Prison Labor in the United States: An Investor Perspective
In order to better understand supply chain risk and to illuminate practices that are considered inhumane, Northstar Asset Mangement (NAM) has undertaken a long-term research project to map prison labor in the supply chains of our portfolio companies and to provide practical steps that shareholders and companies can take in order to pursue solutions.
NAM specifically urges companies to develop and adopt a company Prison Labor Policy to guide companies in formulating a standard process for identifying incidences of prison labor and, when discovered, addressing them with a transparent plan.
NAM urges investors to engage the corporations in their portfolios to seek a complete survey of the company supply chain for prison labor (an engagement template is offered later in the paper).
Prison labor is enabled in the United States by the 13th amendment of the U.S. Constitution which prohibits slavery “except as a punishment for crime.” Over 2.2 million individuals are incarcerated in state, federal, and private prisons in the United States, and nearly all able-bodied inmates work in some fashion. While many inmates are employed in maintenance of the prison, a significant number of inmates work to produce goods or perform services for private companies, nonprofit organizations, and state or federal agencies that partner with prisons.
Prison labor in the U.S. started with convict leasing during slavery and has ballooned into a billion dollar industry that is rooted in the racially-skewed nature of excessive incarceration. The abundance and use of prison labor, rather than being challenged by legislators, has been monetized through the sale of cheap labor to companies and state-funded entities, thereby supporting the expense of expanded incarceration and providing a hidden slave labor force.
While a small percentage of prison labor lies within one specific federally-regulated program, the vast majority exists in state, federal, and private prisons that have no centralized regulatory body. Prison labor is pervasive in the United States penal system, but the extent to which that labor is used to supply American corporations with goods and services is shrouded in secrecy.