Balancing the Needs of Prisons and Business

By Charlie Arlinghaus
Since 1934, the federal government has had a policy that encourages the use of prison
laborers but prohibits the prison from entering into competition with private enterprise. Adopting a
sensible policy like the federal one can help New Hampshire reduce the tension created when
our own government uses prison labor to gain an enormous competitive advantage over the
private businesses paying taxes to subsidize that labor.
Daryl Grasso, a farmer in Woodsville, brought this issue to the forefront when she found
her livelihood suddenly threatened. The Grafton County prison opened up a farm stand at cut
rate prices made possible by prison labor. There is a long history of using prison labor for its
therapeutic effect as well as to offset the cost of running the prison. While few dispute the wisdom
of using work as part of a correctional program, there seems to be something fundamentally
wrong when citizens are forced to subsidize a government enterprise that will put them out of
In a free society, we expect the government to be impartial. The government doesn’t
actively encourage us to shop at a particular store or buy one product over another. We fully
expect that our government will not open a gas station to compete against our own station or a
grocery store to compete against our own store. It should not make a difference whether the
government is using paid labor or unpaid prisoners.
On the other hand, we know that working while imprisoned can reduce internal tensions
and that learning a skill or trade helps a released prisoner get and keep a job making him more
likely to avoid a return visit. Nonetheless, neither beneficial effect of prison labor requires that the
fruits of that labor be used against private enterprise.
The federal prison system has come up with an appropriate compromise that has served
the public well since 1934. In that year, Federal Prison Industries was set up to sell their
commodities to other prisons and “for sale to the departments and agencies of the United
States.” However, the government also recognized that successful prison industries would be
under pressure to expand their operations just as the county prison farm has been under
pressure. To avoid the problem of setting the government up in competition with private
enterprises, the prisoners were allowed to produce commodities “but not for sale to the public in
competition with private enterprise.”
The federal policy has been remarkably successful. Federal Prison Industries has
developed into an economic engine that not only provides work for millions of prisoners but has
become a major supplier to other branches of the federal government. Their success has been
so great that a coalition of small business owners and the U.S. Chamber of Commerce has
sought to gain greater access to internal federal bidding.
If the very successful federal policy were adopted in New Hampshire, prison labor could
still be used to meet the rehabilitative needs of the corrections system without causing harm to
our small businesses. Just as the federal prohibition against “competition with private enterprise”
ought to be adopted, we could easily allow the use of prison labor to support other aspects of
county and state government – such as the prisons themselves or nursing homes.
The difference between using the labor internally and externally is the difference between
opening up a state run gas station and merely having a pump at our facility for the use of the
state trucks.
New Hampshire has a long tradition of supporting and encouraging business. Allowing the
government to compete directly with private enterprise sends a mixed message to other
businesses. A sensible policy, rooted in the experience and history of the federal system, will be
beneficial to business, government, and the prisoners. New Hampshire should encourage prison
work and its interaction with other agencies of government. However, we should learn from
federal experience and add the exception “but not for sale to the public in competition with private
March 2005