What factors lead to your decision to even consider relocating your business inside a  correctional facility and replace your "civilian" work force with inmate labor?

In 1992 after experiencing continual excessive employee turnover for three years, Omega Pacific realized it was imperative to investigate alternative stable labor force options. Moving the manufacturing offshore to Mexico, the Pacific Rim or the Caribbean was a economically beneficial solution. However, Omega Pacific has been a domestic manufacturer since 1983;  and was intent on continuing "Made in the USA" with US labor if at all possible.

So how did inmate labor within a correctional facility accomplish your goals?

In 1993 Omega Pacific learned that the State of Washington participated in a Federal program whereby a private business could operate within a correctional facility and utilize inmate labor as long as they were certified and complied with all Federal and State requirements.  After numerous conversations with company owners who were already certified and operating within a correctional facility, it was apparent that their work force was hard working, highly motivated, stable, efficient and extremely quality conscious.

Would you elaborate on this Federal program and the certification criteria?
The Prison Industry Enhancement Certification Program was originally authorized by Congress in 1979, revised in 1984 under the Justice
Assistance Act and amended again in the Crime Control Act of 1990.  The program is administered by the Bureau of Justice Assistance, Office of Justice Programs, and US Department of Justice.  This is the legislation that governs the program.  To be certified a company must:

1.  Provide assurance that the offender's participation in the program is strictly voluntary and that the workers agree to specific deductions from their wages.

2.  Offenders must be paid the prevailing wage in the free market or minimum wage whichever is higher as well as comply with all Federal and State overtime requirements.

3. Consult with all local labor and business that might be affected by the program.

4.  Pay all required Federal, State  and local taxes which includes FICA, FICA medical, unemployment, workman's compensation, excise taxes, as well as collect and submit FIT.

In December 1993 Omega Pacific applied to the Washington State Department of Corrections for certification to participate in this federal program at the Airway Heights Corrections Center.  After two years of scrutiny and a lengthy economic impact analysis (required by the State of Washington), Omega Pacific was certified in December 1995.  To our knowledge, there are currently 110 certified private businesses operating in 36 jurisdictions throughout the US.

What comprises the deductions you indicated were made from offender wages?

All deductions are based on gross wages with:

* 20% deducted for cost of incarceration
* 20% deducted for any outstanding legal or financial obligations that were provided by the State of Washington
* 10% deducted and deposited into a trust fund for the offender to collect upon release
* 5% deducted and deposited into a victim's compensation fund
* $150 for each law suit filed while incarcerated
In addition, since the offender's are classified as W-2 employees;  federal withholding, FICA, unemployment and workman's compensation taxes are deducted.

What incentives did the State of Washington offer Omega Pacific?

They provided no cost manufacturing space.  However, Omega Pacific was required to pay a substantial portion of the tenant improvements to transform the state provided space into an operating manufacturing facility.

What happened to the employees who were replaced by inmate labor?

All Omega Pacific staff employees were offered the opportunity to move with the company and retain their positions.  Omega Pacific worked very closely with other businesses and a local employment agency to minimize production worker displacement.  The end result was very minimal production worker unemployment.

What difficulties have you encountered setting up and operating a manufacturing facility inside a correctional facility?

The main difficulty was adjusting to and complying with all the institutional procedures and security requirements.  In addition, the
ingress and egress of raw materials and finished goods is more restrictive in this environment.  We must also maintain a comprehensive tool inventory control program with all tools being checked in, accounted for and secured prior to inmates leaving our facility.  Otherwise, there is very little difference from operating on the outside.

How do you meet ISO 9000 standards in a correctional facility setting?

Exactly the same way you do on the outside.  Since relocating to Airway Heights, we have been UL certified on our steel rescue and industrial carabiners and most of our climbing carabiners have been CE certified.  We expect to be ISO 9002 certified by mid 2001.

How many inmates do you employ and how are they selected?

We currently run two shifts employing a total of 62 inmates.  The institution requires all potential employees to have a high school diploma or GED equivalent, be infraction free for a minimum of six months and have completed numerous work ethic and behavioral programs.  Omega Pacific then administers a mathematics, manual dexterity and dimensional measuring test. Upon successful completion, the inmate is granted an interview.  This selection process is an extremely positive motivating force for the entire correctional facility population.

What is the average wage that you pay these workers?  What is the overall hourly payroll cost per hour for these workers, and how does it compare to what you paid before utilizing prison labor?

As previously mentioned, we are required to pay the prevailing hourly wage for comparable work in the local labor market as determined by the State of Washington's Economic Security Department.  The overall hourly payroll cost is the same as if we operated in the civilian labor market.  We are required to pay all Federal, State and local taxes which include FICA, FICA medical, unemployment, workman's compensation, and Federal Withholding taxes.  This total wage package is considerably higher than compensation paid in offshore countries, especially the Pacific Rim.

How do inmates benefit from their employment with Omega Pacific and what are some of the positive results you have experienced utilizing inmate labor?

It is important to note that this program has a dual purpose.  First, the program seeks to generate goods and services that provide income levels above normal correctional facility jobs, so that inmates can make a meaningful contribution to society, their own costs of incarceration, victims of crime and family support.  The second purpose is to provide
meaningful work for inmates that helps them acquire or enhance positive work ethics and attitudes while learning or increasing useful job skills that will serve them well upon their release, not to mention much more productive use of their time.  The end result is a positive and motivational program that is critical to enhancing inmates' opportunities
to get and keep meaningful employment upon their release, thereby reducing the cycle of recidivism.

The most significant positive result Omega Pacific has experienced is a work force that views working at Omega Pacific as a privilege - not a right - as most on the outside view their employment.  This belief has translated into significant improvements in productivity and quality while decreasing scrap and rework.

What is the downside of utilizing inmate labor?

All Omega Pacific employees, whether staff or inmate, are subject to parameters promulgated in our policy manual.  However, inmates are also subject to Washington State legislative rules that are more restrictive and supersede our policy manual.   Certain infractions (which in most cases do not relate to the work place) may necessitate the immediate termination of an inmate.

On the positive side, these legislative rules encourage more positive behavior outside the workplace and actually assists in facility stability. In addition, as an inmate's security classification changes and the remaining time decreases, he may be required to participate in other pre-release programs or be transferred to a minimum security facility thereby ending his employment.  I might mention that to date this has not been a problem or affected our operation due to the number of qualified candidates currently on our waiting list.

Have you received much criticism about your decision to utilize prison labor? If so, what kind and from whom?

Obviously, when you participate in a controversial program there will always be criticism. We have not lost any customers due to our participation in the program and, in fact, have actually increased our customer base.  The criticism we have experienced is from supposed socially responsible people who actually are terribly uninformed and media biased regarding the program.  They believe the program offers us many cost competitive advantages.  However, when compared
to offshore costs where many of our competitor's products are manufactured, our costs are actually higher.  After listening to an accurate explanation of the program and its overall benefits, they generally have a completely different outlook.

How do you respond to those who would raise the following criticisms of utilizing inmate labor:

a.  the use of prison labor creates an unfair competitive advantage
b.  the use of prison labor exerts downward pressure on wages in the labor market
c.  prisoners are exploited because they
* are paid low wages
* receive no health benefits
* receive no pensions


The unfair competitive advantage and downward pressure on wages is not a true statement, as previously addressed.  Inmates do receive full health benefits which are provided by the State.  Inmates do not receive pensions because we, like many small businesses, do not currently have a pension program for inmates or staff.

d.  Safety and quality are inherently compromised by a work force comprised of   sociopathic  individuals who have already proven their untrustworthiness by virtue of their convictions for murders, assaults,
robberies and other crimes against persons and society.

It is unfortunate that the general population's perception of inmates is as negative as it is. Frankly, these men do not get the proper PR they deserve.   Most of what is written and thought about inmates is extremely negative.  The media thrives on the dark side most often only writing about the shocking and bizarre.   They are not really interested in informing the public about the inmate who set up an entire computerized accounting system, or built an entire forging press, or wired an entire building to code.  Or the inmate with college degrees who has an impeccable Q.C. inspection record and greatly assisted in our UL and CE product certifications, or the inmate who can manufacture 30% more parts than anyone on the outside ever did with minimal scrap.  Don't get me wrong! There are some hard core inmates inside a correctional facility.  But the majority are just regular people who have made mistakes and are paying their debt to society.  Our current employees take great pride in their work and the product they produce.  Safety and quality is part of their every day modus operandi.

e. The use of prison labor to manufacture products for sale into commercial markets is contrary to international conventions and treaties and weakens the ability of the United States and other nations to eliminate human rights abuses in China and other countries.

I could not agree more with that statement if it were accurate.  However, I believe my previous discussion of the program clearly indicates that the parameters under which we must operate precludes any chance of human rights abuse and, in fact, protects the rights of inmates.

f. The use of inmate labor is inherently unethical and socially irresponsible.

Quite the contrary!  Not only is it ethical, since the inmates are treated the same as outside employees;  but is socially responsible because the inmates benefit, the institution benefits, private business benefits and the taxpayers benefit with the combined ultimate goal of reducing recidivism.

Has the use of inmate labor played much of a role in enabling you to price your products significantly lower than your competition?

Absolutely not!  Our pricing reflects efficiencies we have gained through improved technology, manufacturing methodology and specialized production equipment.  Omega Pacific only manufactures one product-aluminum and steel carabiners.  So we have to be the most cost efficient.  A review of our pricing over the last three years will show that we have neither increased or decreased our pricing except on one item.

Have you any second thoughts about your decision to utilize inmate labor?

NO!  In fact, what I have come to realize is that helping these individuals put their lives back together has been far more rewarding than any financial benefits we could receive.

 

 





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