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Prison Work Is Taxing and Should Be Taxed

Posted on Sep. 5, 2022

Stephanie Hunter McMahon is a professor of law at the University of Cincinnati College of Law. The author would like to thank the faculty at Seton Hall Law School and participants at the University of Kentucky College of Law’s Racial Wealth Gap symposium and South Carolina School of Law’s Taxation, Finance, and Racial (in)Justice symposium. Finally, she would like to thank the American Civil Liberties Union for including these issues in its recent report, “Captive Labor: Exploitation of Incarcerated Workers.”

In this article, McMahon advocates for Congress to enact when possible, and otherwise to push for, an expansion of the social safety net for prison labor on terms consistent with that for non-incarcerated workers, taking into account the prison context.

Copyright 2022 Stephanie Hunter McMahon.
All rights reserved.

Most prisoners work whether they want to or not, with the federal and state governments often requiring labor unless an inmate is medically prohibited from doing so.1 Their labor can be for the prison, for government industries, or for private employers. Even when these jobs are paid, it is rarely at a market wage. Moreover, prisoners are generally denied employment-based benefits earned by those not incarcerated. Consequently, inmates, their families, and their communities are deprived of benefits otherwise widely distributed.

Building on two prior articles, this article advocates for Congress to enact when possible, and otherwise to push for, an expansion of the social safety net for prison labor on terms consistent with that for non-incarcerated workers, taking into account the prison context.2 This narrow change would not upend the current system, even though the need to eliminate mass incarceration has been persuasively advocated by many. The change would nevertheless be a first step to recognizing the value and reality of inmate labor and should be undertaken regardless of other much-needed prison reform. To achieve this goal, statutory changes would include inmates’ work in benefit systems by making their labor subject to tax and entitled to earn toward benefits.

This article proceeds in three parts. Part I discusses the form of inmate exclusion for the earned income tax credit, child tax credit (CTC), Social Security, Medicare, Social Security disability insurance (SSDI), and unemployment compensation. Part II examines some problems with the exclusions, and Part III provides statutory changes necessary to eliminate them.

Inmates Are Excluded From Tax (and Benefits)

Despite a prevailing requirement that inmates work, inmates are not employees or workers in the commonly understood sense.3 Judicial interpretation of the Fair Labor Standards Act deprives inmates of its protection for workers.4 Also — and the subject of this article — Congress has carved inmates out of the parts of the social safety net tied to employment. Consequently, inmates and their employers generally do not owe the payroll taxes that fund much of the system, and moreover, inmates and former inmates are largely denied benefits regarding their prison employment.


The largest redistributive social welfare programs in the United States are the EITC and the CTC, with 26 states and Washington, D.C., also offering a state-based EITC.5 As many readers are aware, the EITC and CTC are refundable income tax credits, and the amount refundable depends on a taxpayer’s amount of earned income and number of qualifying children. The EITC increases as people earn income until the credit plateaus and then declines to $0. In 2022 the largest credit for a single person with one qualifying child is $3,733 when earning $20,130.6 The CTC is a per-child credit and, although its refundability was lifted for 2021, is only partially refundable. In 2022 the credit is $2,000 per child with the refund capped at $1,400 per child.7

For the non-incarcerated, the EITC and, except in 2021, the refundability of the CTC are tied to earnings, thereby encouraging paid employment. Coupled with a phaseout for higher incomes, Congress targets these incentives to lower-income taxpayers. Thus, the EITC’s maximum benefit is available to someone who earns slightly more than full-time work at the national minimum wage. In 2016 the EITC cost $67 billion in revenue, and in 2013 the CTC cost $55.1 billion, of which $27.9 billion was refunded.8 While these anti-poverty programs significantly reduce the poverty rate, their benefits are concentrated for those who are close to the poverty line and for those with children.9

Inmates do not qualify for either program. Congress carved out from the earnings that earn toward the EITC and CTC any “amount received for services provided by an individual while the individual is an inmate at a penal institution.”10 All wages earned while incarcerated are excluded, regardless of the source of those wages; and inmates have lost litigation seeking benefits from working for federal and state prison-operated businesses and private employers while incarcerated.11 Even when an inmate was transferred to a hospital and worked while there, the labor suffered the prison exclusion.12

To the extent the EITC is to motivate work, prison labor arguably would not fulfill that legislative objective because inmate labor is largely mandated. This has been used to justify the statutory exclusion.13 The House report concluded that the exclusion was appropriate because the EITC was “to alleviate poverty and provide work incentives to low-income individuals. Because of the compulsory nature of much of the work performed by prison inmates, it does not further the objectives of the EITC to include in earned income for EITC calculations any amounts paid for inmates’ services.”14

This interpretation is not without problems because it ignores that these credits also intend to alleviate poverty. Studies show that prisoners often come from impoverished backgrounds and are likely to be released to poverty.15 This latter fact also applies to inmates’ dependents. These funds could be garnished to fund inmates’ support obligations as inmates’ earnings are already so garnished. Therefore, this limitation within the social safety net increases the likelihood that the children and other dependents of inmates suffer from the loss of the inmates’ support.

Social Security, Medicare, and SSDI

In the United States, the Federal Insurance Contributions Act raises almost 35 percent of the federal government’s revenue.16 FICA finances much of the American social safety net in the form of Social Security, Medicare, and SSDI.17 In most employment situations, FICA imposes one-half of a 15.3 percent tax on employers and the other half on employees, with the 12.4 percent for Social Security capped at a ceiling of wages indexed for inflation.18 In 2022 the maximum Social Security tax an employee can owe is $9,114. However, FICA does not apply to all workers.19 Employment that is taxed for Social Security and Medicare is “covered” employment, and Congress carves out non-covered employment in the statute.20 For example, some state, county, and municipal employees may be entitled to state-funded retirement benefits and not be required to pay FICA, in which case their work is non-covered.21

Not only are inmates unable to receive Social Security or disability benefits while incarcerated, but in many circumstances, their labor does not constitute employment for purposes of FICA or earning toward future benefits.22 Therefore, inmates may work their entire prison sentence, saving themselves and their employers taxes, and, on release, discover that they no longer have sufficient years left in their working lives to earn the benefits of Social Security, Medicare, and SSDI for themselves or their dependents.

Most inmate labor is non-covered employment because the statute excludes services performed “in a hospital, home, or other institution by a patient or inmate thereof.”23 The only exception is for inmates who work for private employers outside prison, in which case their labor is generally, but not always, subject to the tax and may earn toward benefits.24

Thus, a statutory bar prevents most inmates’ labor from earning toward future benefits; however, even without the bar, most inmate wages would fail to qualify.25 Workers born after 1928 must accumulate at least 40 quarters of work in covered employment, and a quarter generally means the three-month calendar quarter that, in 2022, generates at least $1,510 of wages (the threshold amount is adjusted each year for inflation).26 Benefits are calculated based on an index of the beneficiary’s earnings subject to Social Security taxes over his or her highest-earning 35-year period.27 Medicare Part A benefits are available for workers 65 or older who have been permanent legal residents for five continuous years and have paid (or have a spouse or qualifying ex-spouse who has paid) Medicare taxes for at least 40 quarters of covered work.28 If contributions were for less than 40 quarters, workers must pay monthly premiums for Part A coverage.29 Finally, SSDI is payable to disabled workers who have completed at least twenty quarters of covered work during the previous 40 quarters (or five of the past 10 years).30 That inmate labor is almost always low-wage and non-covered work and means those working while incarcerated do not earn toward these benefits.

Unemployment Compensation

The federal government funds its share of unemployment compensation through the Federal Unemployment Tax Act, and states have equivalent taxes. The federal tax applies to all an employer’s workers once the employer pays more than $1,500 to employees in a calendar quarter or if the employer has one or more employee for some part of the day in 20 or more different weeks of the year.31 FUTA has a 6 percent rate on the first $7,000 of wages (an amount not indexed for inflation), or a maximum of $420 per employee, although a 5.4 percent credit may reduce the tax to 0.6 percent of the $7,000 maximum wage base, or $42, per employee if the employer pays state unemployment taxes and the state has not borrowed from the federal government to cover its unemployment obligations.32 State-level unemployment taxes are variable in that the applicable tax rate often depends upon the circumstances of particular employers.33

Congress carved out inmate labor from FUTA by defining employment to exclude “service performed by a person committed to a penal institution.”34 Under this broad exclusion, no form of inmate labor qualifies. States also carve out inmates from their state equivalents to FUTA. States’ methods can be explicit; for example, Alabama and Maine expressly carve out work for government-owned industries from employment, with Alabama stating that an inmate is “not to be considered an employee of the state.”35 States can also rely on the FUTA exclusion.

Inmates are also carved out of receipt of unemployment compensation, but because the systems are administered by the states, states can and do have different methods of exclusion. States can deny inmates unemployment benefits expressly or through requirements that make qualification impossible.36 For example, states require work searches and restrict what qualifies as a job search necessary for eligibility. Sometimes applicants must meet with staff in person; other times applicants must be able to travel some distance for a job opportunity.37 New York, for instance, requires that claimants be willing and able to travel one and a half hours by private transport or one hour by public transport for a suitable job, a feat impossible for inmates.38 States also impose qualification limitations that operate against most inmates, including thresholds of base wages that inmate jobs rarely surpass.39 Thus, systems’ limits prevent inmates from receiving or earning toward unemployment compensation.

The Exclusion Is Wrong Because Labor Is Labor

In 2020 more than 2.3 million inmates resided in American jails and prisons.40 The cost of this system partially drives prison labor, but so does a desire to increase jobs training, reduce recidivism, and decrease violence in prison.41 There are three types of prison labor — that which produces goods or services for consumption within the prison, that which is operated by the prison for consumption outside the prison, and that which is operated by private businesses for consumption outside the prison. In each of these, the work is generally low pay and comes with few benefits. Despite prison strikes and litigation over 13th Amendment claims, inmates continue to be made to work.42

According to one estimate, 53 percent of over 1 million eligible inmates have a work assignment producing goods or services for consumption within the prison, although all federal inmates are required to have one unless medically disabled.43 These jobs all have low or no pay. Incarcerated people earn on average a low of 14 cents and a high of 63 cents per hour.44 Of course, not all work assignments would qualify as paying jobs if they were conducted outside prison.45

Inmates may also work to produce goods or services for external consumption. The Bureau of Federal Prisons runs the Federal Prison Industries (FPI) program, and many states have equivalents that operate state-owned businesses producing goods and services.46 The 2020 and 2021 projection is for 19,186 federal inmates to be paid on paygrades ranging from 23 cents to $1.15 per hour, with the top grade applying to no more than 5 percent of workers.47 Nevertheless, there is a 25,000-person voluntary waiting list for FPI.

Also, a small percentage of inmates work for private businesses. At the federal level, Congress enacted the Prison Industry Enhancement Certification Program permitting private employers to hire inmate labor, and Congress requires, among other things, that these businesses pay inmates the prevailing wage of non-inmate labor.48 In 2020 the program received $9,239,362 in gross wages for 5,086 total employees, averaging $1,816.63 per employee.49 In some states, wages were especially low, seeming to belie the prevailing wage requirement: For example, Georgia averaged $217, Mississippi $246, and Montana $417 per employee.50 Additional inmate employment can be organized through work release. Federal prisons and 43 states permit work release as long as the rate of pay is the community’s prevailing wage and the prisoner agrees to pay the Bureau of Prisons for costs; however, little information on the use of work release programs is available.51

That wage levels for each of the three types of jobs are low reduces the tax implications if the exclusions were repealed. Let us consider three examples based on the three types of jobs, assuming the inmate works a 40-hour week for 52 weeks, which would be a total of 2,080 hours. I recognize this is an unrealistic number of hours, but it illustrates a maximum amount of wages and tax.


Post-FICA Employee Wages

Employer’s FICA and FUTA Obligationa

Total Employer’s Tax Cost

$0.14 per hour or $295.20 per year

$272.62 per year
($22.50 FICA)

$40.21 per year
($22.50 FICA/$17.71 FUTA)

$335.41 per year

$1.15 per hour or $2,392 per year

$2,209 per year
($182.99 FICA)

$326.51 per year
($182.99 FICA/$143.52 FUTA)

$2,718.51 per year

$7.25 per hour or $15,080 per year

$13,926.38 per year
($1,153.62 FICA)

$1,573.62 per year
($1,153.62 FICA/$420 FUTA)

$16,653.62 per year

aFor simplicity, this assumes a 6 percent FUTA rate on a maximum $7,000 of wages.

It should be noted that inmates do not receive all their post-FICA wages. Instead, inmates have their wages garnished. Garnishment occurs for prison room and board, victim compensation, and child support, among other expenses.52 Therefore, the amount of post-FICA taxes is not the amount over which inmates have discretion.

Extend Coverage Through Statutory Changes

The changes needed to expand coverage of the social safety net to include inmates and former inmates require revisions to the enabling statutes. That the exclusions have developed over decades at both the federal and state levels means that for maximum effect, coordinated changes are required at both levels of government. However, Congress can take the lead through its control over federal programs and spending powers to reduce or eliminate this inequitable treatment of labor.

Initial Statutory Changes

As a threshold matter, Congress must remove the bars that prevent inmates from earning entitlement to and actually receiving benefits. Therefore, Congress should repeal the sections of the IRC and entitlement statutes that exclude prison labor from these tax and benefit regimes. This would permit inmates to receive the value of their labor measured in terms similar to the non-incarcerated, even as it would require them to pay a portion of their wages to the government.

Changes to expand benefits are relatively straightforward. For federally provided benefits, such as the EITC, the CTC, Social Security, Medicare, and SSDI, Congress determines eligibility and could simply lift the restrictions tied to inmate labor. Thus, the statutory provisions that carve out inmate labor must be repealed. As it engages in these revisions, Congress should think deeply about its prohibition on paying SSDI and Social Security to inmates.53 Social benefits that have been earned that are taken away because of incarceration are an additional layer of punishment not agreed to by the courts. To the extent that much of these earnings would be garnished for prison-related expenses, it is reasonable for the government to avoid circular payments that would simply recoup the benefits if they were paid. However, there are other interested parties, such as victims and the children of inmates, who suffer from the denial of earned benefits.

Congress has less direct power over unemployment benefits because these systems are run by the states, and therefore the extension of benefits requires state action. However, although FUTA funding for benefits is almost automatic, Congress already imposes requirements on its funding of states’ administrative costs of their unemployment compensation regimes.54 For example, to be eligible for this funding, Congress permits states to dispense money only to claimants who are “able to work, available to work, and actively seeking work.”55 Congress also provides that this funding may be lost if a state denies compensation to a worker who refuses to accept work because the job requires the worker to join or to resign from a union.56 Thus, the federal government permits states great but not unlimited latitude in designing their unemployment compensation regimes, and one string for funding could be this expansion of benefits.

For changes to the tax system that are used to fund many of these benefits, Congress would be enacting a tax increase that would require employers and employees to report and pay taxes on inmates’ wages. However, first, for the EITC and CTC, no change is necessary because these regimes operate through the income tax, a tax that inmates are currently required to pay on their earnings.57 Second, for FICA and FUTA, the reality is that the amounts are very low, something many advocates argue should be changed. At this time, for employers, as shown in the above chart, repealing the exclusion would increase the cost of hiring inmates by the amount of taxes that are now saved.

The issue for employee-side taxes is more complicated than simply repealing the exclusion from the tax. For many inmates, inequity already exists because their forced labor is paid less than minimum wage. For them, it is arguably unreasonable to add a tax from their wages when their wages are insufficient to earn toward benefits. To remedy this inequity, employers could be given a choice. Either employers pay inmates minimum wage, in which case inmates would have employee-side taxes withheld as do other employees, or employers could assume the employee-side tax in addition to their own employer-side tax. Thus, one choice would increase wages, and the other would permit the current wage structure but require prisons or private businesses employing inmates to pay both halves of FICA. This choice would require that these businesses better internalize some of the cost of prison labor.58

There are risks to these changes. The benefit expansion, particularly when not tied to a tax increase, may generate a negative public reaction to the extent this is framed as pro-inmate or as reducing the punishment of incarceration. Although it is more appropriately recognized as pro-worker, the public may find the distinction difficult to see. This would carry a political cost for its proponents. However, these changes are only to make benefits consistent for all workers and should be framed as such. Moreover, the expansion would reduce the comparative advantage inmate labor has over non-incarcerated workers.

Regarding the tax increases, they might reduce inmate hiring, which is problematic. Some jobs might not be worth the cost of the tax, especially if the employment is of the “make-work” variety, and therefore could be eliminated. Other jobs might be transferred from inmate to non-inmate workers. However, to the extent inmate wage levels themselves are unaffected, the cost of inmate labor would generally remain significantly below that of other workers. That additional cost could be offset through an extension of the work opportunity tax credit available for hiring the formerly incarcerated within a year of their release.59

Thus, the initial changes required to extend benefits to inmates’ labor are both reasonable and fairly straightforward. The political cost should not be ignored, although that cost is the result of trying to rectify prior inequities that have been cloaked by the desire to punish the convicted. Any change to help the incarcerated carries similar risks, but that does not make the changes any less important.

Harder Issues if Wages Continue to Be Below Minimum Wage

The statutory changes listed in the prior subsection are insufficient to ensure that most inmates and their families can participate in the social safety net unless employers opt to increase wages to minimum wage. The low wages paid to most inmates, particularly those in work assignments and prison industries, are below thresholds to qualify for benefits even without existing statutory exclusions. For example, inmates working for FPI receiving wages ranging from 23 cents to $1.15 per hour60 are unlikely to earn income sufficient to qualify for the EITC or CTC; to earn quarters of credit under Social Security, Medicare, and SSDI; or to surpass unemployment compensation thresholds.

The easiest means to permit the earning or receipt of benefits by inmates would be to increase wages. Mandating a minimum wage for prison labor was debated in New York’s Senate.61 But this is a hard political sell, as shown in New York, and could lead to unintended consequences, such as reducing the number of jobs available for inmates if the jobs are instead filled by non-inmate labor. Moving inmate labor onto minimum wage would, however, best recognize the value it creates.

An alternative to mandating minimum wages is to create an alternative measure for qualification for benefit programs when the government permits wages below minimum wage. For example, Congress could permit qualification based on the number of hours worked. This is similar to the option used in 1972 when Congress attempted to mitigate the injustice to Japanese Americans who were interned during World War II.62 Although it is a different context, Congress awarded formerly interned Japanese Americans noncontributory Social Security credits if they were age 18 or older at the time of their internment.63 This resulted in their receiving credit toward Social Security for their period of internment, and they were not required to contribute financially for those credits.64

Another possibility would be to require employers to pay FICA (based on their election described in the prior section of this article) on deemed wages set at the minimum wage and use that measure to determine qualification. Under this alternative, inmates would not receive minimum wage but would be treated as doing so for purposes of calculating the tax obligation, quarters of credit for qualification, and future Social Security benefits. Similar treatment is available to members of religious orders who have taken a vow of poverty. These members are ordinarily exempt from FICA and not covered by Social Security; however, orders can make irrevocable elections to cover their members and employees.65 In cases of election, the order pays the employer and employee portions of FICA taxes.66 In the religious context, the wage amount is based on the fair market value of room and board, clothing, and other perquisites members receive.67 Adopting instead a minimum wage for inmates prevents inconsistencies in the treatment of employed and unemployed inmates who are provided similar goods.

Engaging in discussions regarding the calculation of wages for benefits accomplishes many goals. Not only does it make it more likely that the elimination of exclusions has value, but it encourages policymakers to debate the consequences of inmate labor. These discussions should take place in a world that values labor and the market, even among the most vocal pro-incarceration advocates. That the workers are in the weakest position makes this more important.


Extending benefits to incarcerated workers may be politically tricky, but it is the right thing to do. It remains the right thing even as it raises government revenue. Inmates who work contribute to society in much the same way as non-incarcerated workers. Recognition of that contribution ensures the social safety net is fair to all workers and their dependents. These changes also create a floor for incarcerated workers as for other American workers, and they often need it. Those formerly incarcerated have fewer future employment opportunities, with their pre-pandemic unemployment estimated to be over 27 percent, significantly higher than for the never incarcerated.68 In the first few years after release, nearly 50 percent reported no earnings, and among those that did, half made less than $10,090 per year. 69 Despite their crimes, these workers are in great need of the protection that the social safety net is intended to provide.

Throughout this article, you may have noticed I did not raise the issue of race. For those who are interested, I have done so in other articles.70 The need for these changes is not solely because, as of 2020, the American criminal justice system incarcerates almost 2.3 million people, and despite Black Americans’ making up 13 percent of U.S. residents, they make up 40 percent of those incarcerated.71 That the system is racially disparate only increases the need to make it fairer. The changes advocated in this article would only minimally reduce the racial injustice of mass incarceration and should be made even if the criminal justice system were made racially just.


1 U.S. Department of Justice, “Inmate Work and Performance Pay” (Oct. 1, 2008).

2 Stephanie Hunter McMahon, “Inmates May Work, but Don’t Tell Social Security,” 72 S.C. L. Rev. 757 (2021); McMahon, “Freed From Prison and Unemployed,” Ky. L.J. (2022).

3 Whitney Benns, “American Slavery, Reinvented,” The Atlantic (Sep. 21, 2015); Daniel Mortiz-Rabson, “‘Prison Slavery’: Inmates Are Paid Cents While Manufacturing Products Sold to Government,” Newsweek, Aug. 28, 2018.

4 Renee Elaine Henson, “Picking Cotton for Pennies: An Exploration Into the Law’s Modern Endorsement of a Free-Prison Workforce,” 2 Bus. Entrepreneurship & Tax L. Rev. 193 (2018).

5 Erica Williams, “States Can Adopt or Expand Earned Income Tax Credits to Build a Stronger Future Economy,” Center on Budget and Policy Priorities (2017). However, Congress did not carve out inmates from COVID-19 stimulus checks. Scholl v. Mnuchin, No. 420-cv-05309-PJH (N.D. Cal).

6 IRC section 32; Rev. Proc. 2021-45, 2021-48 IRB 764.

8 IRS, Statistics for Tax Returns With EITC; Government Accountability Office, GAO-16-475, Refundable Tax Credits 8 (2016).

9 Temporary Assistance for Needy Families (TANF) and the Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamp Program) are more targeted to those at the very lowest incomes.

11 Rogers v. Commissioner, T.C. Memo. 2004-245; Wilson v. Commissioner, T.C. Memo. 2001-139; Taylor v. Commissioner, T.C. Memo. 1998-401.

12 Skaggs v. Commissioner, 148 T.C. No. 15 (2017).

13 The exclusion was added in the Uruguay Round Agreements Act, P.L. 103-465, section 723, 108 Stat. 4003 (1994).

14 H.R. Rep. No. 103-826, at 182 (1994).

15 Brookings Institute, “Work and Opportunity Before and After Incarceration” (2018); Lucius Couloute and Daniel Kopf, “Out of Prison & Out of Work: Unemployment Among Formerly Incarcerated People” (July 2018). Moreover, receipt of the credit might affect the type of job an inmate seeks by increasing the returns for higher-pay work. Therefore, even if not a threshold matter of employment, the credits may increase motivation for securing higher-pay work as the tax benefit increases its economic value.

16 Federal Insurance Contributions Act, IRC sections 3101-3128; Federal Unemployment Tax Act, sections 3301-3311; IRC section 1401 (a)-(b), section 3101(a)-(b), and section 3111(a)-(b); and Office of Management and Budget, Historical Tables 32 tbl.2.1 (2021).

17 Although Social Security is expected to be fully funded by targeted tax revenues, Medicare has four parts and FICA only partially funds Part A. Juliette Cubanski et al., “The Facts on Medicare Spending and Financing,” 6 (2019).

18 Berry-Johnson; compare section 3101(a)-(b) (providing for individual income tax) with section 3111 (a)-(b) (providing for employer payroll tax).

19 See section 3121 (clarifying taxable wages and employment exceptions).

20 See sections 3101(a)-(b)(1), 3121(b).

21 Social Security Protection Act of 2004, P.L. 108-203, section 419, 118 Stat. 493.

22 42 U.S.C. section 306(a); see also 20 C.F.R. section 404.468(a) (2021).

23 IRC section 3121(b)(6)(A). IRC section 3121(b)(7)(F)(ii). Therefore, shifting from incarceration to supervision of convicted persons may not change the tax result. See id. Congress also exempts such work from the additional 0.9 percent Medicare tax. Section 3121(u)(3), (u)(2)(B)(ii)(II).

25 42 U.S.C. sections 410(a)(6)(A), 418(c)(6)(B).

26 Social Security Administration, Retirement Benefits.

27 Sections 401-434. For the federal government’s description of the formula process, see SSA, Primary Insurance Amount.

28 42 U.S.C. section 1395c; 20 C.F.R. sections 406.5(b), 406.11(b), 406.20(b) (2021); see also 42 U.S.C. section 413(a) (defining terms “quarter” and “quarter of coverage”); id. Section 414(a) (requiring 40 quarters of coverage for an individual to be considered “fully insured”).

29 42 U.S.C. sections 1395i-2(a)(4), 1395i-2a(a)(2)(c)(3).

30 Section 423(c); 20 C.F.R. section 404.130(b) (2021).

31 Only three states (Alaska, New Jersey, and Pennsylvania) tax employees to fund unemployment compensation. Department of Labor, Unemployment Compensation, Federal-State Partnership, 8 (2019). IRC section 3306(a)(1), but see exceptions for agricultural labor and domestic servants (section 3306(a)(2), (c)(3)).

32 IRC section 3301 et al. See Treas. reg. section 31.3302(a)-1. Loans are permitted per 42 U.S.C. sections 1321-1324 but generally charge interest.

34 26 U.S.C. section 3306(c)(21). See also Office of Chief Counsel, IRS LTR 200626018 (Jan. 30, 2004).

35 Alabama Department of Corrections, Monthly Statistical Report for April 2021; DOC Policy 25.1, Prisoner Work Opportunities (June 6, 2016).

36 Cal. Penal Code section 2717.9; Cal. Unemployment Insurance Code, Div. 1, Part 1, ch. 3, section 633.1; Ala. Code section 14-7-22.1.

37 For a discussion, see McMahon, “Freed From Prison and Unemployed,” supra note 2.

38 New York State Department of Labor, Work Search Frequently Asked Questions; N.Y.S., Services, Unemployment.

39 McMahon, “Freed From Prison and Unemployed,” supra note 2.

40 Wendy Sawyer and Peter Wagner, “Mass Incarceration: The Whole Pie 2020,” Prison Policy Initiative (Mar. 24, 2020).

41 U.S. Department of Justice, “Inmate Work and Performance Pay” (Oct. 1, 2008).

42 Mitch Smith, “Prison Strike Organizers Aim to Improve Conditions and Pay,” The New York Times, Aug. 26, 2018; Shakouri v. Davis, 923 F.3d 407 (5th Cir. 2019).

43 Id. at 4.

44 Prison Policy Initiative, “How Much Do Incarcerated People Earn in Each State?”; Mortiz-Rabson, supra note 3.

45 Thanks to Tom Petersik for raising this issue.

46 18 U.S.C. section 1761. 18 U.S.C. sections 4121 to 4129.

47 Federal Bureau of Prisons, Program Details; FPI, Fiscal Year 2021; FPI, Annual Management Report 9 (2019); Federal Bureau of Prisons, U.S. Department of Justice, Work Programs for Inmates — FPI 1 (2017).

48 18 U.S.C. section 1761(c); U.S. Department of Justice, Bureau of Justice Assistance, Program Brief (2004).

49 See National Correctional Industries Association, Prison Industry Enhancement Certification Program Certification & Cost Accounting Center Listing: Statistics for the Quarter Ending June 30, 2020, at 1 (2020).

50 Id.

51 18 U.S.C. section 3622.

52 McMahon, “Inmates May Work, but Don’t Tell Social Security,” supra note 2.

53 42 U.S.C. section 402(x).

54 42 U.S.C. sections 501-506.

55 42 U.S.C. section 503(a)(10).

56 See 20 C.F.R. section 601.1-.5 for rules on certification and the findings of state programs.

58 The author does not endorse the current pay structure of inmates; however, as discussed below, it is beyond the scope of this article to advocate for any particular pay system.

60 Supra note 48.

61 S.B. S287 (2021-2022); S.B. S3138 (2019-2020); A.B. A11317 (2017-2018). See U.S. GAO, Prison Labor: Perspectives on Paying the Federal Minimum Wage 2, 7 (1993).

62 Social Security Amendments of 1972, P.L. No. 92-603 section 231, 86 Stat. 1329.

63 42 U.S.C. section 431(b)(1).

64 See section 431(b)(1), (3).

65 Section 410(a)(8)(A)-(B); see Program Operations Manual System (POMS), SSA (Aug. 22, 2005); 20 C.F.R. section 404.1046(a) (2021); IRC section 3121(r)(1); Samson v. United States, 743 F.2d 884, 887 (Fed. Cir. 1984).

66 See POMS, id.

68 Couloute and Kopf, supra note 15.

69 Brookings Institute, “Work and Opportunity Before and After Incarceration” (2018). Theodore S. Corwin III and Daniel K.N. Johnson, “Plus a Life Sentence? Incarceration’s Effects on Expected Lifetime Wage Growth” (2019).

70 McMahon, “Inmates May Work, but Don’t Tell Social Security,” and “Freed From Prison and Unemployed,” supra note 2.

71 Sawyer and Wagner, supra note 40.


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