Inmates vs. Outsourcing

By Jon Swartz, USA TODAY

ONTARIO, Ore. — David Day has a bounce in his step and a glint in his eye unexpected in someone who makes nearly 400 telemarketing calls a day for less than $200 a month. That's because he has a coveted job where few exist: behind bars.

Day, 43, is one of 85 inmates who arrange business meetings from a call center at the Snake River Correctional Institution, a state penitentiary in this onion- and potato-producing town not far from the Idaho line. "I'm grateful for the opportunity. Many of us end up here because we didn't have jobs and lacked communications skills," he says on a recent morning, ponytail cascading down his state-issued denims.

If not for consulting firm Perry Johnson's aversion to moving jobs offshore, Day, who was convicted of assault, and his cellmates wouldn't be working.

About a dozen states — Oregon, Arizona, California and Iowa, among others — have call centers in state and federal prisons, underscoring a push to employ inmates in telemarketing jobs that might otherwise go to low-wage countries such as India and the Philippines. Arizona prisoners make business calls, as do inmates in Oklahoma. A call center for the DMV is run out of an all-female prison in Oregon. Other companies are keeping manufacturing jobs in the USA. More than 150 inmates in a Virginia federal prison build car parts for Delco Remy International. Previously, some of those jobs were overseas.

At least 2,000 inmates nationwide work in call centers, and that number is rising as companies seek cheap labor without incurring the wrath of politicians and unions. At the same time, prison populations are ballooning, offering U.S. companies another way to slash costs.

"Prisons are prime candidates for low-skill jobs," says Sasha Costanza-Chock, a University of Pennsylvania graduate who last year completed a thesis on call centers at U.S. prisons.

Market conditions seem to favor prisons. After declining for years, call-center jobs in the USA increased several hundred, to about 360,000, last year. At the same time, more white-collar jobs are going offshore than researchers originally thought. About 830,000 U.S. service-sector jobs, from telemarketers to software engineers, will move abroad by the end of 2005, up 41% from previous predictions, says Forrester Research.

About 3.5% of the 2.1 million prisoners in the USA produced goods and services worth an estimated $1.5 billion in 2002.

But the convicted workforce elicits as much dread as interest. Companies flinch at the prospect of a public-relations backlash should news leak out that they employ hardened criminals. Union representatives, meanwhile, call the hiring of prisoners a flagrant violation of minimum-wage laws and unfair competition to free workers.

"Quite literally, they're taking advantage of a captive audience," says Tony Daley, research economist for the Communications Workers of America, which represents 700,000 people nationwide.

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