Blaming manufacturing job losses on low-wage foreign competition or, increasingly, on automation has become a staple of populist politics in developed countries. Nowhere is this truer than in the US, where US President Donald Trump campaigned on the issue in 2016 and has since launched a trade dispute with China, but US workers have long faced another source of competition much closer to home: prison labor.
Many Americans might assume that the country’s convict labor system is a thing of the past, especially given unflattering Western media coverage of other countries’ reliance on prison labor to produce export goods.
Yet, in 2005 — the most recent year for which a fairly complete set of countrywide data is available — the US’ convict labor system employed nearly 1.4 million inmates, of which about 600,000 worked in manufacturing. That is 4.2 percent of total US manufacturing employment.
The US’ prisons represent a large and growing pool of available labor: Since 1932, the number of inmates in the US has soared, from approximately 140,000 to more than 2.2 million in 2014. They work for companies like Walmart, AT&T, Victoria’s Secret and Whole Foods Market, yet they earn less than US$1 per hour on average — far less than the legal minimum wage for non-incarcerated workers.
As a result, convict labor is not only exploitative; it distorts market competition.
This is precisely the complaint that has been leveled against China since its accession to the WTO in 2001 — an event now widely referred to as the “China shock.” Yet, over the course of its history, convict labor has affected US manufacturing at least as much as the China shock.
That effect was apparent from the 1870s; in 1886, prisoners constituted up to 2 percent of all manufacturing employees and accounted for 4.2 percent of total manufacturing output. Unlimited working hours and physical punishment, together with new industrial machinery, were a formula for super-profits.
Private forms of convict labor were first abolished by 1941, but the practice was reintroduced in 1979 to finance the growing prison population. Labor markets were again affected.
One might expect that prison labor became most prevalent in the South after the American Civil War, given the region’s history of convict leasing and chain gangs, but the overwhelming majority of inmates were employed in the Northeast and Midwest in 1886-1941, producing manufacturing goods.
While convict labor came to be used to some extent in almost all industries, it was concentrated in only a few. For example, in 1886, 10 percent of all furniture was produced in prisons, although most employed convicts produced clothes and shoes. In the same year, in South Carolina, prisoners produced more clothes than free laborers did.
Among free laborers, women — who tended to dominate the apparel and shoemaking industries — suffered the most, as inmates filled their jobs and drove down their wages. However, male inmates could not use their newly acquired skills after their release, because apparel and shoe manufacturers tended to favor women when hiring free labor. When the China shock came, its overall impact could have been compounded by its effect on convict labor.
From 2000 to 2005, the number of convicts employed in manufacturing increased by 92 percent, as some firms embraced cheap prison labor in an effort to remain competitive, while others in their industry lowered their wage bills by moving their operations abroad.
Overall, convict labor was responsible for 5 percent of the total manufacturing employment decline in the US from 2000 to 2007.
If the Trump administration is serious about protecting the livelihoods of US workers and the integrity of market competition, addressing the problems raised by prison labor is a good place to start.
Companies should be required to pay prisoners wages that are closer to the market rate. At the very least, companies, such as Boeing, should have to bid for the right to use convict labor. Even if all the proceeds did not go to the convicts themselves, the difference could be used to help defray prison costs.
Yet, far from reducing the distortions created by the convict-labor system, some governments are exacerbating them.
In Colorado, for example, state agencies must purchase certain goods, such as office furniture, from the state’s correctional industries — a requirement that puts firms without access to convict labor at a distinct disadvantage. A lack of transparency in the process of determining which firms may use convict labor does not help.
Historically, competition from convict labor did have one unintended benefit: While it wiped out some industries in certain locations, it also forced firms to adapt, including by adopting more advanced technologies. Those companies that survived did so by investing in laborsaving machinery and even patenting their own innovations.
Yet this outcome also had a steep downside: Because it caused returns to capital to increase relative to returns to labor, it benefited capital owners at the expense of low-skilled wage earners.
Colorado recently voted to change the language in its state constitution, so that it no longer allows “slavery” as a form of punishment, but prisoners in the state are producing furniture for the University of Colorado for US$2.45 per day. What are they, if not slaves?
Michael Poyker is a postdoctoral research fellow at Columbia University’s Graduate Business School.
Copyright: Project Syndicate
Recently, China launched another diplomatic offensive against Taiwan, improperly linking its “one China principle” with UN General Assembly Resolution 2758 to constrain Taiwan’s diplomatic space. After Taiwan’s presidential election on Jan. 13, China persuaded Nauru to sever diplomatic ties with Taiwan. Nauru cited Resolution 2758 in its declaration of the diplomatic break. Subsequently, during the WHO Executive Board meeting that month, Beijing rallied countries including Venezuela, Zimbabwe, Belarus, Egypt, Nicaragua, Sri Lanka, Laos, Russia, Syria and Pakistan to reiterate the “one China principle” in their statements, and assert that “Resolution 2758 has settled the status of Taiwan” to hinder Taiwan’s
Singaporean Prime Minister Lee Hsien Loong’s (李顯龍) decision to step down after 19 years and hand power to his deputy, Lawrence Wong (黃循財), on May 15 was expected — though, perhaps, not so soon. Most political analysts had been eyeing an end-of-year handover, to ensure more time for Wong to study and shadow the role, ahead of general elections that must be called by November next year. Wong — who is currently both deputy prime minister and minister of finance — would need a combination of fresh ideas, wisdom and experience as he writes the nation’s next chapter. The world that
Can US dialogue and cooperation with the communist dictatorship in Beijing help avert a Taiwan Strait crisis? Or is US President Joe Biden playing into Chinese President Xi Jinping’s (習近平) hands? With America preoccupied with the wars in Europe and the Middle East, Biden is seeking better relations with Xi’s regime. The goal is to responsibly manage US-China competition and prevent unintended conflict, thereby hoping to create greater space for the two countries to work together in areas where their interests align. The existing wars have already stretched US military resources thin, and the last thing Biden wants is yet another war.
Since the Russian invasion of Ukraine in February 2022, people have been asking if Taiwan is the next Ukraine. At a G7 meeting of national leaders in January, Japanese Prime Minister Fumio Kishida warned that Taiwan “could be the next Ukraine” if Chinese aggression is not checked. NATO Secretary-General Jens Stoltenberg has said that if Russia is not defeated, then “today, it’s Ukraine, tomorrow it can be Taiwan.” China does not like this rhetoric. Its diplomats ask people to stop saying “Ukraine today, Taiwan tomorrow.” However, the rhetoric and stated ambition of Chinese President Xi Jinping (習近平) on Taiwan shows strong parallels with