PRISON JOBS UNDERCUT PRIVATE SECTOR

It is ironic, Robert DeGroft recently told a congressional committee, "that we have laws in this country that prohibit the U.S. from importing products made by prisoners in other countries, but here at home our own government in many cases is solely dependent on prison labor for its goods." DeGroft, of Albuquerque, N.M., is in the office products business and sees prison factories as unfair competition.

Congress, by establishing Federal Prison Industries in 1934 and ordering it to masquerade as a business enterprise, has created a monster. All 50 states now operate their own prison industries, many of which follow the FPI model.

Here, in four parts, is how the FPI transformed a good idea into a chain of 82 prison factories with a license to violate America's free market principles:

* Set a Worthy Goal. FPI's mission statement is admirable: to reduce idleness and build job skills in prison-run factories.

* Find a Captive Labor Supply. As the prison population rises, so does the workforce. At least 20 percent of federal inmates must work in prison factories at daily wages ranging from $1.73 to $8.63.

* Find a Captive Market. To make sure it can sell its goods and services, FPI exercises a Soviet-style economic grip on federal agencies that, by law, must shop first at FPI.

* Abandon Original Goal. Critics say FPI's profit-driven leadership has lost sight of its original purpose of service to inmates. With a slave labor workforce and captive customers, there are few incentives for efficiency. Prison workers seldom train on the kind of state-of-the-art equipment found in private plants.

Congress should repeal FPI's monopoly, says Carl Votteler, representing the Federal Managers Association, made up of 200,000 senior government workers -- FPI's prime "customers." He said that federal buyers want to shop competitively. A General Accounting Office study concluded, "FPI generally did not offer Federal agencies the lowest prices for products that they purchased."

If FPI were committed to the welfare of inmates, says Paul Miller of the Independent Office Products and Furniture Dealers Association, "it would emphasize skills with good job potential, such as carpentry, and form partnerships with non-profits like Habitat for Humanity, which builds homes. Instead, FPI stresses the short-term bottom line at the expense of its inmates' long-term welfare."