This pioneering study from Columbia Labor Lab provides a rigorous, large-scale statistical analysis of the economic impact of prison labor in driving wage suppression in Hyundai/Kia’s supply chain. Drawing on an original survey of more than 600 workers, combined with an analysis of government data and extensive public records collected through a two-year collaboration with Jobs to Move America (JMA), it also documents the greater exposure those workers have to occupational hazards and bad employment practices, such as wage theft.
“When companies use incarcerated workers who can’t easily leave dangerous or low-paying jobs, they can lower wages for the entire workforce,” said Prof. Suresh Naidu, Jack Wang and Echo Ren Professor of Economics at Columbia University and co-author of the report. “The world’s biggest auto companies, building the cars of the future in the U.S., can, and should, provide good, safe jobs that benefit everyone.”
Key Findings from the Report:
- Lower Wages in Hyundai’s Supply Chain: Surveyed workers employed in Hyundai’s Alabama supply chain reported earning 10-15% less than other auto-sector workers in the state – even after controlling for education, race, gender, and age.
- Widespread Labor Violations: These workers report higher rates of safety hazards and more frequent experiences of wage theft, forced overtime, harassment, and denial of breaks compared to other auto supply chain employees in Alabama.
- Regional Wage Suppression: In the Montgomery area, where Alabama’s Hyundai suppliers are concentrated, auto supplier wages are 7–9% lower than expected compared to similar jobs elsewhere in Alabama and neighboring states. One contributing factor appears to be the use of incarcerated labor through Alabama’s prison work-release program—particularly within auto parts manufacturing.
- Economic Impact of Prison Labor: A 10% increase in the share of incarcerated workers in a plant is associated with a 10–14% decrease in wages for non-incarcerated (“free”) workers. Evidence suggests this occurs because incarcerated workers, unable to leave over low pay or poor conditions, give employers leverage to suppress wages and standards for all employees.
Captive Labor: A Modern Form of Coercion
Under Alabama’s work release program, incarcerated individuals are contracted out to private companies, including suppliers within Hyundai/Kia’s Southern manufacturing network. Across Alabama and Georgia, Hyundai/Kia has established a dense cluster of suppliers – many of which produce parts exclusively for Hyundai and Kia vehicles. Some of those suppliers rely on low-mobility workers, including incarcerated individuals.
The report details that many incarcerated workers seek placement in Alabama’s work release program to escape the extreme violence and overcrowding of the state’s prison system. These findings echo atrocities recently documented in the acclaimed film The Alabama Solution, which exposes the human toll of Alabama’s prison labor system and the persistent exploitation that links incarceration to corporate profit.
In 2020, the U.S. Department of Justice concluded that conditions within Alabama’s men’s prisons likely violated the Eighth Amendment’s prohibition against cruel and unusual punishment, citing “reasonable cause to believe” that the system was unconstitutional under the Civil Rights of Institutionalized Persons Act (CRIPA). The Department’s 2017 investigative findings reported a homicide rate within Alabama’s prisons that was eight times higher than the national average within prisons nationwide.
Within this context, work release assignments offer a measure of safety—but at a high cost. Within this system, Hyundai/Kia’s suppliers rely on incarcerated workers who are far less likely to quit over low pay due to coercive prison conditions, which gives the company leverage to lower wages and working conditions for all of their employees.