State Government and State Agencies and Prisons and Products and Education & Workforce Development

$40M prison work program helps inmates, businesses

November 24, 2008

If you've ever cooked a hamburger over a grill at Shakamak State Park, sat in a hospital waiting room chair, or sipped from a water fountain, you may have used products made by Indiana convicts.

Although offender work programs have been around since the 1920s, most Hoosiers know little about the Indiana Department of Correction's prison-based industries, which generate $40 million a year in revenue.

Far from the license-plate-stamping operation portrayed in movies, the state's PEN Products (short for Prison Enterprises Network) employs 2,100 convicts in 15 facilities statewide who work full time, gaining the experience and confidence that could help them avoid a return trip to jail.

PEN also offers private businesses access to a ready supply of labor — and Uncle Sam provides a tax credit to qualified companies that use it.

Most states have similar programs, but Indiana's stands out for the apprenticeship programs developed in partnership with the Department of Labor, said Doug Evans, PEN's operations manager.

Inmates selected for the 30 apprenticeship programs learn skilled trades, working in prison factories and offices, for example, and get specialized classroom and computer training.

In addition to getting the experience, convicts are given certificates from the Department of Labor to show potential employers once they're out of prison.

"This is the most valuable paper an offender can get," Evans said.

PEN is self-sufficient, making and spending about $40 million a year. About a third of its revenue comes from supplying the prison commissaries, where inmates buy everything from Ramen noodles to televisions. PEN employees even make some of the products, like soap and shampoo.

Prisoners who work for PEN's joint ventures with private businesses can earn more than minimum wage, but if so they must pay taxes on their earnings and contribute to a victim's compensation fund. Those who make at least minimum wage also pay for their room and board, saving the state money.

If an offender makes $7 an hour, he can expect to keep about $2 after the deductions, said PEN Director Mike Herron.

Although most of what it makes is purchased by other state agencies, PEN also sells its products on the open market. An outdated list is posted online, and samples are available for customers to examine in an Indianapolis showroom. Merchandise runs the gamut from cleaning products to office furniture.

Battling recidivism

Most prison inmates work, but competition is fierce for the best of the PEN positions, the 10 percent of jobs that pay at least minimum wage.

Convicts are interviewed for positions and, once hired, are responsible for showing up to work on time. PEN employees also must meet certain conduct standards, which Herron said encourages them to be on their best behavior even when they're not on the clock.

Offenders who violate the standards have to wait six months to reapply.

"If they can't or won't do the job effectively, then, like any other business, we release them and hire another prisoner in their place," Herron said. "What we try to do is emulate the outside world as much as possible."

The goal: Give prisoners the skills — and work ethic — they need to keep them out of trouble in the future. Offender work programs can help lower recidivism rates from 40 percent to 8 percent, according to the National Correctional Industries Association.

Indiana's DOC just started keeping track of PEN graduates, so recidivism rates for them aren't yet available, but system-wide about 38 percent of offenders are rearrested within three years of their release. Of those who are rearrested, 85 percent won't have jobs.

About 18,000 of Indiana's 26,000 inmates get out each year, said DOC New Enterprise Development Manager Becky Deeb.

The better-paying prison positions also help inmates build nest eggs to use after prison. Since prisoners can't carry cash, their paychecks go into a trust fund they can use to buy commissary products. Deeb said some offenders save enough to buy a car while they're locked up.

When ex-con Andrew Hardiek, 30, got out of prison after serving 10 years for armed robbery, he took two apprenticeship certifications with him — materials coordinator and office manager. They helped him land a job at Meijer, where he feels respected and valued as a produce clerk.

Hardiek is one of the first graduates of the apprenticeship program, which launched in April 2006 and quickly ramped up. About 1,400 of the 2,100 PEN employees now are enrolled in the program, Evans said. Another 400 ex-offenders have graduated.

Hardiek worked at a garment shop during his incarceration, doing the exact same things his sister-in-law does for a Fort Wayne textiles manufacturer.

"A lot of things that people are doing at PEN Products, people are doing on the outside world," Hardiek said.

In an economy where it's hard to find a job even with a squeaky-clean record, ex-convicts face even harder odds without the right assistance.

Public-private partnerships

Private-sector businesses in Indiana have been teaming up with PEN for just 10 years as a part of the federal government's Prison Industry Enhancement Certification Program.

Businesses get more than just the warm fuzzy feeling of helping to lower the recidivism rate, though. The federal government gives PIE-qualified companies tax credit equal to 25 percent of the wages they pay convicts, up to $100,000.

These private-sector firms have to pay the workers at least minimum wage. Offenders work a typical 40-hour week and get paid overtime for any more. PEN shoulders the security costs.

Federal law keeps PEN Products and similar programs across the nation from competing with private industries because they are designed to be somewhat inefficient, Herron said. Plus, each facility makes products in small quantities.

If someone needs custom work done and is willing to pay for it, Herron said, PEN is always willing to put offenders to work.

"We can do a lot of custom work; that's where we have an advantage," he said.

Kauffman Engineering Inc. executive Eric Dunville agreed. PEN makes wire harnesses, like the ones used in water fountains, for the Lebanon-based company as a part of a PIE partnership.

Kauffman sends a truck with copper wiring kits to the DOC and picks up the harnesses assembled by the convicts daily. A supervisor on Kauffman's payroll works at the prison to teach new inmates the ropes; they make about the same wage as other employees, Dunville said.

He praised the stable work force PEN offers, which was appealing to the company because of a low unemployment rate near Pendleton.

"The quality coming out of there is excellent. This is the type of business that will thrive on a stable work force," Dunville said. "Particularly in our type of industry, the biggest advantage is the stable work force."

PEN also partners with other private enterprises looking for help. Fishers living history museum Conner Prairie, for example, wasn't eligible for the PIE program because it is a not-for-profit. But it still hired prison inmates to make the historical outfits worn by its interpreters and sold in the museum store.

Four women at the Madison Correctional Facility now do the sewing work that Paula Guernsey once tackled along with the rest of her duties as Conner Prairie's historic clothing coordinator.

Guernsey said she likes to think of herself as helping the women, but she acknowledged that cost was a factor, too. Conner Prairie pays the women $1.20 an hour for a job that Guernsey estimates would cost up to $15 an hour in the private work force.

"It really does come down to a monetary thing, that it's really important for us at Conner Prairie to balance our budget ... and this is much more efficient than paying somebody working wages to sew," Guernsey said.

The rates are similar to labor from China, she said, but PEN has the added advantage of producing just a few of the detailed costumes at a time. Guernsey typically gets five to eight costumes per week by UPS.

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