A Military Tech Giant Is Using Prison Labor To Make Electronics

Jonathan Holder gives most of his wages back to the system that imprisons him. 

Incarcerated at South Carolina’s Tyger River Correctional Institution, Holder helps assemble flooring through the state’s Prison Industries program, which employs inmates to manufacture products for the state or outside companies. While he technically earns just above minimum wage, the South Carolina Department of Corrections reclaims most of his pay through fees and other expenses — leaving him with only a fraction to send back to his wife and five children.

“He goes in and works so hard for so little,” Misty Holder, Jonathan’s wife, told Motherboard. “I struggle so hard, you know, having kids and not having any help.”

People familiar with Prison Industries say incarcerated workers in the program work long hours in conditions made more hazardous by the COVID-19 pandemic, only to give a substantial portion of their wages back to the prison system through involuntary fees. The process leaves incarcerated workers with little to send home to their families, who often rely on the supplemental income.

And one of the companies that sources products from Prison Industries — a defense contractor named BAE Systems — is one of the United States’ leading suppliers of weapons and military tech. 

BAE Systems — short for British Aerospace Systems — is a multi-billion dollar British defense contractor that specializes in military electronics, aircraft, ships, ammunition, artillery systems and missile launchers, among other military goods. A June report by Bloomberg listed the company as one of the top defense contractors of the United States government. 

The company is headquartered in central London, but its US subsidiary sources some product components from Evans Correctional Institution, a mid-security prison located on a bare stretch of highway near South Carolina’s northern border, about 4,000 miles away. 

There are only a few degrees of separation between BAE Systems and the Prison Industries program at Evans Correctional. An operating group of the company known as Electronic Systems sources cable and harness equipment from Missouri-based Midcon Cables Company, according to public records on federal contractors and a BAE spokesperson.

To manufacture some of those components, including wire harnesses, Midcon employs 68 inmates at Evans through a contract with the South Carolina Department of Corrections.

Midcon Cables — which didn’t respond to multiple requests for comment — entered into its contract with SCDC in 2012. 

A spokesperson for SCDC said the Prison Industries program’s merits include placing inmates in “realistic work environments” and giving them “a chance to develop marketable skills” they can apply after being released from prison. 

On the surface, inmates in Prison Industries programs like Midcon Cables’ earn above minimum wage, starting at $7.50 per hour, making it the most sought-after employment option for incarcerated people in the state. But most of that pay returns to the department of corrections through fees or other costs imposed on inmates that generate revenue for the state or its partner companies.

After those expenses, incarcerated workers might receive a net income of around $100 per month –– even as they manufacture electronics for multi-billion defense contractors like BAE Systems. 

“It’s long hours, pretty tough work and available to a very tiny percentage of folks that have a good disciplinary record and can demonstrate that they’re willing to do this work without complaint,” Shirene Hansotia, criminal justice policy and legal counsel for the American Civil Liberties Union (ACLU) of South Carolina, told Motherboard. “A tiny percentage of what they’re actually paid they can keep.”

In South Carolina, incarcerated workers who owe child support must pay 35% of their income toward fulfilling those obligations. Those without child support obligations, though, must instead pay 25% of their wages for room and board in a facility they are not allowed to leave. Another 20% goes toward victim restitution or, for workers without restitution obligations, to the state’s general victim compensation fund. After that, 10% goes into an interest-bearing account inmates can access upon their release. 

After paying state and federal taxes, workers often use what little remains to pay for phone calls and buy essential supplies like soap, toilet paper, and toothbrushes at the prison's commissary—often at inflated prices, Hansotia said.

“I got a check from (Jonathan) two days ago that was $192,” Misty Holder said. “That was the most I think I’ve ever gotten. That’s for a month’s work.”

Of the around $100 a month she typically receives from her husband, Misty Holder — who balances child care with a part-time job at a local hospital — often uses most of it to take care of her three sons and two daughters.  

Prison laborers and their advocates have described work programs like Prison Industries' as a form of modern day slavery. Incarcerated workers in South Carolina have organized multiple work and hunger strikes in recent years to demand prevailing wages for their labor –– among other improvements to prison conditions –– including participating in a nationwide prison strike in August 2018. 

While Prison Industries may not pay inmates a net minimum wage, for many incarcerated workers, it’s the best option they have. The program allows incarcerated people to provide some financial support to their families, who may have lost a valuable source of income when their loved one became incarcerated, the ACLU's Hansotia said. And the Prison Industries program is only available to a small slice of the incarcerated population in South Carolina.

Inmates have to apply for entry into the Midcon Cables program that manufacturers electronic components for BAE Systems. Only inmates deemed trustworthy by SCDC are considered for the positions. Of the over 1,400 inmates in Evans Correctional, 68 were employed by Midcon Cables in October, according to the corrections department.

Hansotia and Misty Holder agreed that, at the very least, allowing incarcerated people to earn a wage is beneficial to families who can use all the help they can get. 

The Prison Industries program is also preferable to other work programs in SCDC, such as the one Tammy Standard’s husband is in, that require incarcerated people to work for either no pay or wages less than $2 an hour.

Standard said she and her husband, Rick, who is serving life without parole at Perry Correctional Institution in Pelzer, South Carolina, have debated the benefits of entering the Prison Industries program.

“Rick works a tremendous amount of hours per week and has a lot of responsibility,” she said. “I mean he’s running basically a small grocery store for nothing, no pay.”

Incarcerated workers in non-Prison Industries programs may be able to earn work credits toward an early release, Standard said. But those serving a life sentence like her husband’s are ineligible for these benefits.

“They’re making money off the poorest people in history,” she said. “It’s kind of like hostage labor.”

As it has in prisons and jails across the country, COVID-19 has ravaged correctional facilities in South Carolina, killing at least 34 inmates and infecting thousands of others.

Both the department of corrections and the companies it partners with through Prison Industries have an incentive to keep incarcerated people working amid the pandemic. Similarly, inmates, even those who have experienced symptoms or been exposed to the virus, have wanted to continue working.

“There were individuals who were suppressing their symptoms because they desperately needed to have the job and get back to work,” Hansotia said. “And that resulted in people testing positive.”

Jonathan Holder is among the inmates who contracted the virus, and had to stop working for several months as a result. Even after returning to his job, he continued experiencing respiratory difficulties in the virus’ aftermath.

“He’s really sick right now, even though the COVID’s gone,” Misty Holder said. “It’s hard for me to think about him going in there and working.”

BAE Systems is well-aware of Midcon Cables’ use of incarcerated labor to manufacture electronic components.

In a 2018 edition of PULSE, a magazine run by Electronic Systems — the BAE Systems operating group that sources products from Prison Industries — the company boasted about the Midcon Cables program’s efficiency and purported benefits for incarcerated workers. The article includes quotes from Midcon Cables and BAE Systems employees, but none from inmates involved in the program. 

“Electronic Systems has embedded a Zero Defects mindset as part of the sector’s Partner 2 Win program in a place many would not associate with high-technology manufacturing: a minimum security prison,” the article begins. 

“Prison Industries personnel work on ‘simpler, less-complex’ build-to-print solutions for Midcon, according to Chuck Wheeler, Midcon’s president,” the article continues. “‘It’s a good program,’ Wheeler said of the training. ‘It’s going to do good for Midcon, which ultimately will allow us to do better for BAE Systems.’”

Misty Holder stressed that she is grateful for her husband’s and other Prison Industries employees' opportunity to earn a wage while incarcerated. But if he could keep more of his wage, it would make a huge difference not only to him, but also for their children, she said. It would mean new backpacks. New shoes. Hygiene products.

“I try so hard to do the best I can with what I’m able to have,” she said.