb 3 program to watch) for a local news station in Las Vegas on Friday the 1st, word came in that my information and sources had been correct.  Alpine's owner had just admitted to having the low bid on the Sky Vue Wheel project - as well as having already received the contract for the Wet 'N' Wild job.  With that admission came a disclaimer that there would be no prison labor involved in either of those construction projects.

Checking with Nevada authorities to verify this claim of no inmate labor being used, it was discovered that following the release of my "Study of Nevada's Prison Industries" on January 25th, a decision was made to close Alpine Steel's steel fabrication operation at Nevada's High Desert State Prison complex, disallowing further use of inmate labor by that company.  In addition authorities has gotten a payment plan agreed to by Alpine to repay the state more than $400,000 owed for facility leases and staff salaries.  Alpine was going to have to do what their competitors were doing - hire workers from the unemployed in Las Vegas to fabricate the steel for those two jobs!

When I returned from Las Vegas the minutes of the December Board of Prison Commissioner's meeting had been made public.  At that meeting, the NDOC Director appeared and admitted that he and his department had not been following the laws governing the use of inmate labor or when approving new products or industries.

Members of the Board of Prison Commissioners, are heroes in this battle over the use of inmate labor to disadvantage small business and the unemployed, as demonstrated by the positions taken and the strong pursuit of protecting Nevada's workers:

"Director Cox reported that he testified at the Nevada Legislature’s Interim Finance Committee on Industrial Programs.4 There are three different mechanisms in place to provide oversight of NDOC Industrial Programs. First there is the Legislature’s Interim Finance Committee on Industrial Programs as discussed, second there is this Board of Prison Commissioners and third the Board of Examiners. Director Cox said we are reviewing our Administrative Regulations (AR’s). There is a reference to the Statutes that cover the oversight. After reviewing this at the last Committee meeting it appears that historically, we have never received approvals from the BOP.
We are preparing a draft of an AR.

"Governor Sandoval brought up the issue that inmate labor might be taking away jobs from citizens. DD Connett replied that if Alpine lost the bid that they would be in a position where they would have to lay off employees in their shop in Las Vegas. The Governor pointed out that we don’t want to subsidize private companies to the detriment of other local companies. DD Connett agreed. Regarding the current Alpine contract, he is working with the Attorney Generals office and they have created a repayment agreement with Alpine.

"Governor Sandoval confirmed that until recently Director Cox was not aware that businesses who want to contract with Silver State Industries need to come before the BOP Commissioners as well as the Legislature’s Interim Finance Committee on Industrial Programs. Director Cox will have an AR in place to assure that happens moving forward. DD Connett commented that since James Cox has become Director, no new Silver State Industries contracts have been approved. Director Cox said that the Legislature’s Interim Finance Committee on Industrial Programs is well represented with business and community leaders, labor, and elected officials from various parts of the state."

"Secretary of State Ross discussed NRS’s 209.549 & 209.461 subsection 2.,c. and asked Director Cox if in the past the processes listed within were followed properly.Director said that to his knowledge, they were not however moving forward he will have an AR, written in full compliance of the statutes in place. This will be completed before the next BOP meeting.

"Attorney General Masto requested a list of the current Prison Industries. DD Connett said he will provide it. She discussed the difference between existing and new prison industries and how they are handled. Additional discussion included her concerns as to the intent of the training of inmates within various industries and the affect on current local businesses. She asked if the intent of the industries is training inmates in a vocation so that they would be able to find work upon their release from prison and become a productive part of society therefore lowering their chance of recidivision. Or is a labor force being created (within the prisons) that existing private sector businesses can co-op to the benefit of their needs when they are engaging in an RFP process. She stated that this issue needs further and continued review.

"Director Cox assured that all of the issues brought up today would be further discussed at all three mechanisms in place that provide oversight of NDOC’s Prison Industries.

"Senator Brian discussed the ongoing competition with Alpine Steel that in his view is unfair to other competitors in regards to the labor costs and outstanding indebtedness. Attorney General Masto recommended reviewing current contracts for existing programs. Governor Sandoval said this issue will be examined before, and addressed during, the next BOP meeting."

So it appears even if Director Cox and Deputy Director Connett would not speak with me or acknowledge any of the claims I made in the Study, top officials in Nevada did in fact get "the memo" and decided to take quick and appropriate actions to stop the blatant and deliberate unfair advantages taken by Alpine Steel and other companies having access to the state's prisoner work force.

It isn't simply the failure to notify competing businesses and labor about prison industries or new products, it's the refusal to pay inmate workers the required prevailing wage rate, oversight provided by the National Correctional Industries Association (NCIA) - and fact that Deputy Director Connett is now the Chairman of the Board of the NCIA - that needs addressing.  It is the underlying fact that legislation in each state to allow access to this inmate workforce was written by and lobbied for by the pro-corporate American Legislative Exchange Council (ALEC).  Corporations seeking low wages to increase profits have sought a cheap "American" work force for years.  Through ALEC and the NCIA they have found that labor force here at home.  They will continue to exploit these men and women as long as we continue to look away, refusing to acknowledge that labor is a primary reason for so many American's being in prison today.  This well oiled and quickly growing industry needs new workers for those released from incarceration and as laborers for new factories being built every year and partnered with private companies.

Inmate drilling a steel column in prison shop for Alpine Steel job

Some would consider what happened in Nevada a small victory perhaps, in a larger battle involving the use of inmate labor.  I consider it a huge victory to: inmate workers; competing companies, and; the unemployed all across the U.S.  The effort of lowering costs to private companies with the result of taking jobs away from unemployed non-inmate workers in the community, was just handed an upset at the hands of a conscientiousness state Governor, Attorney General and Secretary of State - looking to protect small businesses and Nevada's workers.  Today there are 1,022 factories in the U.S. prison industrial system...and that represents 1,022 private factories that have closed down and laid off hundreds of thousands of workers.  In Nevada there is now one less factory competing for jobs and profits at the expense of competitors and the unemployed.  That represents one of the few wins on behalf of American jobs.

To give you an idea of the extent of the work being done by Alpine using inmate labor to fabricate the structural steel components - in addition to the theme park and Sky Vue jobs, Alpine currently has several ongoing or just completed jobs that they won through their ability to underbid competitors due to low labor costs:

Desert Inn Mental Hospital project

Fifth Street Bridge over the Interstate

Planet Mazda, Car Dealership

Many of those I spoke with stated they've lost as many as "four or five contracts a year to Alpine" due to the low wage costs.  Each of those lost projects to competing companies represents a half dozen to dozen jobs that could have been filled by unemployed steel and fabrication workers in Las Vegas.  So, the impact is anything but "insignificant" as prohibited by Nevada's statutes on prison industry operations.

Jacob's Trading Company is also using inmate labor in Nevada to repackage refurbished or returned items to retailers such as Wal-Mart - and of course paying the inmate workers less than the wages paid for similar work in the community

Another company, TJ Wholesale is operating out of the prison industries there in Nevada at the same prison as Alpine.  They pay inmates "by the piece" for sorting, punching and repackaging used Casino cards to sell retail to tourists. At their website, this company advertises:

Business Services

"I would like to take this opportunity to formally introduce you to our company; TJ Wholesale is an established company of 27 years with many patented and trademarked products. The new owners have been in the manufacturing/distribution business for the past 30 years. We have manufactured both in the US and abroad to meet our customer’s needs.

"Our connections in China, Taiwan and other Pacific Rim countries are superb.

"We all have traveled throughout the years and created beneficial relationships that will make a wide variety of projects possible. We are looking forward to developing our relationship with your unique company and hope you will think of us on your next project. We are confident that we can meet and exceed your most demanding goals and cost requirements.

"Our unique relationship with a 700 man workforce in Nevada spans 20 years, with a wide and diverse set of industries, some of which include but not limited to:

Card Sorting
Cut & Sew
Printing, Bookbindery, Silk Screening
Embroidery
Draperies
Carroll Shelby Custom Auto Fabrication
Dairy & Ranch Operations (700+ wild mustangs)

Office Furniture
CAD & Metal Fabrication
Auto Paint & Body Work
Auto Re-Upholstery
Custom "Big House" Motercycles (sic)
Truss Manufacturing
Flat & Embossed License Technology
Institutional & Residential Mattresses

"Through our working relationships with our partners, we believe we have the capabilities to fulfill a vast amount of working processes and provide a large array of products. We have access to almost an unlimited workforce with flexible work schedules who are trained and skilled to meet all of our customers’ needs.

"We invite you to explore all the possibilities and opportunities that can benefit both our companies by working together.
Sincerely,

Ronald K. Steiner
VP/Sales
Diamond Mountain Distributors, LLC
Dba TJ Wholesale

This local company was formed 4 years ago and is owned by Diamond Mountain Distributors, owned by the same individual.  Today they hold a new trademark, "Just Vegas" under which they are selling T-shirts and other clothing products.  Are these made with prison labor at Nevada's "cut and sew" industry?  I don't know, but from the look of TJ Wholesale's website, it appears they are operating as a broker or surogate for the prison industry operation, hoping to attract customers for the other products or services offered by Silver State Industries.

Again, this is why prison industry operations are like a huge, rotting onion.  Once you begin to peel back the layers, more and more information is discovered that shows how community jobs are being transferred from workers to inmates.  The entire industry is designed to lower the wages of non-inmate workers while providing companies access to a very cheap and captive workforce.  Nevada represents just the tiniest of glimpses into this secretive operation of providing corporations with cheap labor...labor with no voice, prohibited by law from organizing unions, collective bargaining or requiring annual raises, medical insurance or unemployment insurance premiums.  Once complaints against Alpine Steel were voiced and a Governor with a conscience looked at the situation, all the other industries, products being made and manipulations being made by Silver State Industry's Deputy Director came into focus.  He and others in authority now want to know whether these programs are really for "training" or as AG Masto asked,

"[I]s a labor force being created (within the prisons) that existing private sector businesses can co-op to the benefit of their needs when they are engaging in an RFP process?"

Today China's cheap labor is not the threat to American jobs - it is the prison industries across the state or down the street.

In one conversation I had in Vegas, a business owner told me that he has to consider the labor rates paid by Alpine to inmate workers when he considers raises to his employees.  Knowing that Alpine is out there paying minimum wage for the same work his company pays wages of between $17.00 and $20.00 per hour for, this business owner fears he could price himself out of bid contention due to the disparity in labor costs.  Currently this company is already losing a half dozen jobs a year to Alpine - due to labor estimates.

In order to compete with Alpine, he would have to reduce wages or the number of workers in order to keep his estimates comparable to Alpine's.  Since none of his workers would be willing to perform skilled work for minimum wage - like inmates working for Alpine - he continues to lose contracts to Alpine.  This story was repeated again and again there in Nevada, and not just by owners of steel businesses, but others involving industries competed against by Silver State's prisoner work force making other products.

So - while what happened in Vegas earlier this month was a victory for Nevadans - there is still a lot of work to be done.  More skirmishes to increase inmate wages to what is required under the law; insistence that all union and labor groups be consulted prior to opening new industries or starting new product lines and; consultation with competing companies who may be affected by competition from prison industry operations.

Realizing that today over 40 states and county jail industry operations are participating in this program making inmate labor available to private companies, one begins to understand the depth of this competition working against small businesses in the U.S.  When UNICOR is added to the state industries, we find that in the more than 1,000 factories competing for business collectively, there are an estimated 600,000 to 1 million inmates working in some type of prison industry.  In any terms that's one hell of a lot of jobs!  Considering that we have millions out of work, prison industry jobs represent a significant number of jobs removed from our non-inmate labor markets.

So it is the combination of jobs lost to inmates added to the contracts lost to private sector companies due to the low wages that together represent a hidden and unrealized impact upon business expansions and the hiring of new workers due to those expansions.  Both employment and growth are depressed in private sectors due to the continuing growth of prison industrial "training" programs.

Again due to the number of states involved, each operating multiple and diverse industries, employment and expansion in the private sectors is curtailed in all competing industries.  Even in those cases where a private company can compete, the labor and wage disparities prevent raises and cost of living adjustments, because neither exist within the prison industrial complex.

As I also reported in my last diary, here Congress just gave the go ahead to UNICOR to begin allowing private companies access to federal prison labor and facilities under the PIE program.  This is going to substantially increase both the number of prison workers and factory facilities available to corporations.  In addition Congress saw fit to approve a repatriation program whereby U.S. companies can bring American jobs back to the U.S....where products made are not being made in the U.S. now.  This repatriation program allows UNICOR to put men and women prisoners to work making those products for private manufacturers in prison factories, earning between $.23 and $1.15 per hour worked.  So the jobs coming back...will be going to prisoners.  This is intended to be the "new face" of American manufacturing in the 21st century.

While our President continues to urge passage of his "Jobs Bill" Act...the GOP supported by the likes of ALEC and the Chamber of Commerce, continue to oppose that legislation vigorously - in favor of providing their corporate benefactors with slave labor instead.  Why hire our unemployed at fair wages, provide them with medical and health insurance, unemployment benefits, paid vacations and paid time off...when a prisoner will do the same work for pennies on the dollar, and by can't complain or seek higher wages?  It literally is a "win-win" for companies involved in industry and services.

Now when a friend or family member asks "where have all the manufacturing jobs gone?" you can answer that question factually and in so doing, help awaken more Americans to this hidden theft of our jobs. 

_____________________________________ 

SUN JAN 27, 2013 AT 05:05 PM EST

Jobs Bill Stalls - Legislation Allowing More Corporate Access To Prison Labor Passed

byBob SloanFollow

 
 
 
 
• 22 Comments / 0 New

LABOR UNIONS AND GROUPS - PULL THE WOOL FROM OVER YOUR EYES AND GET ACTIVELY INVOLVED NOW - BEFORE ITS TOO LATE!

Here on DK I published the first and second segments of a three part expose reporting on the use of prison labor in Nevada to deny jobs to local unemployed workers in Las Vegas.  I normally would follow up with the last segment here...but in researching for the final article, very disturbing information came to light that must take precedence.

The final article was published at our ALTP DK group's website, VLTP.net.  Please take a few minutes and read this article that links ALEC and prison industry advocates together in advancing legislation to expand prison industries nationwide.  It is filled with the legislation, names, links to videos of meetings where this expansion began and how Nevada is simply the latest example of sending American jobs to prison.

That being said, I am very disturbed and need to get breaking news out to DK readers about a development that will impact ALL labor in the U.S. - and in the worst way possible.  Congress has loudly argued over President Obama's "Jobs Bill" for a couple of years now, stalling any discussion of it in the House.  At the same time Congress very, very quietly passed legislation giving Federal Prison Industries authorities the go ahead to expand their operations with two critical measures.  This was done under the Consolidated and Further Continuing Appropriations Act, 2012.

 

In the April 2012 NCIA Board meeting minutes, I found this hidden away near the end of the document:

PIE Authority Approved for Federal Prison Industries

Mr. Grieser opened his report by stating that Congress granted FPI two new authorities in December of 2011. The first was PIE authority for FPI, which was accomplished by modifying the statute to allow FPI to participate in PIE. The second was a repatriation authority.

On the subject of the PIECP authority, Mr. Grieser explained that FPI (UNICOR) had an initial meeting with BJA to discuss their plans and from there, they established work group to begin preparing the application. Mr. Grieser detailed that FPI had a technical support meeting with Ms. Honeycutt and Mr. Heslop from NCIA as well as Ms. Auerbach as NCIA’s PIE Technical Coordinator to brief FPI on the application process. Mr. Grieser explained to the Board that FPI does not expect to have the application completed overnight and he stressed that FPI will not compete with states with the PIECP program. FPI will first contact the state CI Director before doing any work that may compete with that state.

In the "FEDERAL PRISON INDUSTRIES, INC. ANNUAL FINANCIAL STATEMENTS FISCAL YEAR 2012" audit presented by the office of the U.S. Department of Justice's Inspector General I confirmed this was in fact true:

"During fiscal year 2012, FPI received legislative authority to participate in the Prison Industries Enhancement Certification Program (PIECP) and to manufacture products...

"The realignment resulted in the reduction of six business segments to five while creating a new group whose primary purpose is to pursue new business opportunities in all product and service areas including repatriation and PIECP."

The FPI already has "mandatory sourcing" requirements that all government agencies purchase products from UNICOR if of comparable in cost and quality.  With the entrance of UNICOR into PIECP, they now have the authority to partner with private companies to use federal prisoners as a labor force to manufacture products or deliver services to/for these corporations or companies.  Take a quick look at their products offered: http://www.unicor.gov/.

These partnerships at the state level have been used to displace tens of thousands of American workers.  With the program now being made available to UNICOR, the number of U.S. jobs still available to private sector labor, will dwindle.  This is what has happened over the past two decades with the PIECP (Prison Industries Enhancement Certification Program) draining jobs from our communities.

The second piece of legislation accompanying authority to participate in PIECP, is even worse and shows precisely how politicians are working with CEOs and company owners to "launder" American jobs already lost to offshoring,  Congress passed legislation enabling a "Repatriation" program to allow companies to return those jobs and skills to the U.S.  Instead of bringing them back to America's unemployed, this new regulation allows the corporations to return the jobs and put them all in the hands of UNICOR's inmate work force - earning a maximum of $1.15 per hour.  Repatriation would allow prisoners:

to manufacture products that would otherwise be produced outside of the United States, as approved by FPI's Board of Directors. with the passage of these authorities, FPI's Board has approved 14 pilot programs for repatriated products. FPI anticipates these pilot projects will assist in further reducing its losses.

The discussion by the NCIA board reveals that these "pilot projects" involve products manufactured in the garment and electronic's industries:

"He (Mr. Grieser) then explained the repatriation authority that FPI also received through Congress. Discussion ensued with concerns relative to how FPI determines a repatriation job vs. a PIE job. Mr. Grieser explained that the repatriation allows FPI to perform work under a pilot program approved by FPI’s Board. He added that FPI has already moved forward on four pilot repatriation programs, electronics and garments, and that wages would be traditional (meaning non-PIECP) wages.

To show the greed of the NCIA, here is a discussion about UNICOR being able to pay inmates non-PIE wages where the state prison industries had to pay PIE wages:

"A Board member asked if a state CI can perform repatriation work via traditional wages and stated that it wasn’t fair that FPI could not do so in their states. Mr. Grieser responded thatthis authority was given to them by Congress and, at this time as far as he knew, there was no exemption for states to perform this type of repatriation work. Another Board member asked Mr. Grieser to clarify if this was non-Federal government customers. Mr. Grieser confirmed. The Board member then confirmed then that states have to pay prevailing wages for the same work that FPI will be paying traditional wages on. Mr. Grieser confirmed that was the case; he stated that the legislation was limited to FPI and FPI is taking advantage of this authority. Another Board member asked if forty percent of a product is made overseas, can FPI get involved in that forty percent via this repatriation authority. Mr. Grieser responded that FPI will not pursue that. Another Board member asked if FPI will discuss with states any repatriation work that will be occurring in their state, just as Mr. Grieser indicated that FPI would do for PIE work coming into the states. Mr. Grieser responded that FPI management hadn’t discussed that but reminded the Board member that the work that is being repatriated would not be currently performed in the US. Another Board member asked if there was a limit to the number of years FPI can repatriate and Mr. Grieser indicated there was not. Another Board member asked if FPI can partner with states on repatriation and Mr. Grieser indicated probably not on repatriation but confirmed that it could on PIECP work."

"Non-PIE wages" means UNICOR will use the standard wage scale currently paid to federal prisoners of between $.23 and $1.15 per hour, per inmate.  I would remind readers that currently many of Apple's electronic products are no longer made in the US, so these products would qualify for repatriation under the description given by Mr. Grieser of the FPI.

From the 1980's through today, corporations have gotten tax breaks and allowable credits for moving jobs offshore, by allowing IRS deductions for offshore operations.  Now those overseas jobs are costing them more due to awakening labor with increased wages in foreign countries, increases in shipping costs due to increases in fuel, oil and increased utility costs.  These tax benefits came about through Congressional action and were in response to lobbying for those benefits.

Now faced with rising costs overseas and facing the prospect of having to pay American workers a fair wage if they bring manufacturing jobs back to the U.S., these corporate raiders have sought a means to return the jobs and avoid the requirement to pay workers appropriately.  

They have been busy lobbying for legislation to ban collective bargaining and to reduce the voice and influences of unionized representation of workers in both the public and private sectors.  Through legislation written by them and disseminated by ALEC and other conservative think tanks and groups, they have brought labor to its knees over the past several years.  Now, a huge and cheap labor force - with no voice, representation or civil rights - has been identified: federal prisoners.  They have again lobbied Congressional members for access to this cheap workforce, promising to bring jobs back to "American workers"  as long as those workers are prisoners.

Recently there was an announcement by Apple that they were bringing jobs back to America.  In this article other electronic manufacturers were identified as bringing jobs back to America...and with UNICOR announcing they have already initiated 14 pilot "repatriation" projects involving the manufacture of electronics and apparel or "garments", chances are some of these jobs will go to prisoners. Apple is getting kudos for bringing home jobs - but has not specifically identified either the jobs or where the production facilities will be located.

Perhaps this memo sent out by Attorney General Holder in October 2010 gives us some valuable insight about where these jobs will be going...

And it isn't just our current AG who is pushing and supporting the expansion of prison industries.  Former AG, Janet Reno took part in advancing this agenda way back in 1999 when these prison programs were first made available to corporations.

The determination of who will have access to UNICOR's prison workforce and factory facilities, products made and what "repatriated" pilot projects will be chosen falls under authorityof the Federal Prison Industries Board of Directors:

"A board of six Directors, appointed by the President, reviews and approves the policies of the Corporation, long-range Corporate plans, establishment of new industries, and bylaws and capital investments in excess of $500,000. The Board also makes annual reports to Congress on the conduct of the business of the Corporation and the condition of its funds. General management of the Corporation is vested in an Assistant Director of the FPS, who serves as Chief Operating Officer, and is carried out by a staff of 11 Corporate Management employees located in Washington, DC. Expenses for this administrative function are subject to congressional limitation."

The following chart shown below illustrates FPI’s Sales, Earnings, and Net Income for the period of FY 2007 through FY 2010:

The description of the FPI Board is best described as:

FPI is “administered by a board of directors, appointed by the President to serve at the will of the President without compensation.” 18 U.S.C. § 4121. The statute creating the board states that the directors “shall be representatives of (1) industry, (2) labor, (3) agriculture, (4) retailers and consumers, (5) the Secretary of Defense, and (6) the Attorney General, respectively.” Id.

 As this reveals, the DOJ and DOD are directly represented upon this controlling board - and again, serve at the pleasure of the President.

These actions taken to expand FPI's ability to partner with private companies to provide labor in manufacturing or services, combined with the "repatriation" of our lost jobs to those same inmates, seriously conflicts with the stated goals of President Obama and his proposed Jobs Actto create jobs for "American workers."  Unbelievably - or perhaps not so unbelievable, given the behavior of Congress since 2010 - is the fact that when this was presented to the Congress in September 2011, Congress stalled it while passing the CONSOLIDATED AND FURTHER CONTINUING APPROPRIATIONS ACT, of 2012 putting more American jobs within reach of prison industries and prisoners.

These Congressional actions bring the outsourcing of our jobs overseas full circle...take our jobs overseas, reducing our workforce by huge numbers, then repatriate them and bring them back to a labor force that is just as "foreign" and detrimental to U.S. workers as those now used in China or Taiwan.  The effect is the same: corporations continue to be provided a cheap labor force by Congressional acts; continue to profit through deductions of their foreign operations and; at the expense of American taxpayers and workers.

I have documented my research and written about this for several years now, and can't seem to attract the attention of labor leaders or activists.  With the national rate of union workers now hovering at just above 11%, (down by .5% from 2011) one would think the AFLCIO, SEIU, Teamsters, UAW, EWU and dozens of other organized labor unions and groups would already have an active voice in opposition to prison industries and labor - but they do not.  The information is available, the statistics and numbers available to them, yet they remain non-committal on this topic, even as labor memberships dwindle and ALEC's repressive anti-union, anti-labor legislation becomes law state by state.

My opinion is that these new initiatives approved by Congress is the next-to-last-nail in the coffin of organized labor in America.  The final nail will be state or federal Constitutional Amendments abolishing and/or making organized labor forbidden.

Union leaders, you can stand by idly, wringing your hands and let this happen - or you can wake the hell up and join those of us out here fighting your battles in this labor war.  We need help organizing, funding and boots on the ground to resist the new and existing pursuits of taking our jobs from us and putting them in prison.  Corporate interests are outspending you and our grassroots activist groups...while funding all opposition to publicizing these labor practices.

Regardless of whether you are a union or non-union worker, this affects you - personally.  Available jobs for those without one, are disappearing by the day.  Those with jobs are seeing more and more of their co-workers disappearing as well, as employers say they are "downsizing" - when what they really mean is they're moving operations to prison industries.  Corporate employers have discovered there is no need to hire private sector workers and pay them prevailing wages, benefits, unemployment insurance, worker's compensation, paid vacations or paid leaves...when they can employ prisoners for pennies on the dollar, who have no voice, representation and are forbidden by law from organizing or striking.

Look forward, and it's just possible that in the future decades the unemployed will have to be sent to prison to find employment as that is where our American jobs will be, with positions available to attach "Made In The U.S.A." labels to millions of prison made products. 

___________________________ 

SAT JAN 19, 2013 AT 02:58 PM EST

NDOC & Silver State Industries – Meet the Exploiters

byBob SloanFollow

 
 
 
 
• 1 Comments / 0 New

Working on the “Chain-Gang” was how prisoners were punished for their crimes in days gone by– and people who had been victims of crime were happy.

Then we became “civilized” as a society and changed laws, regulations and opinions that eliminated these hard forms of punishment and degradation.  Instead of harsh working conditions we made sentences longer, believing that to be more humane.  Parole was abolished; possession of a “joint” was enough for a mandatory five years in prison.

Problem was, all this incarceration was costing taxpayers ever more in corrections costs.  Lawmakers sought ways to reduce the ever-increasing expense of incarceration.

An idea was born: create prison industries where prisoners could be put to work to “earn their keep” and reduce the incarceration costs borne by taxpayers.  Soon another idea was floated, let private manufacturers gain access to the prison run factories and further reduce the expense of housing, feeding and providing medical care to prisoners.  Inmates can be taught work ethics, products made by them will cost us less and recidivism will be reduced…and once again the people were happy.

Problem is, this program has created more opportunity for crime and exploitation – of the prisoners themselves. Instead of prison populations shrinking, they grew.  This growth was due to more laws, stiffer sentences, the war on drugs and increasing penalties.  Alongside that population the prison industries grew even faster with more inmates came more job positions.

This labor force exists in a near vacuum; no voice, no representation, disallowed from unionizing (though today an estimated six hundred thousand to one million men and women are working in prison industries nationwide), sentenced to hard labor by courts.  DOC’s assign them to jobs, and if they have existing skills needed, they are put to work in prison industries.  Industry managers seek skilled inmates with long sentences in order to quicken production, maintain shipping schedules and dependability.

Court challenges under the Fair Labor Standards Act (FLSA) about wages and deductions are mostly denied with prejudice – meaning the plaintiff is prohibited from ever filing such claims in the future.

In Florida and Nevada (just two of nearly 40 states involved), percentages of what little wages earned are taken back and given to the prison industry to help expand or create new work programs.  This aspect itself violates one of the key tenets of the federal prison industry program referred to as the “PIE Program” and there are other more critical violations resulting in our jobs being lost to prisoners.

This expose will bring to light the existence of a national network of individuals, corporations, a private association, agencies and branches of state and federal government involved in exploiting inmate labor, profiting off that exploitation and pursuing the transfer of tens of thousands of jobs from communities to prisons across the country.  Nevada ranks high on the list of states involved in violating the trust of their citizen workers, small businesses and exploiting prisoners delivered into their care.

 

In Nevada the prison industries are managed by Director James “Greg” Cox and Deputy Director, Brian Connett.  Previously one individual held both of those positions as prison industry programs were developing back in the last quarter of the 1900’s – Howard Skolnik.  He set the stage for what is occurring today and now, Cox and Connett carry on in his stead.

 

NDOC Director, Greg Cox                                              Deputy Director, Brian Connett

Running an entire state prison system is a daunting task; housing medical care, work programs, staffing, complying with legislation impacting prisons and budgeting.  Today the Director of Nevada’s Department of Corrections is James “Greg” Cox.  He has deputy directors assigned to various important divisions of the DOC and in general Director Cox and his Deputies are doing an admirable job.  The one exception to that observation involves the DOC’s Prison Industrial Program.

One of Cox’s responsibilities is operations of the prison industrial work programs.   Brian Connett serves in the capacity of Deputy Director, Industrial Programs and is in charge of running Silver State Industries (SS), Nevada’s prison industries program.  Mr. Cox and Mr. Connett have responsibility for insuring the prison industries are operated properly under state and federal laws.  Their responsibilities and actions are likewise overseen by a committee created specifically for that purpose: the Nevada Interim Finance Committee’s Committee on Industrial Programs. Nevada determinations as to operations of prison industries involving; approvals for new products, new factories, partnerships with private companies and compliance with all applicable state and federal laws and regulations, are all the responsibility of this oversight committee.

For that committee to perform their duties properly, they have to know and understand the parameters of all controlling regulations such as the federal Pie Program’s mandatory requirements that allow inmate labor to be used by private companies.  They must be able to weigh new projects against the requirements of noticing competing businesses and labor groups prior to implementing any new program to insure fair competition and no displacement of jobs to non-inmate workers.  How can they judge whether a prison operation will unfairly impact local labor or unfairly disadvantage competing businesses, if they do not fully understand the programs and the Legislative provisions put in place to guard against such interference’s?

Unfortunately in an interview with a member of that committee I was told he was not fully aware of the Pie Program’s mandatory requirements, and that concerned him.  He did not know local businesses were required to be contacted prior to operational start-ups or production of new products began.  More importantly, he had not been advised by anyone within NDOC or Silver State Industries that labor groups were also to be consulted.

This committee has a composition of members that include representatives from the legislature, business and labor and charged with the duties described above.  If they are to perform the functions of the state with regard to the operation of prison industries, they must be cognizant of the federal rules, regulations and a law controlling the federal Program Silver State Industries is participating in – and has certified to the federal government they are and will remain, in compliance of.

Below you will find prison industrial boards or committees such as this one in Nevada have been designated responsibility for insuring compliance, but that is difficult to do if you are unaware of what that responsibility entails.  The oversight “authority” for this program at the federal level, encourages such committees or boards operating in the states.  It allows them to claim that with members of business and labor on these boards, both groups are made aware of new projects, products and partnerships.  They argue that in that way, the requirements of consulting competing businesses and labor unions is satisfied.  Again, this style of “consulting” is insufficient as compliance, where members of the board or committee are unaware of actual legal requirements.

This federal program of prisoner training began with the passage of 18 USC 1761 in 1979. This law is known as the Prison Industries Enhancement Certification Program (commonly called PIECP orPie Program).

Under this program Congress allows private companies to have access to inmate labor in order to “train” them and provide skills prisoners could utilize upon release.  Congress put in place nine mandatory requirements that must be complied with.  Failure to comply subjects those in violation to federal imprisonment for up to two years and/or a fine of $50,000.00 and loss of the PIECP certificate.

The Department of Justice outsourced or privatized policy determinations, enforcement, compliance reviews and investigations of non-compliance to a private organization in 1995.  These tasks were taken over by the National Correctional Industries Association (NCIA) which is a trade group representing prison industries, their staff, employees, vendors, suppliers and companies using prison labor.  Since transfer of program oversight, there have been a total of -0- prosecutions for violations.  As you read the following you will find it difficult to understand how such a zero-sum figure is possible…

Once the NCIA assumed a duty of crafting policy for this program, they began to interpret the nine mandatory requirement in the light most favorable to their corporate members, adjusting annual assessment determinations to reflect alterations designed entirely by them.  The NCIA made these alterations and the entire program was changed.

A mandated prevailing wage requirement was changed to minimum wage scale, computed to the 10th percentile and allowing industries to institute a pre-training program where wages could be reduced to as little as $.20 per hour:

   a.       The Training Wage Exception to the 10th Percentile Wage Floor

“BJA determined in 2006 that wages must be set at or above the 10th percentile, as defined by the State Department of Economic Security Agency. BJA takes the position that this is a “generous interpretation of comparable, yet still fair to competitor manufacturers because of the “lack of education, training, and experience typical of the inmate labor force.” The one exception to the 10th percentile requirement is that inmate workers may be paid a training wage that falls below the 10th percentile if “their employment agency provides express written agreement of a wage less than the tenth percentile for a limited training period.”

In December, 2010 the BJA issued a Back Wage Policy that unequivocally reinforces the prevailing wage requirement and refutes the above statement made by the NCIA.  It reads in part:

Background:

“18 USC 1761 (c), the statute authorizing the Prison Industry Enhancement Certification Program (PIECP), states that PIECP inmates must “have, in connection with PIECP work, received wages at a rate which is not less than that paid for work of a similar nature in the locality in which the work was performed. The Bureau of Justice Assistance (BJA) 1999 PIECP Guideline gives the State wage setting agencies authority to make wage determinations for PIECP workers that are comparable to those in effect for similarly situated workers.” (emphasis mine)

The claim that lower wages are fair to “competitor manufacturers” is a false one.  In Nevada a high percentage of inmates working in the industry are serving long sentences or life terms (as reported by CNN), and skills taught will likely never be applied in the private sector.

In Florida a report containing research provided to Governor Scott by his 2010 transition Law and Order team found 28% of the prison workforce was comprised of lifers or prisoners serving sentences with ten or more years remaining until release.

Silver State Industries has set the Pie Program maximum wage for all inmate workers at the 10th percentile of the state/federal minimum wage.  Unless the “prevailing wage” is set by the state OESat minimum wage for all occupations in NV, the NDOC is out of compliance with the mandatory wage requirement.

The NCIA also determined that mandatory notification to local labor groups, unions and competing private businesses about new or existing industry projects or products, could be satisfied by informing local Chambers of Commerce, or advertising in classified sections of newspapers – and compliance review personnel were told these requirements were already on file with the NCIA andhad been verified and would not be a part of the annual compliance review.

These changes resulted in a substantial reduction in wages to inmate workers, creating a huge and low paid labor force used to attract business owners seeking to expand operations or reduce labor costs.  The NCIA produced a video  titled “Cutting Through The Perceptions” to be used in marketing prison labor to private companies.  When it is used in conjunction with lowered wages the changes in notification to and consultation with labor unions, and competing businesses, prison industries began to expand and grow quickly, without labor or competing small business awareness.

As the video shows, this prison program is not for training, it is a way to provide skilled labor to private companies to reduce labor costs, increase production and avoid typical “benefits” they would have to pay to private sector employees.

This brings us to the current situation involving Silver State Industries and Alpine Steel there in Nevada and complaints lodged with the Board of State Prison Commissioners by XL Steel and others who complain about the loss of private sector jobs to inmate labor and possible unfair competition.

The information above educates you as to the program, how it has been manipulated, changed and altered to provide a maximum savings to companies involved in prison labor, and the least wages to a truly captive workforce.  Now let me document the specific violations committed in Nevada involving those regulating the state DOC and Silver State Industries.

_____________

Recent reports from Las Vegas reveal s Alpine has been using prison labor as a means of undercutting all competitors on projects requiring bids.  Labor unions were unaware of the PIECP program.  Union officials had no understanding of the Pie Program or that they were to be consulted prior to the startup of any Pie project or industry.

This is hard to comprehend where SSI was reviewed by the NCIA in 2011 (@pg. 4) and found in full compliance…except for one wrinkle kept from the public and apparently the Nevada legislature and the Board of State Prison Commissioners:  NDOC Deputy Director Brian Connett is alsoPresident of the NCIA with a responsibility for insuring, enforcing and certifying full compliance by all state prison industries to the BJA.

Harder yet to comprehend; how is Mr. Connett able to enforce and certify industry wide compliance, when he and Director Cox claim to not know or understand the regulations and are just now admitting SSI and NDOC are in violation?

The NCIA receives a sizable grant from the BJA out of tax dollars to perform compliance duties – in effect receiving a subsidy for self-oversight of an industry generating annual sales of $2.4 billion dollars.

Under questioning by Governor Sandoval and others at a recent meeting of the State Board of Prison Commissioners, Director Cox admitted that his “agency has not been performing necessary checks to ensure inmate work programs are not taking jobs from private industry workers.”  Mr. Cox went on to say, “The process has not been followed,” it should have been.”

Mr. Cox indicated that he, “will develop regulations to require that prison industry programs be approved by the Prison Commissioners Board, chaired by Gov. Brian Sandoval.”

However, new regulations are not necessary; rather existing Pie Program regulations need enforcement – and true oversight provided by someone other than those participating in the program.  SSI’s inmate workers for Alpine Steel are a prime example of the lack of enforcement.  Alpine pays inmates working as structural steel fabricators the state minimum wage of  $8.25 per hour and no unemployment benefits.  The Nevada OES sets the mean hourly wage for such skills at $17.63:

Even using the NCIA’s 10th percentile rate, these workers should be receiving no less than $11.63 per hour.  Competing companies in the structural steel industry in Las Vegas and elsewhere in Nevada pay workers the median wage of $16.91 per hour plus benefits.  Without factoring benefits, private companies are thus required to pay more than double the rate paid by Alpine.  A serious disadvantage prohibited by the Pie Program wage requirement and congressional intent of a “level playing field.”

Multiply this discrepancy by the states participating, inmates employed in the program, and you begin to understand the massive savings in wages provided to companies such as Alpine Steel and those discussed below.  It also helps to understand why so many of our jobs are literally “going to prison”.

Compliance problems are no stranger to Mr. Connett.  In his previous position as the PIECP Program Manager with PRIDE Enterprises, Inc. operating Florida’s entire prison industry, Connett cut corners similarly.  I will introduce and discuss the documented corruption Mr. Connett was a part of in the third and final segment next week. Suffice to say, Brian Connett brought a substantial amount of baggage with him to Nevada.  I would urge Nevada workers to again send him packing as Florida did in 2008.

The controversy involving Alpine Steel is merely the latest in a series of problems with compliance by SSI.  Previously former NDOC Director, Howard Skolnik when he served as Deputy Director of Industrial Programs was involved in a scheme involving inmate wage deductions.

In 1990 he petitioned the BJA for a determination that would allow Nevada to deduct 5% of all inmate wages earned and use those funds to expand prison industrial programs.  He was advised there were four approved deductions and no additional deductions could be imposed by his department.

This denial should have been clear and final, but in 1991 the Nevada legislature amended NRS 209.463 to allow for the 5% deduction Skolnik requested and the BJA had already ruled was impermissible.

“NRS 209.463  Deductions from wages earned by offender during incarceration; priority of deductions.  Except as otherwise provided in NRS 209.2475, the Director may make the following deductions, in the following order of priority, from the wages earned by an offender from any source during the offender’s incarceration:

“1.  If the hourly wage of the offender is equal to or greater than the federal minimum wage:

… (c) An amount determined by the Director, with the approval of the Board, for deposit in the State Treasury for credit to the Fund for New Construction of Facilities for Prison Industries, but only if the offender is employed through a program for prison industries.” (The same deduction is taken from the wages of inmates earning less than minimum wage.  Emphasis mine)

In 2003 Howard Skolnik advisedthe Legislative ASSEMBLY COMMITTEE ON JUDICIARY that there were three deductions taken out of prisoner pay; 24.5% for room and board, 5% for victim restitution fund and a 5% deduction that went to a fund for the expansion of new industry programs.

Obviously the NDOC and Silver State Industries were intent upon creating a fund whether controlling authority over the federal program permitted it or not.  In 2011 the Legislature“swept” $948,000 from this Capital Improvement Fund (pg. 8):

These inmates are underpaid on Pie projects, with a maximum amount taken back as “deductions.”  In effect, the $948 thousand “stolen” from the PCIF by the legislature was first stolen from the inmate workers through an illegal deduction taken from their wages.  Use of the money in this fund was prohibited for anything except expanding prison industries:

“ 1.  There is hereby created in the State Treasury a Fund for New Construction of Facilities for Prison Industries as a capital projects fund. The Director shall deposit in the Fund the deductions made pursuant to paragraph (c) of subsection 1 or paragraph (b) of subsection 2 of NRS 209.463. The money in the Fund must only be expended to house new industries or expand existing industries in the industrial program to provide additional employment of offenders…“

The use of unauthorized and thus illegal deductions taken from inmate PIECP wages and then used in violation of existing state law to cover budget shortfalls, serves as a tax upon the workers or worse, out and out theft amounting to tens of thousands of dollars a year as shown by thechartbelow:

This is all covered up in reports to the BJA through reviews conducted by Mr. Connett and formerly Mr. Skolnik’s NCIA organization, allowing the 5% deduction to stand and certifying to the BJA that Nevada is in full compliance.

Both Connett and Skolnik held positions upon the NCIA board simultaneously in 2006 when Connett was the PIE Program Manager with PRIDE Enterprises in Florida.

Previously, Connett and the CEO of PRIDE also sat side by side on the NCIA board when PRIDE was committing acts later deemed illegal.

The Alpine SSI partnership is not the only partnership that is being operated questionably in Nevada – and paying minimum wages.  Several other companies also have been given access to inmate labor and possibly involved in displacing local workers and/or unfairly competing in the market place.

Thomson Equipment Company, Inc. (now Silver Line Industries, Inc.).   Silver Line is owned by entrepreneurs out of New Zealand, Malaysia, and Thailand partnered with a company in Oregon to use inmate labor to manufacture or refurbish heavy equipment such as water trucks.

In March of 2006 the serving Deputy Director of Industrial Programs advisedthe Committee on Industrial Programs that Thomson had been acquired by new owners in Australia and New Zealand – and water trucks were shipped from Bangkok for inmates to renovate.

BY 2008 when Mr. Skolnik was serving as Director of the NDOC, he and Mr. Connett advisedthe same committee that Thomson had changed its name to Silver Line Industries.  Skolnik further advised as part of full disclosure that his daughter worked for the parent company in New Zealand.

It is unclear if Skolnik’s daughter secured her job before the 2006 acquisition of Thomson, or if that occurred after Mr. Skolnik was elevated to the Directorship of the DOC.   In either case this should have raised an issue of ethics to the members of the Industrial Programs Committee concerning the relationship between the NDOC Director running the prison industry operation and a family member working for a company operating under his authority.  Silver Line Industries ultimately withdrew from the Pie Program.

Another company, Jacob’s Trading Company (JTC) partnered with SSI for years, but left SSI late last year.  JTC acts as a liquidator for Wal-Mart and other large retailers.  Inmates remove bar codes, labels and other identifiers to the retailer then repackage the items and JTC sells the products through distributors to after market retailers.  Of course Wal-Mart denies that they or any of their vendors or contractors use inmate labor – period. These products are shipped back and forth across state lines, and thus come under PIECP authorization.  JTC’s operation in Nevada is substantial:

“In Nevada, the entire JTC operation is housed inside the Southern Nevada Women’s Correctional Facility in North Las Vegas. Jacobs is the only private employer of female prisoners in Nevada. In 2000, a female prison laborer working 40 hours a week kept just over half of what she earns. After several deductions mandated by the state prison department, she took in about $460 per month. That’s net pay of $2.67 an hour…”

Another company operating under the Pie Program was Shelby American, manufacturer of the Shelby Cobra sports cars.  Dozens of inmates at the facility received an hourly wage of at least the federal minimum to build every part of the car except the engine.  Shelby American has also closed operations with SSI but is still listed as a Pie Program participant under SSI’s certification.

In September 2012 JTC closed operations at SSI’s facilities, and Like Alpine Steel, they left owing the state $115,819.44 in unpaid leases and other expenses.  According to the October figures provided to the Interim Finance Committee, SSI’s project failures have Nevada taxpayers on the hook for more than $600 thousand dollars in unpaid operating expenses or lease payments.

There will be much more on Howard Skolnik and Brian Connett in the third and final article that will detail activities committed by Mr. Connett to avoid complying with PIECP requirements and out and out theft of private companies partnered with PRIDE Enterprises.   In one particular industry, Connett deliberately failed to register the industry as a PIECP operation with the BJA, resulting in prisoners receiving as little as $.20 per hour for their labor for five years…and huge profits for PRIDE and the companies partnered with PRIDE.

I will also further expose the NCIA and explain why they have been so successful in advancing an agenda of using inmate labor to enrich a handful of companies, their organization – and both at the expense of America’s taxpayers and struggling workforce.

Of course, those of us here at DK who have been paying attention to ALEC for the past few years, know that these prison industry operations came about due - at least in part - to ALEC's Prison Industries Act adopted in 1995. 

____________________________ 

January 11, 2013 

Part one of a three part Expose on Prison Labor in Nevada and Beyond
By Bob Sloan – Prison Industry Consultant

 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 re-manufacturing) 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.

   

    

Typically owners, investors and general contractors of projects such as the Mazda dealership and Wet ‘n’ Wild are not informed of manufacturers of materials used by sub-contractors working on such large jobs.  It is thus highly unlikely that Agassi, Graf, the Thomas’, John R.Staluppi, Jr. or GC’s such as Johnson Carlier are aware that through Alpine Steel, their facilities are being built using products made by state prisoners earning minimum wage or less – and much of that taken back to pay for the cost of their incarceration.

This cannot be said of the family Bulloch.  Apparently none of the Bulloch brothers have any objections to making or saving huge sums of money by using construction materials manufactured by prisoners.  No it appears jobs involving structural steel components involving the Bulloch’s as investors or developers are steered to brother Randy and his company (which has been using inmate labor since 2005). Some might think there was some manipulation of bids going on when the brother of project developers seemed to be awarded bids on each of those projects.

However, no need to rig bids when: your labor costs are 30-50% below the costs of your competitors and the state advances you a credit line exceeding $400,000; you are allowed to default on even the meager wages owed to the inmates ($78,000); you fail to pay $668,000+ owed in payroll taxes to the IRS, and; you refuse to pay your workers compensation insurance premiums to Explorer Insurance ($84,000+) or your suppliers (F&M Steel, Utah – $15,000 and Pierce Aluminum Co, $12,500) for raw materials used in construction projects.

The end result is more work for inmates, fewer jobs for workers in Nevada with similar skills, reduced sales to competing private companies and depressed wages for the industry as a whole – with increased profits for Alpine Steel’s owner.  Mr. Cox, Director of NDOC and the Deputy Director of Silver State Industries are of the belief that if 20 or so Nevada workers are denied employment due to inmate labor, that’s an “insignificant” impact upon local employment.  Maybe they and members of the Nevada Legislature’s Interim Finance Committee on Industrial Programs should ask potential workers if losing a job to prison labor is insignificant.

Unfortunately this is not an isolated incident. The transfer of jobs to prisoners is something that has been happening all across the country for more than a decade: private companies folding operations due to competition from prison industry operations that are making the same or similar products or services. Union and non-union workers laid off or terminated due to lost sales or unfavorable market swings caused by prison industry operations:

Lufkin Industries, Trailer Division
Cañon City, Co
Pensacola Naval Air Station in Pensacola, FL
American Apparel and Tennier Industries in AL. and MS
South Carolina

 In mid 2004 while involved on a prison reform project, I received letters from inmates working in the PRIDE industry where I had briefly been years before. They were posing questions about PRIDE’s PIE program. Prisoners were manufacturing goods for the private sector under this program and wanted to know what the rules were. They also wanted to know if their work was legal and if it affected jobs on the outside.

These were good questions and I began to research this PIE program and an entire story of unseen and until then, unknown exploitation was exposed.  It all began with the discovery of 18 USC 1761(c), the Prison Industries Enhancement Certification Program (PIECP).

I documented how: PIECP was being used to allow prison industries to partner with private companies, providing access to inmate labor; how private sector companies were urged to close operations and re-open them behind prison fences, using inmates in place of American workers; the huge sums of money being made off prison labor; laws written by corporationsand passed by lawmakers they contribute to allowing the exploitation of prisoners; government regulations ignored in the pursuit of profits; entire companies partnered with prison industries under PIECP were “seized” by prison operators along with their proprietary technologies and all equipment taken and used to increase profits to state prison operations and; how taxpayers were paying for much of this without even knowing it.

Huge complex corporations had been formed to take advantage of cheap prison labor. One – and possibly more – of these corporations, U.S. Technologies, Inc., bought up other companies through their wholly owned subsidiary, Labor-to-Industry, Inc., closing private sector operations and moving production operations into prison industries nationwide. Below are excerpts from the SEC filings of UST:

“U.S. Technologies Inc. (the “Company”), is engaged directly and indirectly through its wholly owned subsidiary, Labor-to-Industry Inc. (“LTI”), in the operation of industrial facilities located within both private and state prisons, which are staffed principally with inmate labor. These prison-based operations are conducted under the guidelines of the 1979 Prison Industry Enhancement (PIE) program.

“The Company is an “outsourcing company” soliciting manufacturing, assembly, repair, kitting and fulfillment services from Fortune 1000 and other select businesses. The Company performs its services utilizing prison labor under the Prison Industry Enhancement Program (“PIE”). Congress created the PIE program in 1979 to encourage states and local units of government to establish employment opportunities for prisoners that approximate private sector work opportunities. The program is designed to place inmates in a realistic working environment, pay them the local prevailing wage for similar work, and enable them to acquire marketable skills to increase their potential for successful rehabilitation and meaningful employment upon release…”

Today more than a dozen years after UST began to exploit prison labor for corporate profit, Nevada finds itself in the grip of a controversy involving the use of prisoners as a cheap labor force made available to “select businesses.” As shown above, Nevada’s private manufacturers are simply the latest victims in this ongoing – and relatively hidden – program taking jobs from neighborhoods and putting them behind bars.

This private organization representing all prison industries and the vendors, suppliers and corporate partners using inmate labor, now has responsibility for ensuring compliance with all applicable laws pertaining to prison industry programs. In effect this is the proverbial “fox guarding the henhouse” scenario where program operators are allowed to determine if they are in compliance with government regulations – and their assurances of compliance are accepted without further review by the BJA.

This oversight organization has an influential “inside man” in Silver State Industries in a position of power, influence and the ability to allow Randy Bulloch’s company to operate freely.  He is also personally responsible for the unauthorized half-million dollar “line of credit” advanced by the state to Bulloch – and for falsely assuring the federal government that Silver State Industries is in full compliance with federal regulations.  At the core of the current prison labor issues in Nevada this same individual, previously involved in a PRIDE prison industry corruption scandal is once more embroiled in the controversy involving the use of inmate labor.

In the following segment we’ll introduce this individual, the organization he belongs to and explain the prison industry PIE Program and how it is being used to remove jobs from American workers. 

December 2012 -  Investigative report from Russia Today on prison privatization and prison industries.  Very informative and names several of the companies involved in exploiting prisoners for cheap labor and high profits: http://www.youtube.com/watch?v=CySzoJFkTA8

<iframe width="640" height="360" src="http://www.youtube.com/embed/CySzoJFkTA8?feature=player_detailpage" frameborder="0" allowfullscreen></iframe> 

June 20, 2011 - Please follow my Daily Kos blogging at: http://www.dailykos.com/blog/Bob%20Sloan/ to follow issues involving prison industries, privatization of prison facilities and legislation impacting upon both. 

June 8, 2011 -  The Department of Justice just released a request for applications to oversee the PIECP program!  It appears they are finally trying to sever the ties with the NCIA who has been in charge of oversight of the program since 1995.  As I've provided elsewhere on this site - the NCIA is made up entirely of those prison industries, their administrators and the corporations taking part in the program.  Thus, the DOJ has allowed them to oversee themselves for more than 15 years now.

December 15, 2010 - The Bureau of Justice Assistance (BJA) announced a new policy this week in reference to the complaints PIECP Violations has made about state prison industry programs participating in PIECP not paying "prevailing wages". It is titled "Back Wage Policy for Inmate Workers Under the Prison Industry Enhancement Certification Program (PIECP)" and can be found here: http://www.ojp.usdoj.gov/BJA/grant/PIECPBackWagePolicy.pdf at the BJA PIECP page site. I have posted it below for those who want to read it now:

 March 12, 2010: Visit the following site (Alternet.org at the link below) and read for yourself the path we are all following to deliver profits to the prison industry investors and corporations. Great article that connects the dots. Posted on March 11th.

 

http://blogs.alternet.org/theprisonwatchproject/2010/03/11/prison-for-profit-private-prisons-and-us-laws/ written by Rebcca McFarland.