The rise of US forced prison labour | NAFTA and the decline of blue collar America

America and the UK both share a long history of respectable blue collar employment. Jobs which didn’t need particular qualifications but which offered respect, a pension, and enough income to own a house and a car and raise a family. If you kept your nose clean and did the right thing you could get on, without a college education.

This was the America of Bruce Springsteen, the England of Paul Weller and Billy Bragg.

Since the 1980s these jobs have been disappearing, blighting former industrial areas across both countries. The generation who left school with no qualifications in the 60s and 70s when wages were high for manual workers were the same voters who backed Trump, Brexit and Boris Johnson. Voters in towns and cities devastated by the Conservative Party and the Republicans 30 years ago enthusiastically backed those same parties because they offered a socially conservative political identity.

A common theme from the right in the US and the UK is to claim that jobs have gone abroad to economies with low wage rates – Mexico or China. The Conservatives and the Republicans have long been suspicious of trading with foreigners, and have a natural protectionist streak, particularly when it protects the interests of inherited wealth. Margaret Thatcher’s championing of the European single market was an aberration.

The North America Free Trade Agreement (NAFTA) is a particular target of the Trump administration which blames it for it’s large trade deficit, and the consequent loss of jobs. Trump claims that US jobs are being lost to Mexico and that Mexicans are coming to the US to take those same jobs, which is an impressive feat of logic. Bernie Sanders and the US left agree with Trump that NAFTA and trade agreements in general cost jobs.

The problem with that view is that unemployment statistics don’t support that argument.The era of NATFA has been one of strong job creation, not job losses in the US. America has more jobs dependent on trade with Mexico or China than it has lost to Mexico and China. The same is true of the UK and the EU.

The US automobile industry has been particularly vocal in complaining about production shifting abroad ignoring the fact that they make ugly stupid looking cars with terrible fuel consumption and dreadful handling.

I am sure that there has been some drift of jobs South of the Rio Grande, however there is one place where US manufacturing jobs have definitely gone. Prison.

US prison labour has boomed, mainly in manufacturing and garment production, but in all kinds of areas, including fire fighting. The US government is reluctant to admit how many inmates are in forced labour programmes, or the value of the work they do. A recent study put it as high as $9bn pa. Most states have a rule that all inmates must work, and all private prison corporations all inmates work. The US Government actually owns a prison labour company. Prison workers grow crops, raise and slaughter cattle, pigs and sheep and supply major supermarkets. Texas Correctional Industries alone turns over $90m pa, and the whole Texas prison system makes a profit.

At least 37 states have legalised the contracting of prison labor by private corporations that run their operations inside state prisons. The list of such companies includes: IBM, Boeing, Motorola, Microsoft, AT&T, Wireless, Texas Instrument, Dell, Compaq, Honeywell, Hewlett-Packard, Nortel, Lucent Technologies, 3Com, Intel, Northern Telecom, TWA, Nordstrom’s, Revlon, Macy’s, Pierre Cardin, Target Stores, and lots of others.

The people who looted this Target could end up working for Target in prison. No irony there at all.

Inmates in state penitentiaries generally receive the minimum wage for their work, but not all; in Colorado, they get about $2 per hour, well under the minimum wage. In privately-run prisons, they receive as little as 17 cents per hour for a maximum of six hours a day, the equivalent of $20 per month. The highest-paying private prison is CCA in Tennessee, where prisoners receive 50 cents per hour for what they call “highly skilled positions.”

The US sends more people to prison than any country in the world; 660 per 100,000 population. Stalin only beat that number in 2 of his near 30 years as Russian leader. The UK, by comparison, has 150 per 100,000 population.

40% of the prison population are black, 39% white, and 19% hispanic. 13% of the US population are black, 64% white and 16% hispanic. The incarceration rate for black Americans is 2,306 per 100,000, for white Americans it is 450 per 100,000

Picking through the date from Federal, State, and private prisons I think that roughly 2m people are currently in forced labour programmes in he US, indicating that there are 0.8m black prisoners in these programmes.

Thanks to prison labor, the United States is once again an attractive location for investment in work that was designed for Third World labor markets. A company that operated a maquiladora (assembly plant in Mexico near the border) closed down its operations there and relocated to San Quentin State Prison in California. In Texas, a factory fired its 150 workers and contracted the services of prisoner-workers from the private Lockhart Texas prison, where circuit boards are assembled for companies like IBM and Compaq.

The US has lost blue collar jobs to lower wage economies. So has the UK. But that isn’t why well paid blue collar employment has changed so radically. De-unionisation, labour market deregulation and new technology are much more significant factors.

But if the US really wants to bring back blue collar jobs it doesn’t need to renegotiate NAFTA. It could just stop jailing so many black people and stop forced labour programmes.

I spent a long time working on Government outsourcing. One of the things that concerned me most was creating financial incentives within the commercial structures for the delivery of public services. If you get those incentives right you can use them to improve how services perform. It you get them wrong you create perverse incentives.

I don’t particularly have a problem with Government outsourcing as long as the private sector takes risk along with it’s reward and the contract contains effective incentives.

I do however have a massive problem with outsourcing in the criminal justice system. There is no way of structuring contracts in this sector that does not create perverse incentives to jail more people and treat them worse. It should be an anathema not just to the left but to those who believe in free market capitalism.

The US system of mass incarceration and forced labour isn’t just damaging to labour markets. It is destroying the ethical framework that underpins the whole system of criminal justice.

I always prefer to make my arguments using maths and graphs rather than ethical entreaties, but it is impossible to ignore ethical corrosion that comes with forced labour.

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