Prison Jobs Program Just Barely Working

Fourteen years ago, California voters put convicts to work for private companies behind prison walls. Businesses were granted cheap rent and other perks, while inmate workers earned real-world wages and shared them with victims.

Created by a statewide ballot measure, the program took off and became a national model. Its director traveled the country, touting her winning formula, and graduates of the program seldom returned to prison.

But now, as Gov. Arnold Schwarzenegger seeks to better prepare inmates for release, the joint venture program is a shambles.

Once dubbed the future of corrections and expected to employ thousands of felons throughout the state, the program has withered to less than half its size several years ago. Today, with fewer than 150 of California’s 163,000 prisoners taking part, it is dwarfed by similar ventures in much smaller states.

The program’s decline, said state Sen. Jackie Speier (D-Hillsborough), represents a squandered opportunity to slow the tide of repeat offenders crowding state prisons at an ever-rising cost.

“Without skills, without jobs, you’ll see these people end up right back in prison,” said Speier, who has held hearings on the troubled correctional system. “This is the kind of program that we should be expanding.”

California Department of Corrections officials blame the program’s woes on a slowing economy, a dearth of industrial space on prison grounds and competition from more business-friendly states, especially those with lower minimum wages.

But the program also has suffered from neglect by top state officials. “It was as far on the back burner as it could possibly be,” said former Assistant Corrections Director Noreen Blonien, who ran the program from 1992 through 2002.

Records and interviews show the program has been plagued by the same sort of management problems that have infected other corners of the $6-billion-a-year correctional system, as well as by shrinking budgets, labor disputes and resistance from prison wardens and guards.

Recently, the program hit a new low when a Superior Court judge in San Diego assumed its oversight and ordered an investigation into allegations that inmates were underpaid millions of dollars.

And one of the program’s early success stories -- a firm that made T-shirts for No Fear and other hip brands -- is seeking $7 million in damages, accusing the state of destroying the company through rosy but misguided promises of cheap inmate labor.

The man picked by Gov. Arnold Schwarzenegger to reform California’s prison system said he wants to salvage the joint venture program, and officials hope that talks with several companies will lead to new deals.

“This is a program that can provide parolees with a means of success in the community,” said Youth and Adult Corrections Secretary Roderick Q. Hickman.

Work programs not only make it easier to manage inmates, but also provide marketable skills that can help parolees stay out of prison. Officials say about 15% of former joint venture workers return to prison, compared with a 60% return rate for all parolees.

The program also benefits crime victims. One-fifth of all inmate earnings are diverted to victims, amounting to $3.5 million since the program was launched. But the program’s decline has eroded that support.

“When we were getting $100,000 [annually], we helped 600 or 700 people a year,” said Bob Marinaccio, executive director of the Crime Victims Fund near San Diego. Now, he said, there is only about a third as much money to help people.

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Abundant Workforce

California’s is one of three dozen federally sanctioned prison joint venture programs run by states. Businesses get an abundant workforce, low rents and other incentives. Inmates with good disciplinary records receive the prevailing wage, far more than the nine cents an hour for most prison jobs.

Society, meanwhile, benefits because most earnings -- up to 80% -- go to support inmate families, compensate crime victims, pay taxes and reimburse the state for incarceration costs. Joint ventures also help keep jobs from flowing offshore.

Voters approved the program in 1990 over opposition from the California Labor Federation, AFL-CIO, which condemned it as unfair to “free labor and free business.” The joint venture program grew within eight years to involve 15 companies and several hundred inmates. Optimistic leaders hoped to have at least one venture in every prison.

Today, however, there are ventures at only six of the 32 state lockups. Budget cuts have reduced the staff to one full-time position and a consultant. Marketing has virtually ceased. The few convicts lucky enough to land a spot are packaging laboratory supplies, raising alfalfa and making computer circuit boards, display racks and brewery tanks.

The program was undermined from within, say many familiar with it.

Prison wardens have strongly resisted joint ventures as intrusions on the state’s principal mission of incarceration, said Jim Martin, a decade-long member of the program’s advisory board.

“The various prisons are in reality small kingdoms,” said Martin, who represents the correctional officers union, which supported the ballot measure. “You did not have a strong person over there grabbing wardens by the shirt and saying, ‘This will work and be a priority.’ ”

Blonien, the former program director, said she fought fiercely for it but was hindered by disinterest from superiors after Gray Davis was elected governor in 1998.

In a court deposition, she said, half the wardens “did everything they could” to block creation of joint ventures, and guards resisted, believing that “inmates have nothing coming and to give them jobs that paid was just unfathomable.”

The program’s decline is a great disappointment for former Gov. George Deukmejian, who championed the program but left office before it was launched.

“I believed then and still feel that this program is a win-win idea for California,” said Deukmejian, who recently led an exhaustive review of prisons for the governor. “What it needed to succeed was leadership so that it would be viewed as a high priority.”

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Success Stories

Despite its dwindling size, the program can boast some success stories. One is housed in a sun-baked building at the Central California Women’s Facility in Chowchilla.

There, 28 women imprisoned for such offenses as drug sales and murder report each day for highly prized jobs at Joint Venture Electronics, where they wield soldering irons to assemble circuit boards. At $7 or $8 an hour, the jobs are a godsend -- a rare opportunity to save money and learn a skill.

Deyshawn McCarthy, 32, is in charge of quality control. Inspecting solder joints on a circuit board the size of a saltine cracker, she said the job is a bright spot in her life.

“I’ve learned a trade and learned how to handle myself in a workplace setting,” said McCarthy, who says she is serving a second-degree murder sentence in the 1990 killing of her abusive husband in Oceanside. “The job also lets me send money home to my mother and pay taxes, so I don’t feel like a burden ... to society.”

Across the room, Carla Cole of Los Angeles runs shipping and receiving. Digging through boxes to make sure incoming materials matched what was ordered, Cole said her motivation is simple: to provide for her two sons.

“My dad is raising them, but this job enables me to send money home,” said Cole, 31, whose parole date for an attempted murder conviction is in 2010. “With this job, my boys know that even though I’m in here, I’m still doing everything I can as their mother.”

From the company’s standpoint, the 11-year partnership with the state has been a positive one.

It takes extra time to inventory tools at the beginning and end of each workday, and all trucks carrying supplies and products must be exhaustively searched.

But there are obvious advantages of operating in prison: The firm provides no medical benefits, vacation or sick leave, and its rent is well below market rates.

Other pluses are less tangible. Frank Klein, the company’s general manager, said being a joint venture partner means engaging in “progressive rehabilitation. You’re not just going to work every day,” he said. “You’re affecting people’s lives.”

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Trouble Strikes

Not all partnerships have run so smoothly. While other businesses simply dried up, CMT Blues toppled from the pinnacle of the program.

Operating inside San Diego’s J.R. Donovan State Prison, the T-shirt factory was growing into a multimillion-dollar enterprise that newspapers would portray as a success story. Then trouble struck.

One of the sweeteners in owner Pierre Sleiman’s state contract was that inmate trainees could work for free so long as they were not producing items for sale. However, the state labor commissioner ruled otherwise.

Then a local television station aired allegations by two inmates that they were required to sew “Made in U.S.A.” labels in shirts from Honduras. The inmates were placed in solitary confinement, accused of sabotaging the venture.

Though the allegations of phony labeling and sabotage were not proven, the episode led the inmates and the textile workers union to sue the company and the state. The suit alleged retaliation against the two inmates, and failure to pay prevailing wages and to compensate trainees as required.

On the first day of trial in 2002, San Diego County Superior Court Judge William C. Pate ruled that CMT Blues owed more than $840,000 in back wages and penalties, plus attorney fees of $500,000.

After he shut down operations, Sleiman filed for arbitration, claiming that the state’s misrepresentations and negligence cost him his business and at least $7 million. State officials deny the allegations.

Sleiman’s attorney, Robert Shipley, said his client figured that having the state as a partner would spare him from labor grief. Unfortunately, Shipley said, the program’s leaders “did not know what they were doing.”

Blonien, the former program chief, said she and other corrections officials followed federal rules for joint venture programs, and assumed -- incorrectly, it turned out -- that state labor law did not apply to inmate workers.

In February, the state acceded to a court injunction placing the state’s entire joint venture program under Judge Pate’s supervision for two years.

But more trouble may lie ahead because Pate ordered the state to investigate whether two other companies had underpaid inmate workers millions of dollars.

Ron Sherman owns one of those companies, Western Manufacturing. Eight years ago, Sherman moved his metal products operation from Mexico to Calipatria State Prison in Imperial County.

Then, about a year and half ago, he heard that the lawyers suing CMT Blues were telling his inmate workers that they, too, were being deprived of their rightful wages.

Tommy Rogers, 63, who had been imprisoned since a Midwest crime spree at 18, was one of those who listened. He believed that he was entitled to more than minimum wage after eight years in Sherman’s factory. “Sometimes we never got paid for a month or two, then we never got raises,” said Rogers, who recently was released from prison.

Sherman said he paid the minimum wages allowed by his state contract and that his company will fold if he is forced to increase wages, or pay penalties. “I can’t afford to pay more,” he said.

Critics of the program expressed hope that the court’s oversight would help build partnerships like those envisioned by voters 14 years ago.

“The joint venture program was a great idea endorsed by millions of voters,” said Bob Berke, a Santa Monica attorney pursuing the legal action. “But the administration never adequately followed through. It has been an opportunity lost because of neglect.”

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Inmate workers A voter-approved program that allowed private companies to use inmate labor inside California prisons has declined dramatically.

Projects Inmates 1995 13 174 1996 14 192 1997 13 197 1998 15 240 1999 12 246 2000 13 363 2001 12 330 2002 11 244 2003 8 166 2004 6 138

Figures are for June of each year and include seasonal workers.

How California compares

Several of the 38 states with prison joint ventures have more projects or inmate workers than California.

State Projects Inmates South Carolina 11 753 Kansas 17 472 Texas 6 448 Indiana 18 397 Washington 9 314 Florida 23 269 Nevada 10 234 Minnesota 13 174 California 7 165 Idaho 6 165

Figures are for quarter ending Sept. 30, 2003.

Sources: National Correctional Industries Assn., California Department of Corrections.