Introduction
On August 17, 1982, Warren E. Burger, chief justice of the United States Supreme Court, sat before a selection of Minnesota’s business and civic leaders at a private dinner in Minneapolis. He remarked: “If we don’t fulfill this moral obligation to make these people better when they go out than when they go in, we’re doing more than just failing in moral obligation, we’re doing a rather stupid thing on a dollars and cents basis, on… all the terms that the private sector uses to measure progress – we’re doing a very foolish thing.”Footnote 1 Burger, a conservative jurist, a native Saint Paul-ite, was a central figure in the Supreme Court’s transition out of its liberal Earl Warren era. He is also often remembered as the first prominent “law and order” Supreme Court judge and fervent supporter of privatizing prison labor in the United States.Footnote 2
Burger had come to the dinner from an afternoon tour of a disk drive assembly plant inside of a maximum-security prison in Stillwater, Minnesota operated by Control Data Corporation. Control Data, a now-defunct US Defense contractor, was responsible for producing a suite of supercomputers utilized by the Lawrence Livermore National Laboratory. The firm was also the world’s largest producer of computer peripherals, things like disk packs, printers, and terminals during the early 1980s. The press coverage that Burger’s visit received, however limited, portrayed the visit as a stopover on the judge’s ongoing tour to promote the transformation of US prisons from “warehouses” of people to “factories with fences.”Footnote 3
The chief justice’s visit to Control Data’s prison-based factory in the spring of 1982 nevertheless signaled an end, rather than a beginning, to the story of deregulating prison labor in the United States. The prison plant, awkwardly named Minnesota Correctional Industry Contract-Control Data Corporation (MCIC-CDC), opened almost exactly a year prior to Burger’s visit. Disk drive units assembled at the plant were routed to a different Control Data facility in the Twin Cities suburbs with a cleanroom for final assembly. At its height, the plant employed approximately 150 of the 1,100 inmates at Minnesota Correctional Facility-Stillwater (MCF-Stillwater) and reported an output of more than 3,000 units annually.
The institutional and legal framework out of which the US’s contemporary system of private prison labor was built did not occur at the height of the deregulatory turn of the 1980s. Rather, the foundation was laid a decade earlier. Few to no lawyers from elite legal lobbying networks, policy wonks from conservative think tanks, “Chicago School” economists, or even rising political stars of the New Right appear in this early effort. Instead, the federal agency overseeing the MCIC-CDC pilot program, and the Control Data prison-based factory, was none other than the now-defunct Law Enforcement Assistance Administration (LEAA), created by the Johnson administration in 1968 as part of the Great Society. The political figures propelling prison labor deregulation through Congress and state legislatures ran the gamut: New Deal liberals like Ted Kennedy, progressive governors like Wendell Anderson, and “Rockefeller Republicans” like Charles Percy (R-IL), aided by liberal-progressive Minnesota Department of Corrections (MN DOC) bureaucrats, midcentury tech leaders like those at Control Data, and a smaller cast of backwater businessmen.
For context, Congress effectively banned the private employment of incarcerated people with the passage of the New Deal-era Ashurst-Sumners Act in 1935. This act, further strengthened in 1940, made it illegal to transport goods made for private companies by prisoners across state lines.Footnote 4 The Minnesota State government became the first state to challenge this prohibition in 1973, through an amendment to state law, which allowed private firms to lease space in State correctional facilities. Only a few years later, US Congress ratified the Justice Systems Improvement Act of 1979. This act, following the spirit of the 1973 amendment, created a carve-out in Ashurst-Sumners. This carve-out allowed the transport of goods made by incarcerated persons across state lines, granted that these goods were made at state and local corrections departments participating in a federal-certification program—the Prison Industries Enhancement Certification Program (PIECP)—administered by the LEAA. Private companies entered into the arrangement as subcontractors of certified state and local corrections departments. Congress first authorized PIECP in seven “pilot” states, including, critically, Minnesota. PIECP entered a phase of incremental expansion from there. Six more states were added in 1984. Federal legislators indefinitely extended the program and authorized it for all 50 states in 1990, that is, pending a state’s application.
The progressive policymakers and corporate leadership involved in early efforts to privatize carceral labor in Minnesota—critically Control Data’s corporate leadership—continued as major players in the effort to deregulate prison labor on the federal level as the decade wore on and into the 1980s. The outsized influence of such figures wasn’t accidental, nor does it indicate that the epiphenomenal nature of the US’s contemporary system of prison labor.Footnote 5 Instead, it speaks to, on the one hand, a new interest in “market-based” solutions by state administrators.Footnote 6
The vast majority of states in the United States at that time could not, and still cannot, legally run operational deficits; capital projects, like infrastructure, can be bonded by contrast.Footnote 7 Administrators of state-level social programs, therefore, acutely felt the rising costs of government administration across the late 1960s and 1970s. Lawmakers implemented state-level fiscal reforms across the 1970s to find creative ways to balance state budgets. Many of these administrators and policymakers were not budget hawks, libertarians, or quiet advocates of a race-based backlash to welfare programs. Reformers were instead informed by a belief that a decline in social spending may actually lead to an increase in, rather than diminishment of, the quality of services delivered, if done more rationally, efficiently, and with the proper oversight and partnerships. This was particularly true in Minnesota, where progressive policymakers, under the leadership of Democratic Farmer Labor (DFL) Party governor, Wendell Anderson, implemented a sweeping overhaul of the State’s budget and its Corrections administration during the 1970s.Footnote 8 Such reforms included new cost-sharing measures or unlocking new government revenue streams, as well as a turn to “self-help” in social programs and an increasing interest in government-administered “market-based solutions.”
What makes corrections a particular flashpoint in this evolution of progressive leadership and the rise of “market-based solutions” to problems of government is that the vast majority of people incarcerated in the United States were in state, not federal prisons during the late 1960s and 1970s. Although the number of incarcerated people did not increase dramatically over this period, the costs of incarcerating them did, and at a much faster rate. This was particularly true in Minnesota. The Minnesota State DOC reported lower rates of incarceration compared to the national average but yet still increases in corrections expenditures in the late 1960s and early 70s, a trend which arguably amplified policymakers’ susceptibility to arguments asking incarcerated persons to “pay their way” in the lead-up to the 1973 amendment.Footnote 9
New deals for old institutions
Penal labor of all sorts served as an important source of revenue for state and local prisons in the US historically. The predominant image associated with prison labor in US cultural memory is that of Jim Crow-era chain gangs. Think: Black men in striped black and white uniforms, shackled together at the ankle, hammer overhead, driving spike after spike into newly laid railroad track. These men, leased to private firms like Western North Carolina Railroad by prisons, worked in inclement weather across rugged terrain and precipitous heights, like the Old Fort Loops in the Blue Ridge Mountains, without pay. (The prisons, however, were making money off such excursions.)
The private employment of carceral labor in the United States—and, furthermore, the notion that “leasing” imprisoned persons to private companies might be used to defray the costs of prison operations and daily inmate expenses—however is much older than the Jim Crow era. It is, instead, as old as the modern prison system in the United States and has served as a recurrent source of revenue generation for US prisons for most of the country’s history.Footnote 10 As historian Rebecca M. McLennan writes: “Thus, decades before ex-slaveholders enacted the Black Codes and instituted the criminal surety system (often cited in scholarly and activist literature as an origin point for our carceral labor system), northern states had striped convicted offenders of almost all their rights and sold their labor power to private interests.”Footnote 11
Although state-level bans on convict-leasing emerged at the turn of the century, it was only with New Deal-era policy that the practice became, effectively, banned under federal law. Specifically, in 1935, the US Congress passed the Ashurst-Sumners Act. This legislation ended the national market for prison-made goods by making the shipment of such goods a federal offense for carriers.Footnote 12 Six years later, a federal ban on convict leasing was strengthened through Circular No. 3591, which was issued by Attorney General Francis Biddle in 1941. This Circular instructed US Attorneys to prosecute prisons that engaged in forced labor.Footnote 13 The bans of the New Deal era can be attributed in no small part to the influence of organized labor on the Democratic Party. Labor organizers lobbied the Roosevelt administration, urging federal intervention, seeing prison labor in direct competition to waged, American manufacturers. For example, Sidney Hillman wrote Roosevelt directly in July 1935, during the middle of the Depression, urging him to sign “Sumhers-Ashurst” [sic] as “It is only fair that the cotton garment industry should not be subject to competition from prison made garments thereby further depressing the price structure in that industry stop Sumners-Ashurst Bill [sic] will help in some way to protect not only employers but labor as well in the cotton garment industry.”Footnote 14 However, it is worth highlighting that the private use of incarcerated people as workers had been in decline since the late 1890s and 1900s, likely due to sustained immigration, which substantially reduced the price of labor in things like railroad construction. Reviving the practice, it was thought in the 1970s, would unlock a new revenue stream for state agencies, which would offset, at least in part, these rising costs. If done correctly, providing private corporations with access to incarcerated people would not resemble the convict-leasing systems of the turn of the century, but instead it would help prisoners build skills, self-worth, and ease the pains of reentry. Or, private work programs would help prisoners help themselves.
Initial policy around privatizing prison labor was, indeed, crafted with an awareness of the fact that Black Americans, and Black men specifically, were incarcerated at disproportionate rates when compared with other Americans. The awareness of this fact, however, did not fuel a hope in liberal policymakers that privatization would result in a new system of race-based extraction, or a New Jim Crow.Footnote 15 Nor was the policy simply the result of misguided intentions or implicit biases of well-meaning liberals. Privatizing prison labor was instead an effort in progressive corrections and— as I hope will become clear—correcting for capitalism.
Fault lines and federalism
The article dovetails with a rich literature on the emergent digital electronics industry’s search for cheap-labor enclaves, such as rural hinterlands, Native reservations, predominantly Black urban neighborhoods, deindustrialized regions across the continental United States, and US-allied developing nations abroad like South Korea and Taiwan. The article adds prisons to this growing list of low-wage manufacturing reserves utilized by digital electronics firms during the second half of the twentieth century.Footnote 16 It also highlights, following this literature, the digital electronics industry’s active role in, not only capturing, but more critically making, new cheap labor pools. However, more critically, the narrative steps outside of this literature, to put the effort to deregulate prison labor within an analytical frame that supports both analysis of the relationship between capitalist development and federalism in the United States as well as of the historical particularities of firm-level motivation, institutional inertia, and prevailing political ideology.
All state and local governments in the US experienced tight budgets across the late 1960s and 1970s—some much more than others. Not all states, however, were pushing for the deregulation of prison labor. This is where the issues of uneven development and, critically, digital electronics enter in. The connection of the computer industry was not limited to the Democratic Party, although Minnesota was, indeed, both a “digital” and Democratic state during the 1970s.Footnote 17 A more important mover, rather, was the limited influence of organized labor on the computer industry and digital electronics-adjacent industries. Emerging, in earnest, in the post-Taft-Harley era, the US computer industry did not have the same connections to organized labor that did other light manufacturing industries, like textiles, food processing, and so on.Footnote 18
US computing firms, which emerged as a feature of the US Cold War military-industrial complex, moreover had established operations in geographies with other massive defense-related investment, like the Sunbelt and select locations in the Farm Belt.Footnote 19 As a result of this investment, such high-tech hubs experienced relative growth—which commentators often framed as a bellwether of coming national prosperity—when compared with states in the US Manufacturing Belt, where unionized auto production, steelworks, and rubber factories were disproportionally concentrated. What made electronics manufacturing even more conducive to production in a prison—and more mobile in general—than products of “traditional” US manufacturing at firms, such as Ford of General Motors, was that electronics were portable, flexible, and comparatively less capital- or energy-intensive than something like an automobile. In other words, this was a type of industrial operation that could be seamlessly incorporated into, well, a prison.
The deregulation of prison labor is part of this history of uneven growth and federal investment. Of seven PIECP pilot states authorized in the 1979 Justice Act, the three PIECP factories—outside MCF-Stillwater’s MCIC-CDC plant (by far the largest of these operations)—were a facility dedicated to the manufacture of defense control consoles and steel storage in Kansas, a call center in Arizona, and an assembly line for fiberglass satellite-dish antennas in Nevada.Footnote 20
Minnesota also fits well into this trend. Although the state’s economy continued to be driven by agroindustry well into the 1970s, with global leaders in agribusiness—Pillsbury, General Mills, and Cargill—all headquartered in Minnesota. Computers, biomedical and scientific instruments, and chemical companies, including Control Data, came to account for a growing share of revenue generated in the state, with the state’s manufacturing trade sectors coming to employ roughly half of the state’s workforce by the early 1970s.Footnote 21 Beyond this, it’s worth highlighting the uneven influence of unions across the industries making up the state’s economy, which likeness it to the aforementioned Sun Belt and Farm Belt hubs. Taconite mining in the state’s Mesabi Iron Range may have demonstrated a strong union presence in 1973, as did agroindustry, and, starting in 1971, the state’s public sector employees. An exception, however, was the state’s computer industry—and Control Data’s Minnesota-based workforce even more specifically. Executives like Edward G. Vargon, Vice President of Labor Relations at Control Data, actively discouraged unionization and pursued an unrelenting course of union decertification at the company regarding acquisitions. As Frank Dawe, a vice president at the firm noted, “Control Data’s philosophy is not one of being against unions, but more one of feeling that we can deal better with our employees if we don’t have to go through a third party.” He continued, “That third party inhibits our ability to communicate directly with our people.”Footnote 22
Progressive corrections
It is unclear from the record who contacted whom first in the lead-up to the 1973 amendment. What is clear is that upper leadership at Control Data Corporation were stewards of an effort to privatize State-run “prison industries” from the initiative’s beginning. In fact, executive leadership at the firm sent a key personality from the company’s Human Resources Department, Richard “Dick” D. Conner, “on loan” to the Minnesota Governor’s Office to study the feasibility of private industry opening a factory inside of MCF-Stillwater in the six months between December 1972 and May 1973—when the Minnesota state legislature ratified the landmark amendment.Footnote 23 The legislation, Section 243.88 of Minnesota Statutes of 1973, amended Section 243.66 of the 1971 Minnesota Statutes to permit private corporations to lease portions of state adult correctional facilities “for the purpose of establishing and operating a factory” dedicated to “the manufacture and process of goods, wares or merchandise.”Footnote 24 Paired with this amendment was a bill outlining that “the amount of compensation” to inmates at states correctional facilities was “to depend on the quality and character of the work as determined by the commissioner [of Corrections].”Footnote 25
Between December 1972 and December 1979, when federal law around the transport of prison-made goods was relaxed, Control Data affiliates headed a selection of State Task Forces and penned several studies on prison reform. Conner even chaired the 1973 Select Committee for Correctional Institutions for the state Senate, which addressed how to reduce state financing for minimum- and maximum-security prisons by reforming prisons’ “climate,” “population,” and “treatment/solutions” (which included work “rehabilitative” work programs).Footnote 26 Control Data representatives were, frequently, the only representative of private industry consulted in these efforts. When Minnesota became one of the seven pilot states for federal PIECP, which instigated the establishment of a Control Data plant inside its MCF-Stillwater facility two years later, corporate leadership remained a central player in corrections reform in state and national discussions.
Corrections reform became a legislative priority for Minnesota Governor Wendell Anderson in the early 1970s. Anderson was, however, not motivated by rising crime or incarceration rates but by the rising costs of incarceration. Corrections were not, by any means, the biggest line on the state’s budget, but the cost of corrections grew considerably across the 1960s and early 1970s despite relatively stable incarceration rates.Footnote 27 These rising costs of incarceration were coupled with rising government expenditures across the board during this inflationary period. The number of inmates in state and federal prisons in the state, by contrast, largely held stable across this same period and experienced a small decline from its level in 1950.Footnote 28 The 1973 Community Corrrections Act (CCA), also a national model, sought to shift more correctional responsibility from state prisons to local communities, primarily counties. In exchange for moving some correctional and rehabilitation programs as well as incarcerated people out of state-run programs and institutions, participating counties would receive a subsidy from the State. Incarcerated people eligible for transfer included, for example, some non-violent offenders, people on parole, and those eligible for a spate of new, local rehabilitative programs. The 1973 CCA, in other words, intended to promote cost-saving in corrections for the State and more easeful reentry for inmates. So, too, was the associated 1973 Prison Industries amendment.
Just as the CCA shifted some of the burdens of managing county jails and local correctional programs, allowing public prisons to generate revenue by leasing space to private companies, it also sought to shift some of the social costs of incarceration onto private firms and promote “self-help.” The difference here, as we will see, is that this arrangement arguably shifted the costs of incarceration onto inmates—especially given the fine line between “self-help” and outright exploitation in the context of incarceration, when prisoner-workers lacked rights and, furthermore, did not theoretically need to work to live.
Coupled with this legislative effort was a push to remake the MN DOC from within. To do so, Anderson staffed the upper echelons of the Department with progressive types. Of particular importance was Commissioner Kenneth F. Schoen. Schoen would come to work with key personalities Control Data corporate leadership across the decade, who Schoen affectionately called his “Control Data Brain Trust.”Footnote 29 Schoen replaced David Fogel as Commissioner in 1973 after Fogel left for the Illinois’ Department of Corrections following public controversy over “progressive” prison reforms during his commissionership.Footnote 30 Schoen’s background was in social work. But he came to the MN DOC in the early 1970s after serving as the executive director of the Probation Offender Rehabilitation and Training (PORT) Program in Rochester, which was an “experimental, community-based corrections program.” When describing the administration’s philosophy on corrections, Schoen noted: “I think we [himself and Governor Anderson] agree that our first goal must be public safety, and that some dangerous or hard-core offenders must be locked up. But we both understand that it’s important to keep people out of the (corrections) system when possible.”Footnote 31
Leasing space, monopolizing time
Dick Conner’s early work at the Governor’s Office in 1973 included drafting a “Position Paper on Establishing a Manufacturing Operation in the Minnesota State Prison: Bayport, Minnesota,” which he completed in August of that summer. MCF-Stillwater was officially located in Bayport, a city one mile south of Stillwater on the St. Croix River. The facility already housed some manufacturing operations; however, these operations were managed by and for the State and involved making outmoded products with limited distribution, therefore generating limited revenue.
In the white paper, Conner outlined the basic features of such a private leasing program. Given that the average person at MCF-Stillwater only served a 26-month sentence, some positions should be keyed to a short time window and timed with prisoners’ respective release dates.Footnote 32 Long-term inmates, of which there are fewer in number, serving sentences of five to twenty years, often for violent crimes, might be utilized for positions with longer “learning curves.” Conner, furthermore, noted that the Stillwater facility had existing space to establish a factory which could be easily retrofitted, as a “large hemp factory” had formerly been located on the prison grounds. Specifically, he emphasized that the Stillwater facility would lend itself well to both refurbishment-related work and subassembly processes, the latter of which clearly nodded to the activities of his employer, Control Data.Footnote 33
Industry, as well, would need certain assurances for such a program to work, as Conner explained. One included how to properly incentivize inmates to work productively, as incarcerated people at Stillwater did not, even if required to do so, need to work to live. Of bigger concern, however, was the stability of the workforce and management’s control over inmates’ time. A related concern was private firms’ ability to set wages in a regulated prison environment. Conner explained in the paper that in a correctional environment, “an inmate may be removed from his scheduled work assignment to other groups within the prison.” These “custodially initiated activities,” such as rehabilitative and educational programs, assigned inmate work details, appointments with social workers, pre-lease administration matters, disciplinary measures, and so on, “prevent a stable work force from developing in prison.”Footnote 34 The irony that educational and rehabilitation programs would be in conflict with a private industry work program that, at least on paper, aimed to be educative and rehabilitative, did not appear to register with Conner.
The preoccupation of Control Data management with the idea that incarcerated people were simply not captive enough to make good digital electronics assemblers may seem strange. An important lever management at Control Data used to keep wages low was, through firm-level location strategy, controlling the number of opportunities for alternative employment. Competing with the State’s monopoly on inmates’ time, and the State’s ultimate ability to dictate wages in this space, presented important complications to this labor management strategy, which set off Conner’s alarm bells. That said, the Human Relations specialist did leave open the possibility that this check on corporate power could be curbed through careful negotiation with corrections staff. In that case, however, “the prison staff would have to do a better job of planning, or the industry project would have to over-man to compensate for planned absenteeism due to program disruptions,” the latter of which was likely undesirable for Conner.Footnote 35
This was just one of many studies Conner and others at Control Data worked on for Corrections in the mid-1970s. These efforts to study the issue began to dovetail with a rehabilitative effort at the federal level. Of note was the creation of the Free Venture Prison Industries Program in the late 1970s. This program aimed to make existing government-run work programs at correctional facilities function closer to working environments “on the outside,” a good-faith but somewhat condescending effort. Reforms included the introduction of a full workday, skill-based occupational grading and pay plans, productivity standards, and new provisions around hiring and firing. The program aimed at promoting and facilitating worker placement post-release, although the fruits of this effort are less clear. The Free Venture Industries Program was overseen by the Great Society-era LEAA. Minnesota was one of a small selection of states participating in the Free Venture pilot.
Despite this larger push for reform and Conner’s earnest work, plans to privatize prison labor in Minnesota ran up against a much larger problem—something that Dick Conner did not account for in his study, but that was a frequent topic of conversation between the respective leadership at Control Data and State Corrections: the federal ban on the transportation of goods made wholly or partially by prisoners across state lines, i.e., the Ashurst-Sumners Act, which had been on the books since 1935.
Control Data was a multinational corporation, with operations across the United States and around the world. Using prisoners to manufacture parts and components or assemble devices, that could not be carried across state lines made no business sense. This frustration was expressed, for example, in Control Data Human Relations executive Norbert “Norb” Berg’s correspondence with Schoen in July 1977 in which he floated direct international sales as a way around the federal interstate ban, an idea which, to no surprise, was tabled.Footnote 36 Without private participation, the ambition of turning prisons into a site of revenue generation, not simply state outlays, would, at least temporarily, remain unrealized.
“Enhancing” prison industries
US Congress ratified the Justice System Improvement Act in 1979, which created a carve-out in the 1935 Ashurst-Sumners Act for the private employment of prison labor, in Section 827 of the 1979 Act—titled “Prison Industry Enhancement”—also referred to as the 1979 Percy Amendment. Specifically, Section 827 created a carve-out in federal law for the transport of prison-made “goods, wares, or merchandise,” across state lines, granted that such goods were, wares, or merchandise, for products manufactured in LEAA-approved projects within the aforementioned “seven pilot states.”Footnote 37 Beyond this, Section 827 introduced several provisions pertaining to PIECP-approved programs in line with the reformist spirit running through corrections at the time. The legislation, for one, mandated that wages must be “not less than that paid for work of a similar nature in the locality in which the work was performed,” or what was elsewhere called the “prevailing local wage.”
The legislation, furthermore, established provisions for protecting, or at least appeasing, organized labor. As the Section outlined, for LEAA certification, Prison Industries programs required documented “consultation” with “representatives of local union central bodies or similar labor union organizations… prior to the initiation of any project qualifying of any exemptions created by this section.” The legislation, on a similar note, required that such employment opportunities ought “not to result in the displacement of employed workers, or be applied in skills, crafts, or trades where there is a surplus of available gainful labor in the locality or impair existing contracts for services.” Finally, in the service of transparency and to ward off the appearance of blatant exploitation, and, furthermore, a system of racial exploitation, Section 827 of the Act made it an explicit requirement that inmate participation in a PIECP project must be strictly voluntary. The bill’s authors, in other words, wanted to make clear the effort to privatize prison labor was not intended to roll out a system of modern-day slavery.Footnote 38
The bill’s goal of “enhancing” (meaning, privatizing) Prison Industries was, nevertheless, a better deal for prisons than prisoners. The law established a series of eligible deductions from the baseline wage. Well intentioned or not, these deductions—which could amount to up to 80 percent of gross wages—included: federal, state, and local taxes; “reasonable charges” for inmates’ room and board, as determined by state Corrections commissioners; allocations of family support “pursuant to State statute, court order, or agreement by the offender”; and individual contributions to a victim compensation fund, which could amount to no more than 20 percent of, but no less than 5 percent of, an inmate worker’s gross wages.Footnote 39 Inmate workers in PIECP programs, in other words, were in practice often paid at a fraction of what they would have received “on the outside” for the same work. This system of deductions structures the market for prison labor in the United States to this day.
This arrangement presented (and continues to present) a boon to private corporations and corrections systems engaging in the practice. To risk stating the obvious, the arrangement, at least in part, offloads the costs of caring for inmates and prison administration—as well as general state administration and social welfare programs (through taxes), family support, and victim compensation—onto inmates, while recasting this extraction as self-help. One might say that private corporations are covering the cost of the prison by leasing space or paying prisoners’ wages, but this would ignore the fact that the employer, a private company, is getting a product out of the arrangement, which the firm, in turn, sells at a profit. Regardless of whether prevailing wages are accounted for or not, furthermore, such workers do not receive standard private-sector benefits, which lowers the costs of hiring incarcerated workers to private firms.
Beyond this, provisions in the section aimed at protecting labor from unjust competition with incarcerated people were, more than anything, a weak nod to organized labor, as they provided no real mechanism for reporting or measuring the practice’s likely depressive effect on wages at local and national levels in the long term. This was particularly true given stability and lack of competition in the labor pool inside of prisons (even if, as mentioned above, private industry did have some concerns they might have to bargain with, not workers, but the state to set labor prices).
Discussions of Section 827, nevertheless, were overshadowed by the larger 1979 Justice System Reform Act. The Section, as such, didn’t receive much attention in Congressional chambers or in the press in the lead up to its ratification. When the section was discussed, the primary concern seemed to be not if the program should exist, but how large it should be. Edward “Ted” Kennedy, Democratic Senator from Massachusetts and Chair of the Senate Judiciary Committee, and author of the larger Act, wanted to keep the program small—around five states total.Footnote 40 Legislative intention is difficult to parse. In its rollout, the practice nevertheless was restricted to a selection of states witnessing an expansion of manufacturing coupled with relatively weak labor power, when compared to parts of the Northeast corridor and manufacturing belt. Risking repetitive, the states included in the pilot —Arizona, California, Florida, Kansas, Minnesota, South Carolina, and Utah—all witnessed economic expansion and a growth in high-tech manufacturing in the 1960s and 1970s. Organized labor, the historical antagonist of private contracting for prison labor, likewise exhibited comparatively less political influence in these “pilot” areas than in those of the Northeast corridor or Steel Belt.Footnote 41
Beyond this, another important aspect for legislative buy-in on such a provision, previously mentioned, was the rising cost of corrections and general government expenditures across the 1970s—trends that were equally present in Minnesota as they were in Kansas and South Carolina. The two factors—a growth in the overall prison population and a growth in the annual costs of incarceration per inmate—compounded and resulted in a marked increase in prison costs when compared to a decade earlier. The growth of incarceration rates during the 1970s paled in comparison to the spiking US prison population in the 1980s and 90s, with the onset of the War on Drugs starting in the mid-1980s and accelerating through the early 1990s.Footnote 42
Liberalizing prison labor might, it was thought, spur economic growth, present cost-savings to taxpayers (and the state), generate government revenues, and even contribute to consumer welfare in the form of low-priced, prison-made goods. In other words, as in the case of Minnesota in 1973, rising inflation likely served as a backdrop to this discussion, as policymakers—largely New Deal and Great Society Democrats—looked not to completely gut the welfare state but rather to offload a portion of the costs of corrections administration onto private entities and, in this case, inmates. Moreover, the notion that prison-made goods and subassemblies might lower the cost of production likely sat well with consumers, who had become increasingly conscious of thinning pocketbooks after a decade of rising inflation.
Expanded prison manufacturing, and importing goods made in sweatshops abroad later, could be reframed as tolerable, if not beneficial, so long as it boosted consumption and workers did not face immediate job loss or a decline in purchasing power.
That said, it is important to highlight that—unlike state governments, such as Minnesota, where these market-based approaches to corrections first found their footing—the US federal government had the ability to deficit spend with relatively limited risk. This made federal cost-saving measures much less necessary than they might have been for states. Nevertheless, the temptation of policymakers and taxpayers to adopt such self-help measures in areas such as corrections likely grew stronger as the decade wore on. When US Congress authorized the creation of a PIECP pilot program in 1979, we were still far from either the heyday of “efficiency” thinking or even the punitive “law and order” policing of the following decades. Proponents thus framed liberalizing prison labor—in the context of the larger 1979 Justice Systems Improvement Act—as a path to improved self-image, self-sufficiency, and social adjustment of incarcerated people, on par with other progressive vocational, educational, and early-release programs introduced in the 1960s and 1970s.
Piloting industry
Following the Justice Act’s ratification in December 1979, leadership at the MN DOC and Control Data got to work, and did so faster than firms in their companion “pilot” states. Some states, like Kansas, even looked to Minnesota as a model. Suffice it to say, despite the pledged interest in and emphasis on inmate self-help, at the point of implementation both parties appeared less interested in the experience of inmates and more in the viability of the factory and their capabilities as workers.
The first question of concern to Corrections and Control Data was what exactly the firm might manufacture inside of MCF-Stillwater, a maximum-security prison. Conner, in his original 1973 report, following a pattern established in Control Data’s early “poverty plants,” noted the suitability of the Stillwater facility to “subassembly” operations, however vaguely defined. When the firm’s computer peripherals business hit the one-billion-dollar revenue mark in 1981—fueled, in large part, by a growing business in memory devices—the company’s priorities had begun to shift. Instead of wiring harnesses or soldering circuit boards for mainframe computers, Control Data’s plant inside of the Stillwater Correctional Facility would be dedicated to assembling disk drives for Magnetic Peripherals, Inc. (MPI), Control Data’s joint venture with Honeywell.
In tandem with this new prison-based plant, corporate leadership, since 1979, had been preparing to establish a related MPI plant in San Antonio, Texas. This San Antonio plant—located in the “blighted” largely Latinx neighborhood of Vista Verde and in proximity to the University of Texas, San Antonio—would produce printed circuit board assemblies to be incorporated into MPI disk products, or, in other words, important subassemblies to be incorporated into the disks assembled at MCF-Stillwater or other MPI operations.Footnote 43 The overwhelming majority of the 60,000 square foot one-story plant’s 225, and estimated future 2,000 assemblers, would be Latina women.Footnote 44 The firm’s communications team lauded the Vista Verde plant as a welcome addition to the company’s growing collection of rural, urban, and now institutionalized basic manufacturing locations. Although the work at MCF-Stillwater, unlike that at Vista Verde, need to be done in a “clean room,” like the Vista Verde poverty plant, the Stillwater operation involved, even in comparison, “skilled” or “bespoke” work. The firm’s poverty plants—an homage to the Kennedy-Johnson War on Poverty—originally targeted federally defined poverty zones and “labor surplus” areas in an effort to expand production and bring basic manufacturing jobs to chronically unemployed and underemployed populations—but became a cornerstone of the firm’s sprawling Corporate Social Responsibility ventures of the late 1970s, which included the firm’s work with the Minnesota DOC.
Planning for the Stillwater plant on the Control Data side was tasked to Larry Lindstrom and E. R. Abrahamsen. Together, Lindstrom and Abrahamson developed a graded work structure and a production pay plan for the plant. Regarding the work structure, Lindstrom proposed the establishment of five grades. Grade 1, or entry-level employees, would perform some assembly work, alongside assisting with cleanup and handling some materials. All new employees would be assigned grade one work after completing training. Grade 2 workers would perform more difficult assembly tasks than Grade 1 assemblers but may be called to perform Grade 1 tasks on an add-needed basis. Grade 3 workers, as Lindstrom described would perform “more difficult assembly and material handling jobs than Grade 1 and 2,” but also, like Grade 2 assemblers, may be assigned lower grade work as necessary. Grade 4 workers would be responsible for performing more difficult assembly tasks than the lower three grades and, furthermore, must be “capable of performing special assembly jobs and duties as needed.” Finally, Grade 5 employees would handle quality control; they must be capable of performing all assembly jobs.Footnote 45
Lindstrom and Abrahamson anticipated that wages would range from $3.35 an hour for starting pay and would max out at $4.00 per hour for Grade 5 workers. Management, moreover, estimated that 65 percent of all workers would fall into Grade 2 and would, therefore, make between $3.42 and $3.50 an hour.Footnote 46 Trainees would make $1.50 an hour while awaiting certification. It is, furthermore, likely that this pay schedule was implemented. The average wage paid at the plant in 1982 stood at $3.28, which likely accounted for a reduction in the average due to the low hourly pay for trainees.Footnote 47 These wages, it should be noted, although perhaps considered a “prevailing wage,” once in effect, were indeed smaller than what the average Minnesotan was being paid for similar work “outside.” As a journalist at the New York Times reported in 1983, “For its own part, Control Data declines to discuss the profitability of the disk-drive assembly line. But data compiled by the State of Minnesota suggests that minimum wage workers on the assembly line at Stillwater are paid considerably less than their counterparts in factories around the state.” “The median wage for an electronic assembler, someone who assembles electronic components, in Minnesota is $6.50 an hour. In Minneapolis, the median wage is even higher at $7.20 an hour.”Footnote 48
Corrections officials also attempted to “calculate” the “size of skilled industry slots” given inmate profiles. Tom Dowdle, Assistant Warden of Operations at MCF-Stillwater sorted inmates into five groups: (1) inmates holding a General Education Development (GED) certificate or high school diploma with two or more years on their sentence; (2) inmates holding a GED certificate or high school diploma with less than two years left on their sentence; (3) inmates with a sentence of two years or more with a tenth- or eleventh- grade education; (4) inmates with two or more years on their sentence with less than a tenth-grade education; (5) and inmates with less than a GED certificate or high school education who are also in protective custody or will be in the facility for less than two years. Of these groups, Dowdle determined Groups 1 and 2 would be most fit for employment, with Group 1 “comprising,” as he put it, “the long term more or less stable work force.” Group 2, by contrast, was the largest group of inmates. Group 3 “could work, given [their] long sentences,” but would “need to be trained,” Dowdle surmised, considering their low levels of educational attainment. Groups 4 and 5 were, in Dowdle’s opinion, likely unemployable but might, in some cases, be “placed in jobs that require no training or skill.”Footnote 49 The overall size of the plant’s workforce was then calculated based on these metrics.
Finally, Control Data management worked directly with Tom Grogan at the MN DOC in preparing a timetable for the project. By August 1981, the Control Data-DOC team had accomplished all major tasks related to stakeholder- and public- engagement. This included briefing the Governor’s Office, finalizing a news release announcing the new facility, and informing the Minnesota AFL-CIO and IBEW Minnesota State Council via written announcement of Control Data’s plans to open a digital electronics assembly operation inside the state prison. Regarding government contracting and program certification, Grogan, who was responsible for liaising with the LEAA on these issues, anticipated contracts would be finalized in early September of that year, followed by certification a couple weeks later.Footnote 50
Grogan’s project timeline, moreover, anticipated that getting the plant up and running and inmates trained would proceed at a fast clip, once administrative concerns were behind them. Outfitting the shop should begin in late August, according to Grogan, before receiving formal LEAA certification. In these early days, the floors of the shop would be patched and sealed; the transfer of equipment from Control Data would be coordinated and set in place; and air drop assembly stations would be installed. By early September, procedures for moving materials in and out of the Correctional Facility would be finalized. By October, a 50-cycle generator would be installed on the site, to supply power to the factory.Footnote 51
Regarding staffing, Grogan noted that training materials on methods, inspection, and procedures would be completed by the end of August, followed shortly thereafter by the development of “paperwork systems” for production control, material reporting, quality control, and other documentation required by Control Data and Corrections. Inmate training would begin in early September of 1981, pending the receipt of the Attorney General’s signature, yet prior to receiving formal certification from the LEAA.Footnote 52 By October 19, Grogan hoped to have, initially, 34 inmates working, and anticipated that employment rolls would swell to 120 inmates by the end of June 1982.Footnote 53 The majority of inmate workers would, furthermore, be utilized in disk “pre-decking” and magnet installation or—that is, in the case of pre-decking, preparing and mounting a try or caging assembly for later installation and, in the case of magnets, likely gluing or epoxying the a drive’s internal magnet to the deck.Footnote 54
Accounting for social welfare
By September 2, 1981, MCIC-CDC was up and running, having successfully secured a “federal exception from federal law which prohibits the interstate sale of prison-made products… by the Law Enforcement Assistance for the special project.”Footnote 55 Management reported, by April that year, that 50 inmates were on payroll, with 79 hired, 13 terminated, and 16 released. Control Data management reported that revenue from the operation came in at $4,24,000 by April 1981, which included $1,22,500 connected to training costs. The firm, moreover, sought to grow the operation still. By spring 1981, the MCIC-CDC received 206 applications from inmates interested in working at the prison-based plant.Footnote 56
Of perhaps more interest was not the value of the operation to the company, per se, but how the workers were being valued. Calculations from April 1981 estimated that these 50 or so inmates had paid out close to $90,000 in federal taxes and approximately $31,000 in state taxes.Footnote 57 This revenue, a standard PIECP deduction, was withheld from inmates’ gross wages, which were deducted by half. Income subject to withholding included regular pay, overtime, bonuses, and all other money paid. (The precise rate and make-up of other deductions, such as PIECP-allowed room and board, were set by Corrections.) Beyond this, inmates working for MCIC-CDC participated in a mandatory Savings Plan. Under this plan, “one half of all gross hourly wages paid above the highest existing wage paid in our regular correctional industries, currently $2.90 per hour, will automatically be credited to savings in the inmates Social Welfare Account,” or in other words, 50 percent of workers’ net earnings. Under this policy, “except in an emergency, as determined by the Warden, inmates will not have access to the funds credited to savings, in the Social Welfare Account, until they are released from the institution.”Footnote 58 Inmates were, furthermore, “encouraged to use the remainder of their earnings for financial support for their dependents.”Footnote 59
The rationale here from Control Data leadership and program administrators was that incarcerated people didn’t need to work to live, outside of mandatory work assignments. Instead, by the very nature of their incarceration, they had a place to live and food to eat, but very little use for money inside of the prison. Often leaving prison with little money or assets to their name and diminished opportunities for employment, however, building a bank account in prison would ease inmate pain around “reentry.” Moreover, program leaders saw the Social Welfare Account as allowing inmates to reverse “learned poverty” and empower themselves as providers to themselves and their families, court-mandated or not— hence the account’s name. (Albeit speculation, another possible motivation for reducing direct wages, from the perspective of Corrections, might have also been geared at controlling the supply of money inside of the prison…) When it came to the question of future employment and employability, however, MCIC-CDC leadership made few promises and instead framed the program as an opportunity to build direct work experience rather than a secure path to employment at the parent company down the line.
Whatever the thinking on the precise benefits, or lack there, of employment at MCIC-CDC, the PIECP program presented a boon to Control Data, the State, and the federal government. From the viewpoint of the state, inmates transformed from being an expenditure sink to a source of revenue. For Control Data leadership, the inmate workers offered a copious, and captive, source of low-wage workers, from whom they didn’t have to award standard employee benefits like healthcare, dental insurance, and so on. From Control Data’s perspective, its leadership had indeed negotiated a good deal with the State for the price of said workers’ time.
Correcting for capitalism
Control Data leadership actively encouraged the growth of the PIECP program between 1979 and 1984, when the 1984 Justice Assistance Act, which Control Data management actively lobbied for, added six more states to the approved PIECP roster, as the firm likely toyed with the idea of establishing more prison-plants outside Minnesota. Lobbying to expand PIECP is what, in fact, put Control Data leadership in contact with Justice Warren Burger in the early 1980s.
In 1986, nevertheless, Control Data management announced the ceasing of operations at MCIC-CDC, as the company spun off its peripherals business, prompted, in part, by an abrupt change in executive leadership at the company.Footnote 60 The effort to place private corporations inside prisons, however, would only grow over the coming years, with or without Control Data. The firm’s contract with the State Corrections, however, was promptly transferred to a West German company.Footnote 61 And, in 1990, under the Crime Bill, PIECP received authorization for all 50 state jurisdictions, and the program was expanded indefinitely. Year after year, state after state applied to participate.
The material conditions and messaging around the need for PIECP did indeed shift as early as 1984, when the PIECP program was first expanded, and grew over the coming years. Some of these changes were rooted in trends in incarceration itself. Incarceration rates, which were relatively stable across the 1970s, first exploded with the introduction of new federal restrictions on narcotics under the 1984 Comprehensive Crime Control Act, which placed new pressure on the Bureau of Prisons to build prisons to house inmates as well as to find the funds to do so. The rising cost of incarceration per inmate was no longer the primary cost concern. The decline of unionization in major US industries and kneecapping of labor by the Reagan administration also contributed to national expansion of prison labor, as organized labor exerted increasingly less leverage and workers found themselves with increasingly anemic representation on the national political stage. So, too, likely, did the rise of consumer welfare standards as a measure of economic performance and a race to the bottom regarding global wages and labor standards, as US firms—navigating increasingly complex global supply chains—both utilized and found themselves competing against the low prices for goods made wholly, or in part, in a growing international archipelago of low-waged “sweatshops.”
But it is worth highlighting that the administrative and legal infrastructure as well as, arguably, the political and social will, for this effort started much earlier. The first wave of corrections reform was propelled by progressive politicians and computing industry leaders in America’s digital heartland in an effort to: (1) lower the state’s tax burden (as rising inflation put a stress test on state and local budgets); (2) support industry expansion; and (3) incentivize incarcerated persons to improve themselves, build skills, and, ultimately, “unlearn” what was assumed to be a deep-seated culture of crime and poverty. The effort to expand the practice nationally in the late 1970s kept to this script: privatized prison labor was an inflation-fighting, cost-saving, self-help measure (even if the pressures of inflation were arguably felt more acutely at the state and local levels). The national shift, like that in Minnesota in 1973, moreover, was packaged into a larger liberal effort to reform state administration during the decade.
The point here is not that we should read the progressive reforms to corrections as leading to their own undoing, as some commentators on other New Deal and Great Society programs maintain. Nor is it that the reforms introduced in the 1970s were inherently racist—or at least any more racist than the US’s persistent racial division of labor—rendering the bridge between reform and mass incarceration, in fact, not a bridge at all. Instead, progressive corrections were an effort to recalibrate business-government relations and better rationalize the allocation of society’s resources to do good works while promoting growth, boosting employment, and doing good works. In other words, to correct for capitalism.
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