Promises State contends that prison labor: Saves taxpayers money

Does not harm private-sector companies

Boosts employment for inmates after release

Makes prisoners less likely to reoffend Reality All these claims are unproven or untrue The series continues Part 2: How the state lost $1 million in a cutthroat mattress-recycling scheme → Part 3: The real reason license plates have cost us so much money →

Three decades ago, as get-tough-on-crime laws channeled more offenders behind bars, the state Department of Corrections launched a campaign to leverage profits from prisoners.

Compel inmates to produce low-cost goods for state agencies at no public cost. Teach offenders new skills to help them land better jobs after release. Turn bad people into better people and reduce crime.

Washington’s pitch — crime can pay — was an easy public sell.

Today, some 1,600 incarcerated men and women in prison factories produce everything from dorm furniture to school lunches. Washington Correctional Industries (CI) generates up to $70 million in sales a year, ranking as the nation’s fourth-largest prison labor program.

But behind CI’s glossy brochures and polished YouTube videos is a broken program that has cost taxpayers millions of dollars, charged exorbitant markups to state agencies to make up for losses, and taken jobs from private businesses that can’t compete with cheap prison labor, a Seattle Times investigation has found.

Alan Berner / The Seattle Times

Alan Berner / The Seattle Times

Alan Berner / The Seattle Times

Far from being self-sufficient, CI has cost taxpayers at least $20 million since 2007, including $750,000 spent over three years on a fish farm to raise tilapia that has yet to yield a single meal.

CI has reaped millions of dollars — money it keeps — by inflating prices of furniture it sells to state agencies and public universities, capitalizing on a law that requires they buy from prison factories. In many cases, prisoners didn’t make the items, but CI instead bought prebuilt furniture then resold it with markups, previously undisclosed state records show.

The Times also found dozens of private business owners in Seattle and statewide who say they’ve had to stop hiring or lay off workers, victimized by unfair competition from an inmate workforce paid as little as 55 cents an hour.

“Have we had some problems?” said Danielle Armbruster, director of Correctional Industries. “Absolutely.”

“I believe in this program. We hope to expand and reach even more inmates. If we help just one inmate, then that’s one less victim in the future.”

But CI can’t substantiate that key claim — that inmates who work in Correctional Industries commit fewer crimes after release than those who do not. State recidivism studies often contradict each other and are rife with shortcomings, failing to account for thousands of inmates who commit new crimes, according to a Times analysis.

Likewise, officials have publicly claimed that CI inmates more successfully gained jobs after release, but they actually have no idea which offenders get jobs or where they’re working.

CI has even undermined its key mission — “Working on the Inside, Succeeding on the Outside.” Rather than always employing inmates nearing release, CI attempted to cut costs and boost profits by filling at least 171 prison jobs with those serving life sentences. They will never be on the outside.

Prisoners at work in Washington Source: Washington Department of Corrections; Seattle Times reporting Thomas Wilburn / The Seattle Times

Touring the furniture factory

CI’s furniture factory is the showcase of its inmate work program, reaping more revenue than any other CI industry.

Corrections officials spent $12 million to rebuild the factory four years ago at Stafford Creek Corrections Center in Aberdeen. A 90,000-square-foot warehouse now holds millions of dollars of computerized manufacturing equipment.

This is where lawmakers and the media are often shepherded on CI-led tours designed to highlight the benefits of prison labor.

“I had one legislator who was unsure about the program,” Lyle Morse, then-director of the CI program, said earlier this year. “But I got her inside here and showed her what we’re doing and she became one of our biggest fans.”

On many tours, the first stop is at a work station manned by Andrew Raymond, 34, of West Seattle, convicted in 2000 of killing a landlord while trying to rob a suspected Everett drug dealer.

“This job has made me a better person,” said Raymond. He now makes metal fasteners and hopes his work experience will someday lead to an outside job. He has 12 years to go.

The state’s pitch: Inmates learn specialized skills using the latest technologies, better preparing them for jobs on the outside. CI has dozens of testimonials by inmates about how the program helped them.

Alan Berner / The Seattle Times

“This isn’t about making money,” said Morse. “It’s about making better people.”

But when The Times visited the factory early this year, inmates weren’t making furniture. This was not an aberration, previously undisclosed state records show.

Rather than always building its own furniture, CI since 2010 has spent at least $4 million to buy prebuilt products from furniture dealers and retailers, records show.

CI officials call them “pass-through products” because inmates do little more than unpack boxes or perform basic assembly, before passing furniture to state agencies.

Although CI says pass-through products represent a small percentage of sales, state records show the furniture factory “became dependent” on prebuilt products as “revenues declined and CI became less profitable as a whole.”

Armbruster, the current CI director, said that she has reduced the reliance on pass-through purchases. In some cases, inmate workers do more than just put together a “kit,” such as customizing fabrics or metal frames, Armbruster said.

Either way, no matter how much furniture manufacturing experience offenders receive inside CI factories, their skills haven’t been in demand on the outside.

At least a dozen furniture retailers, dealers or manufacturers have been asked in recent years during hearings in Olympia whether they have hired a former inmate from the CI program. The answer was always no.

Correctional Industries’ backdoor funding By law, state agencies must buy furniture from Correctional Industries (CI). $16.4 million revenue CI capitalizes on this by charging hefty markups. 17% profit margin With the markup and required agency buys, CI profits. $2.8 million profit Source: state Department of Corrections for fiscal year 2014

Built-in monopoly

State agencies are required by law to buy furniture from CI, and the prison program has capitalized on that monopoly with hefty markups.

Some agencies and businesses have complained about this for years. The Department of Social and Health Services once ordered two steel bookcases from CI, a furniture executive testified to lawmakers in 2005. A private vendor offered the same pair for $376 with overnight delivery, he said. CI charged $536 and took 13 weeks to make delivery.

Price markups have continued, The Times found. Last year, CI reaped an average profit margin of 17 percent on its furniture sales — an extraordinary boon for an organization that is supposed to be providing low-cost goods for government.

Carly Boudreau, the second-generation owner of Coriander Designs, a furniture manufacturer in Woodinville, said that she is astounded that state agencies and legislators have tolerated CI’s high prices. She said bankers have told her that a 3 to 5 percent profit margin is considered the sign of a healthy furniture manufacturer.

If her company could get profit margins like CI’s, she said, “I’d be dancing on top of my desk.”

In the past fiscal year, CI reported $16.4 million in furniture sales, nearly all to state agencies, keeping $2.8 million in profit.

Alan Berner / The Seattle Times

With tax dollars swept in from other agencies, CI amasses public money to cover losses in its other prison industries. Armbruster said 20 percent is CI’s standard markup and extra revenue provides it with “working capital,” allowing it to invest in new lines of business or cover unexpected expenses.

“All of that profit reinvests back into the program,” Armbruster said.

Lawmakers generally expect CI to be self-sufficient and have passed laws that make it difficult for state agencies to buy furniture from any other vendor. Many private business owners say they’ve been hurt by CI’s competitive advantage.

Boudreau said her company, which began in 1979 in a two-car garage and now has 60 employees, has lost big projects to the prison system.

“It’s absolutely hurt our business,” she said. “It’s not fair that they can use inmates to take business away from companies that are trying to create jobs.”

Kerri Brockhaug of Zebra Solutions, a Seattle-based furniture dealer, told lawmakers in 2011 that her company had hoped to sell furniture to a public university, but CI officials swooped in and took the contract.

“I had to sit down with my staff and tell them that they were going to lose their jobs,” she said.

Employees were in disbelief, she said, and asked, “You’re telling me that we’re going to lose our jobs and it’s going to be given to an inmate who doesn’t pay taxes and who’s broken the law?”

Problems could deepen, private business owners said, because the prison system is hoping to command even more of the furniture market.

Early abuses

Washington’s first inmate labor program took place in the 1870s at a private prison run by a brutal sheriff in Thurston County. He required them to work in a local mill; those who refused were tortured.

“A pitcher of cold water was held high above the restrained inmate and poured directly into his open mouth. … The near-drowning experience would be repeated until several episodes of unconsciousness were achieved,” according to the Encyclopedia of American Prisons.

In 1904, prison reforms led to the first state penitentiary in Walla Walla. There, inmates worked in a sack mill and, later, made license plates.

Founded in 1983, Correctional Industries promised that its core mission would be rehabilitation, with a goal of putting more and more inmates to work in prison each year. That never happened.

Fifteen years ago, CI employed about 2,500 inmates. Today, there are 1,626 inmate laborers, about 10 percent of the state’s prison population.

While lawmakers have pushed to increase the number of inmate workers, they’ve limited the educational opportunities that could help offenders find work outside of prison.

As part of a “get tough on crime” effort, the Washington Legislature in 1995 passed a law prohibiting state money from being used for higher education in prisons. Some taxpayers had griped that inmates were getting college courses for free.

Rep. Larry Springer, a Democrat from Kirkland who serves as deputy majority leader, views the CI jobs as “basic skill” work that may only help former inmates find very low-paying jobs. The better use of tax dollars would be for higher education for higher-skilled jobs.

“Those are much more important, marketable skills,” Springer said.

Alan Berner / The Seattle Times

Prison break

Few places were harder hit by the recession in 2008 than the garment factory at Clallam Bay Corrections Center, a 900-bed complex near the Strait of Juan de Fuca.

To cut costs and turnover, CI officials reasoned, they should employ long-term inmates rather than pay to train offenders who would soon be released.

For the next three years, CI officials readily recruited inmates with violent histories.

Among them were Dominick Maldonado, serving a 163-year sentence for gunning down shoppers at Tacoma Mall in 2005, and Kevin Newland, serving a 45-year sentence for the 2006 murder of a teenage girl, whose body was found under the floor of a Stevens County cabin.

Both were assigned jobs in the CI clothing factory, which meant extra pay and extraordinary freedom compared to other prison jobs.

The 25-year-olds capitalized on their newfound access, hoarding survival supplies inside the linings of heavy work jackets: shoelaces; bags of chocolate treats; a lemon sugar cookie; spools of dental floss; tea bags, state records show. Newland mailed a letter to his mom and apologized for the pain he had caused and the pain he “will cause in the future.”

On a drizzly morning in June 2011, shortly after the morning shift break, Maldonado twisted apart a pair of sewing scissors and pressed a metal shear against a correctional officer’s throat. Newland jumped on a forklift, rammed through a reinforced-aluminum door and accelerated toward a perimeter chain-link gate.

Outside the secure perimeter, a corrections sergeant with a shotgun happened to be driving to the prison’s shooting range for practice. Responding to the breach, he fired a warning shot and yelled for Newland to get on the ground. As Newland drove to ram the gate once again, the sergeant fired a fatal blast to the chest. Maldonado promptly surrendered. He was later transferred to a maximum-security prison in Walla Walla.

Publicly, the corrections department was lauded for a “job well done” in handling the breakout, state and county investigations found. Behind closed doors, top prison administrators were astonished to learn the extent of CI’s use of lifers. The two escapees were among 171 inmates assigned to CI who were serving life sentences or the equivalent, an internal study found.

Another was Byron Scherf, a three-strike convicted rapist who worked in a CI print shop at Monroe Correctional Center, records show. In January 2012, he strangled corrections officer Jayme Biendl, 34, inside the prison chapel.

Prison officials ordered CI to refocus its programs on soon-to-be-released inmates. Among the changes: No inmate could hold a job longer than seven years; and CI’s workforce could not have a higher percentage of lifers than the prison as a whole.

A September 2013 internal audit found that five of seven prison factories surveyed remained in violation. At times, CI was employing up to 12 times the number of inmates serving life sentences than allowed, the audit found.

An internal prison report did offer a possible explanation for why Maldonado and Newland rushed to escape: The two inmates were likely afraid they would soon lose access to weapons and a vehicle.

A CI supervisor wrote, “There has been pressure or tension within the work force due to the reduction in sales and the potential for worker [inmate] cutbacks.”

Who really reoffends?

A core belief of the CI program is that most offenders, if given a chance, want to change and become law-abiding citizens.

In Washington, dozens of studies purport to track recidivism — how often felony offenders return to prison — and have often provided contradictory conclusions. Different state studies have put the recidivism rate as low as 29 percent and as high as 61 percent.

Compounding the problem, The Times found, is that the state doesn’t count parole or probation violators when measuring recidivism, whether they worked in CI or not. These offenders make up a large group. In 2011, for instance, they spent 17,193 days in jail, state records show.

The Seattle Times

Alan Berner / The Seattle Times

Researchers face even more challenges when trying to study offenders who’ve participated in CI programs. For example, in Washington prisons, the better-educated and well-behaved inmates are typically recruited to work in CI programs. CI inmates also receive specialized training on how to handle job interviews and write résumés.

Yet, they are often compared to inmates who chose not to participate or were rejected for a CI program. These inmates are typically less-educated, underachieving offenders who may have behavioral problems.

Two state studies, published a month apart in 2011, highlight why it’s nearly impossible to determine whether the CI program reduces crime. Some findings showed CI inmates returned to state prison less often than their peers, but some findings showed the opposite.

State officials acknowledge there are shortcomings with the research.

Dan Pacholke, deputy secretary at the Department of Corrections, said the state does see immediate benefits of CI work, such as teaching inmates important skills like how to manage conflict and get to work on time.

“I would certainly agree that there are limitations on the data that’s available,” he said.

Recent skepticism

The federal government and every state except Alaska — which abandoned its program — currently operate correctional factories. In total, 542 prisons employ 67,000 inmates and produce more than $1 billion in goods and services.

Where prisoners are at work Source: Seattle Times reporting Garland Potts / The Seattle Times

Washington’s isn’t the only prison labor program to be accused of unfair competition, putting lifers in prison jobs and excessively marking up products.

In Nevada and Texas, lawmakers in recent years have placed new restrictions on prison labor programs after businesses complained it was impossible to compete with such cheap labor.

A few months ago in Arkansas, prison officials gave one of its jobs to a man serving a life sentence for the murder of a teenager. School officials were outraged to learn the inmate’s background after he was sent to a junior high school to install a wall mat in the gym.

But perhaps the most scrutinized prison labor program is in Pennsylvania, which was targeted in a scathing 2005 audit that identified many of the issues now being repeated in Washington state and elsewhere. Auditors said one-third of the Pennsylvania inmates working in the prisons were serving life terms. Most of the inmates produced clothing, but they would have difficulty finding a job, auditors noted, because there aren’t many U.S. clothing factories.

And the Pennsylvania auditors found excessive profits and high prices in some industries that were used to subsidize other failing sectors.

Uniform sabotage?

While about half of corrections officers support CI, according to union officials, just as many believe it creates safety hazards and doesn’t work. Their objections spilled into the Legislature in January 2012, centering on whether inmates should make uniforms for the officers.

A $1 billion hidden economy State Revenues* Inmates in programs Total inmates % of population California $180.2 6,700 116,627 5.7% North Carolina 91.4 2,399 37,985 6.3 Texas 88.9 4,862 150,361 3.2 Washington 69.8 1,626 16,556 9.8 Pennsylvania 69.0 1,563 51,041 3.1 Colorado 65.0 1,800 20,000 9.0 Florida 64.4 2,435 100,444 2.4 Maryland 51.8 2,052 24,000 8.6 Illinois 49.7 818 48,902 1.7 Virginia 49.0 1,374 29,981 4.6 *All revenues in millions of dollars. Source: Seattle Times reporting Garland Potts / The Seattle Times

Inmates in CI sewing shops made those uniforms for 12 years. Corrections officers repeatedly complained about shoddy work and even raised claims of sabotage.

They told of trouser zippers splitting from defective seams, crotches ripped open, pants with legs of different lengths, and cuffs on long-sleeve shirts sewn shut.

Female guards told of being overexposed by uniform blouses with buttons that were suspiciously placed too far apart.

CI officials said the complaints were exaggerated.

But lawmakers, many of them staunch CI supporters, reluctantly voted to shut down CI’s uniform business, which cut about 100 inmate jobs.

Sen. James Hargrove, D- Hoquiam, clearly exasperated, tried to reinforce CI’s claim that inmates find jobs related to their CI training.

During a hearing on the bill, Hargrove pressed the owner of Blumenthal Uniform, also in Hoquiam, to say that he’d consider hiring former inmates from the sewing shop.

Owner Mitch Blumenthal hesitated on the answer.

“So,” Hargrove concluded, trying to pin him down, “it’s possible.”

“Possible,” Blumenthal said. “Not probable.”