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A Review of the Department of Corrections' Prison Industries Program
October 2003

FOLLOW-UP (PDF)     REPORT (PDF)     SUMMARY (PDF)

Members of the General Assembly requested that we conduct an audit of the prison industries program at the South Carolina Department of Corrections (SCDC). The requesters were primarily concerned with use of inmate labor by private sector companies. Our findings include the following.

  • SCDC does not have adequate goals or performance measures for its prison industries program. Without adequate goals and performance measures, the effectiveness of the program cannot be accurately assessed.
  • Under federal law, the use of inmates for manufacturing jobs by private sector companies involved in interstate commerce may not displace private sector workers. Also, wages must be comparable to those paid for similar work in the community. The Employment Security Commission needs to improve its methodology for determining comparable wage levels and for ensuring that displacement does not occur.
  • We reviewed whether the prison industries program is operated in a manner which results in a competitive advantage over private sector workers. We found that the employment of SCDC inmates may create a competitive advantage over private sector workers because companies that employ inmates pay low wages, do not pay fringe benefits, and receive subsidized rent and utilities. Whether this competitive advantage results in the displacement of private sector workers by SCDC inmates also depends on whether a company would transfer its operations out-of-state or to a foreign country if it were not employing inmates.
  • SCDC has not adhered to the requirements of the Prison Industry Enhancement (PIE) program by dividing the cost of inmate training between SCDC and a private sector company. In addition, SCDC has not consulted with the Employment Security Commission before establishing the training period for inmate workers.
  • Contrary to state law, SCDC has not consistently made deductions from the wages of inmates in its prison industries who work for private organizations. As a result, funding has been reduced for items such as child support, victim restitution, and inmate room and board.
  • South Carolina law limits competition between SCDC and private vendors in the sale of goods and services to government entities. As a result, there is a reduced incentive for SCDC and its private competitors to limit the prices they charge to government entities.