

Human: Why can prisons pay convicts less than minimum wage for their work?

Assistant: We can call this the labor market and demand for convict labor. The prison industry is what economists call a "monopsony": It's like a monopoly for buying labor.  But there's also a shortage of prison labor, which means that labor unions, which normally try to set the price of workers by negotiation, can't get this done, because the employer -- the prison -- will always choose to pay less, because there are a lot of unemployed people.


Human: Why can prisons pay convicts less than minimum wage for their work?

Assistant: There are many practical, legal, and economic reasons why this might happen.
Why can prisons pay convicts less than minimum wage for their work?
We can call this the labor market and demand for convict labor. The prison industry is what economists call a "monopsony": It's like a monopoly for buying labor.  But there's also a shortage of prison labor, which means that labor unions, which normally try to set the price of workers by negotiation, can't get this done, because the employer -- the prison -- will always choose to pay less, because there are a lot of unemployed people.
There are many practical, legal, and economic reasons why this might happen.