Prop. 139 Would End State Ban on Hiring Out Inmates : Ballot: Initiative sponsored by Deukmejian would let businesses set up shops on prison grounds.

In Kansas a handful of state prisoners work for a company that makes heating elements. In Washington state they work for a firm that makes recreational clothing. In Florida they harvest sugar cane. In Nevada they make water beds.

But not in California. Since 1879, this state--fearing exploitation of inmates, lost jobs and anti-competitive business practices--has constitutionally banned the leasing of prisoner labor to private industry.

Proposition 139, a ballot initiative personally sponsored by Gov. George Deukmejian after years of unsuccessful tussling with organized labor in the state Legislature, would eliminate that prohibition.

If Californians approve the heavily favored measure on Nov. 6, they will join a small social experiment that has sprouted in many parts of the nation during the last decade, expanding inmate labor beyond the traditional license plates, furniture and shoes that prisoners now make strictly for government agencies.

Proposition 139 would allow the state director of corrections and individual county sheriffs to sign deals with businesses in which prisoners would manufacture consumer and industrial products for sale on the open market. Businesses would be invited to set up shops on prison grounds. Prisoners--limited to volunteers, authorities say--would be guaranteed at least the state’s $4.25-an-hour minimum wage.

About 30 states now allow prisoners to work for the private sector. The most likely takers are businesses that need unskilled workers to fill fluctuating numbers of production orders.

In campaigning for Proposition 139, Deukmejian says that much of the money prisoners earned would be deducted for taxes, the cost of their prison upkeep, family support and victim restitution, and that prisoners would learn “real-world skills under real-world working conditions, which helps prepare them for jobs once released.”

Organized labor and a small coalition of business and law enforcement officials contend that the initiative is full of loopholes that could turn prisoners into strikebreakers and make it harder for unionized companies--which pay significantly higher wages than prisoners would earn--to compete in California.

“Every job they (prisoners) take means that many more workers added to California’s increasing unemployment total,” said John F. Henning, head of the California Labor Federation.

Henning is credited with single-handedly persuading labor’s Democratic allies in the Legislature last year to kill Deukmejian-backed legislation that would have placed the prison measure on the ballot. After the defeat, the governor led a petition drive to qualify the measure for the ballot.

The argument over Proposition 139 mirrors one of the nation’s oldest social debates.

In the mid-1800s, convicts were frequently leased by their institutions to businesses as indentured slaves. This made money for the prisons and lowered their overhead. It also angered social reformers, unions and some manufacturers who had to compete against cheap labor.

It was not until the Depression in the 1930s that Congress passed several federal laws that restricted the sale and interstate transport of prison-made goods, effectively ending the relationship between prisons and private industry. Work was largely restricted to “state-use” products that could be sold only to other government agencies. The percentage of state inmates working to produce goods for the open market dropped to 12% in 1940 from 74% in 1905.

For much of this century, California was able to make extensive use of prisoners to construct its highway system, including the bridges that span the chasms of Big Sur. However, that did not violate the earlier constitutional ban because the work was under the supervision of Caltrans, not a private contractor, according to state highway officials. A network of prison road construction camps, jointly funded by Caltrans and the Department of Corrections, operated from 1915 to 1975, when it was eliminated because of high costs.

The national move to reunite private enterprise and prison labor began in the mid-1970s. The rising pace of incarceration and a public mood swing toward making prisoners pay for the cost of their upkeep encouraged the U.S. Department of Justice to approve an experiment. Seven states were allowed to enter into agreements in which prisoners worked voluntarily for private industries. Products manufactured in these government-certified programs could be sold across state lines.

Today there are 17 states and three counties with certification to lease prisoners’ services to private industry, with legislation pending in Congress to certify programs in all states. Currently, 10 other states that lack certification--in most cases because they pay prisoners wages far below the federal minimum wage--lease prisoner labor to business, but the goods inmates produce cannot be sold out of state.

The industry programs personify what former U.S. Supreme Court Chief Justice Warren E. Burger often called “factories with fences” in speeches advocating increased prison work and the tearing down of “the wall of protectionism” that limited the sale of prison-made goods.

However, despite the growing willingness by states to make prisoners available to private industry, employers are responding timidly.

Nationwide, only about 5,000 state or local prisoners worked for industry last year. That is dwarfed by the 44,000 state and federal prisoners nationwide--about 6% of the total inmate population of 750,000--who make products strictly for government agencies.

The prisoners employed privately were scattered through 69 small, diverse ventures. On any given day last year, fewer than 2,000 of those inmates were on the job. They averaged 382 hours of private employment--less than 10 full-time weeks--and made about $2.85 an hour, about two-thirds of which they kept after deductions.

“It takes forever to get people to come on board,” said Anthony P. Travisono, executive director of the American Correctional Assn. “Business still has a long way to go in believing we’re for real.”

During legislative hearings on Deukmejian’s plan, major employer groups were conspicuously absent from the witness list.

Some business lobbyists have expressed fear of competition from prisoners. One target is Federal Prison Industries, a little-known government corporation that employs 14,000 federal inmates. While restricted to doing business with other federal agencies, FPI sold $360 million in goods last year. Last summer it scrapped plans to enter the military shoe market after companies that make shoes for the Pentagon protested.

Deukmejian, whose initiative offers a 10% state income tax credit to entice employers, has predicted that California alone could find private employment for 7,000 prisoners. However, state corrections officials admit that the estimate is based only on the number of prisoners currently on waiting lists for traditional state-supervised prison work, not the number of willing businesses.

Although the prison labor proposal has limited applicability, Deukmejian, a former state attorney general, invested it with unusual personal importance.

In the wake of his legislative defeat, the governor cranked up his personal campaign organization, which raised more than $1 million to gather the half-million signatures needed to qualify the proposed constitutional amendment as an initiative. Donations included numerous contributions of $10,000 or more from a wide variety of corporations. By contrast, opponents had raised less than $25,000 by early October.

A California Poll released last week said that only 28% of the voters were aware of Proposition 139, and that two-thirds of those who had heard of it favored it. Among all voters questioned, the proposition was favored 57% to 25%. To labor’s chagrin, the candidates it is backing for governor and attorney general--Democrats Dianne Feinstein and Arlo Smith, respectively--have both endorsed the proposition.

Although California’s Constitution bans allowing prisoners to work in the private sector, wards of the California Youth Authority are exempt. The state began allowing wards to work privately in the mid-1980s.

Today about 110 CYA wards work for seven private ventures from Norwalk to Ventura, making $4.25 to $5.80 an hour. The most popular is a program in which wards at the CYA’s Ventura School take reservations for Trans World Airlines several hours a day. Youth authority spokesmen say it has provided valuable training and motivation to wards who previously lacked a work ethic.

Labor spokesmen use the TWA program as an example of how employing prisoners takes jobs away from the general work force.

Labor leaders are upset that Proposition 139 does not expressly prevent prisoners from working during a strike. They criticize the fact that the initiative requires inmates to be paid merely the “comparable” wages a business pays its non-inmate work force, rather than the often higher, industrywide “prevailing” wage. And they note that counties that cut deals with employers have the option of letting prisoners work outside of jail.

Phil Vermeulen, executive director of a 15,000-member state association of sheet metal contractors that opposes Proposition 139, said it would be more valuable to expand trade apprenticeship programs that now operate inside prisons, with more emphasis placed on job training.

In a recent analysis of private-industry prison programs prepared for the Justice Department by a Philadelphia consulting firm, the absence of employment training was criticized. The majority of private-industry prison jobs “are unskilled and not likely to provide released offenders with a realistic opportunity to do anything but the same kind of low-paying, entry-level work in the community,” the report said.

Craig L. Brown, California undersecretary of youth and correctional programs, said the experience of CYA wards has convinced him there is great rehabilitative value in private-sector work.

“Even if it’s a meaningless, worthless task . . . at least they learn how to get up in the morning. . . . That’s better than what they knew when they got here,” he said.

Don’t look for ads in favor of Proposition 139 to spend much time on the issue of rehabilitation, however.

In discussing how to sell the notion of prison industry at a Washington conference a few years ago, an Illinois state representative named Aaron Jaffe got to the heart of the matter. Politicians must emphasize the fact that much of what a prisoner earns goes toward his prison upkeep and support for his family, he said.

“What could be more American,” Jaffe quipped, “than business exacting vengeance and making a buck at the same time?”

Times staff writer Carl Ingram contributed to this story.

KEY PROVISIONS OF PROPOSITION 139

Proposition 139 would allow inmates in state prisons and county jails to work for private companies. Among the proposition’s major provisions: ECONOMIC IMPACT: In signing agreements with employers, the Department of Corrections would give priority to programs which “create jobs for a deficient labor market” or programs that “reclaim” jobs now being lost to cheaper, overseas companies.

STRIKES: A prison could not sign a new work agreement with a company that was being struck. A company already using inmate workers during a strike could not increase its hours to compensate for workers on the picket line.

WAGES: Prisoners would be paid wages “comparable” to wages the company pays its non-inmate workers, or wages comparable to those paid for the same work in that geographical area.

DEDUCTIONS: The state director of corrections could withhold up to 80% of a prisoner’s wages to pay taxes, the cost of the inmate’s upkeep in prison, restitution to victims of crime and support of the inmate’s family.

INCENTIVE: Participating businesses would receive a 10% state income tax credit.

OVERSIGHT: The Department of Corrections would establish an advisory board, including one labor representative, one industry representative and three public members.