What Should I Know About the Underground Economy in Federal Prison?

Many people go into the prison system with the intention of avoiding all problems and getting out of prison at the soonest possible time. Every day they have the power to make decisions with regard to how they’re going to respond to their environment. They do not have the power to decide how others will respond to the environment. The more they understand about prison, the more they empower themselves to navigate the challenges and complexities successfully.

When judges sentence people to prison, the prisoners become wards of the system. In the BOP, the government assumes control and responsibility for each person’s existence. While a person serves time in the BOP, he’s deprived of the opportunity to earn a living. The system provides basic needs. Along with a bed, or a mat, the system issues sheets and blankets. People get standard clothing. The men have reasonable access to showers and bathroom facilities. The BOP provides three daily meals. If a person needs medical attention, a process exists for him to follow.

Essentially, the system reduces men in prison to a status equivalent to that of highly dependent child, but without the toys and goodnight kisses.

Adults do not react well to this stripping of independence and responsibility.

Rules do not allow for much in the way of personal possessions. If a person accumulates property—like clothing, nicer sneakers, sunglasses, watches, or radios—that the prison does not issue, staff may confiscate the property as contraband. Staff members may also cite the person with a disciplinary infraction.

Those not mentally prepared for the complexities or prison life may feel their identities being stripped away. Over time, people resent the institution’s quest for total control. They do not want to be restricted to wearing only government-issue clothing. They do not want government-issue food. And they do not want to eat only at times dictated by institutional rules. Rather, like all human beings, people want autonomy over their lives. They want the freedom to make choices. Some people try to bend the system. If they are caught, they should expect punishment that may result in harsher living conditions or longer stays in prison.

Some people adjust to the rigidity of rules and regulations by creating their own informal bartering system—or underground economy. They create an exchange of goods and services.

This universal aspect of prison life represents one response to the total control that administrators strive to exercise over the lives of the men in confinement.

Through covert exchanges between themselves, people lift some of the monotony that comes with institutional living.

Every day for years at a time, people in prison listen to the same bells that ring at the same time. Rules dictate where they are supposed to be, what they are supposed to be doing, and how they are supposed to be doing it. Regulations dictate what people are supposed to be wearing at those times when they are supposed to be complying with the machine.

People do not ask Why so many rules exist. The monotony machine does not provide answers. A long-term prisoner knows exactly what he will be doing five years in the future because it’s the same thing he is doing today. If he has been incarcerated for a while, it may be the same thing he was doing five years ago.

Endless repetition might drive a man to madness if there were no opportunities to bring some variation to his life. Since the prison system does not provide opportunities for much in the way of differentiation, the men create it for themselves through the underground economy. Although a person may choose not to participate in the underground economy, it’s wise to understand how it operates.

Cautionary Information about the Underground Economy:

Every prisoner should realize that the disciplinary code prohibits one inmate from giving anything of value to another inmate. If an individual runs out of stamps, a cellmate is not supposed to lend one; if a new prisoner comes in and does not have a toothbrush, the hard rule is that he must wait until an officer provides it or until he can purchase one from the commissary.

In reality, prison does not work this way. People in prison rely on each other. In doing so, they may violate code 328 of the disciplinary code, which prohibits anyone from:

“giving money or anything of value to, or accepting money or anything of value from another inmate, or any other person without staff authorization.”

The letter of code 328 indicates that an individual cannot even give a gift to his daughter without staff authorization. People in prison should be aware of the rule.

Administrators want to make it their business to know everything going on in an institution for security reasons. After all, the prison is filled with people convicted of felony crimes. They recognize that disputes between prisoners can erupt over disagreements. By prohibiting prisoners from exchanging anything of value, administrators limit some opportunities for disagreement. In truth, however, these exchanges between prisoners are as much a part of the life in prison as are the guards themselves. And staff members understand that the underground economy exits.

Currency in the Underground Economy:

Although some people may barter with one another for goods and services of equal value, it’s much more common for prisoners to settle their accounts with a currency-like transaction. U.S. currency is considered contraband in prison. People may use commissary items, such as packs of tuna or candy bars as currency to pay for services. When the value of an exchange exceeds $50, some people settle the debt by having a family member send funds to an address outside of prison. Relatively few people in prison have access to funds outside, however, and they may charge a premium for the service.

A typical federal prison holds about 1,000 men. Administrators require that the people work. We can estimate that, on average, each person in prison earns approximately $30 per month. Some people earn more, many earn less. But on average, it’s likely that the system deposits $30,000 into inmate accounts each pay period.

Besides what the prison pays people to work, many people also receive money from home to supplement their income. Family members send money to pay for phone calls, stamps, and commissary items. Although some people do not receive any money from outside sources, others receive more than $1,000 each month to live in prison. On the low side, we think it would be safe to estimate an average of $100 monthly comes into the institution from outside sources for each person in prison.

If those figures are accurate, we could make some assessments. With a typical population of 1,000 men, approximately $130,000 comes through the prisoners’ accounts each month. In a larger prison, with more than 4,000 people, more than $500,000 per month passes through inmate accounts. These funds feed and sustain a thriving underground economy.

Indigent Prisoners:

Indigent people in prison play an integral role in the underground economy. Like everyone else, they have needs that cannot be met through their paltry prison earnings.

BOP policy prohibits some people from earning more than grade four, or approximately $20 per month. Yet the person is required to purchase certain medical items from the commissary if he needs them. If he wants to watch television, he must purchase a portable radio, headphones, and batteries regularly to listen to the sound. Stamps are sold at face value. He may want to purchase toiletries, and even some food from the commissary. If he wants to pay for a phone call, he may need money for that, too. Since prison rules make it difficult for the indigent to survive, many who lack access to outside funds establish themselves in prison hustles.

By establishing a hustle, an individual finds a bit of independence from the prison machine. He may perform domestic services like cleaning inmate cells, performing laundry services, or ironing clothes. There is no shortage of opportunities for unskilled individuals to support themselves by providing services for others. Well-heeled prisoners will pay for others to perform services on their behalf.

Most hustlers work so they can earn enough money to ease their own time in confinement. Some, however, are real entrepreneurs and work with hopes of creating a pool of capital that will help them upon their release.

Juan’s Story:

Juan is from a poor village in Central Mexico. He was sentenced to a five-year term for his second illegal entry into the United States. He does not speak English and does not have a GED, so his capability for prison earnings is limited. That said, through the services he provides Juan has been able to save an average of more than $400 each month over the past 38 months of his confinement. He has 15 months remaining before his release. If all continues to go well, he expects to have $20,000 in U.S. currency upon his release. With that much capital, Juan says he will be able to set his life up in Mexico far better than he could have had he not come to prison.

Juan begins each morning at dawn. He performs laundry services, three times each week, for two packs of tuna per load. From this service Juan receives between 40 and 50 packs of tuna each week. Besides the laundry, though, Juan also cleans rooms, for which he charges five packs of tuna per week. Juan earns a total of 30 packs of tuna each week for the six rooms he cleans. During the evenings, Juan irons clothes, for one pack of tuna per item. For ironing services, he earns an additional 30 packs of tuna each week. With all of his domestic services, Juan accumulates approximately 100 packs of tuna each week.

Juan does not eat his tuna, nor does he allow the packs of tuna to sit idly. Rather, he “invests” them. The commissary sells packs of tuna for $1.05 each. But Juan exchange his packs of tuna for $0.85 worth of other commissary items. He accumulates such items as chips, cookies, pastries, and other food products. Juan does not eat these snacks. Rather, he “runs a store” in the unit. If an individual has a craving for something sweet or runs out of food that he craves, the prisoner can always find what he’s looking for from Juan—no matter what time of day or night—as long as the purchaser is willing to return three items for every two items he takes.

Through all of his services, Juan regularly accumulates more than $500 worth of commissary items. He converts that prison currency into cash by selling it for $0.80 on the dollar. In other words, if an individual is willing to send $100 to Juan’s mother in Mexico, he will provide that person with $120 worth of commissary. These services keep Juan on track to reach his $20,000 goal by the time he goes home. The money will allow him to purchase a dump truck in his hometown. With that truck, Juan expects that he will have the means to build a business through which he can support himself.

With nearly 400 people assigned to each housing unit in this prison, there is no shortage of people who are willing to pay indigent prisoners to make their lives easier. Paying someone through the underground economy is not only about making one’s life easier, it’s also about avoiding the frustrations and problems that come with prison living.

Although it may be an infraction to give anything of value to another inmate, many people believe that it’s wiser to accept this risk and limit one’s exposure to frustrations—and more serious disciplinary problems.

For example, there is no shortage of lines in prison. In a large institution, shopping in the commissary requires one to wait around in various lines for at least an hour. There are huge crowds gathered around the commissary. People without resources hang around like leeches, pleading for acquaintances to buy them ice cream or other items.

Shopping in the commissary also puts a person in closer proximity with guards or others that may talk disrespectfully. Those who can afford the fee may avoid commissary frustrations by paying someone else to shop for them. It’s not uncommon for family members to send $125 into the account of someone who has no funds. The understanding may be that the recipient of the funds will keep $25 for his own use, and purchase $100 worth of commissary for the person who arranged to have the funds sent.

Corky’s Story:

“I haven’t shopped in the commissary since my first month in federal prison. There are too many problems. For one thing, they limit my spending to less than $400 per month. I can’t survive on that! The water they sell costs .80 a piece and I go through two of those bottles a day. That’s $50 a month right there. I never eat in the chow hall, so it costs me at least $500 for food. Then there are toiletries and everything else I’ve got to buy. I also like to keep $100 worth of stamps and packs of tuna around for currency, in case something comes up that I need. I have to pay for someone to cook, to do my laundry, to clean my cell. I even pay a guy to do my job. I’d say it costs me between $800 and $900 each month to live in here, and I’m not carrying anybody.

“It may cost a bit more, but I avoid frustrations that come with all the crowds and the lines. At the commissary, for example, there are so many people hanging around. People I hardly know are hollering out ‘buy me this, buy me that.’ Some of these guys put a guy in a position where he has to respond. I try to avoid all that.

“Each month, my wife sends a few hundred dollars to a few guys who don’t have any money. She has their names and registration numbers. She sends each guy $300. He buys me about $250 worth of goods from the store and he keeps the rest. Hell, they’re only earning $20 a month on their jobs, and they don’t have anyone outside to help them out. I’m helping them and they’re helping me. It works out well for all of us.

“All I’m trying to do is finish up this time and go home. If I’ve got to spend a little more to avoid the problems of prison life, so be it. I’m getting a bargain. Every day that I get to avoid the riff-raff of prison is a good day.”

Underground Economy – Buying Influence:

Administrators like to say that all prisoners are treated equally. Policies require fairness across the board. The reality is that staff members develop better relationships with some prisoners than with others. Through those relationships, individual prisoners in certain positions will build an informal influence, and frequently they will turn that influence into a marketable commodity.

Individuals with influence can be of assistance to others when they are settling into an institution. Some will be helpful in arranging good jobs that meet one’s needs, others will assist a prisoner as he struggles to find an agreeable bed assignment. Although there are some prisoners who help as a courtesy, others use their influence as a source of capital. They expect to be compensated whenever they tap into it.

John’s Story:
“I was lucky when I came in. I knew Leon from the county jail. By the time I got to prison, Leon had already been settled in for two months. He broke everything down to me on what I could expect as soon as I got out of A&O. I knew that I’d have to get a job, but I didn’t know how different the jobs were. If I were assigned to a job in maintenance, I would have to report for work at 6:30 in the morning, and I’d have to stay there all day. Besides that, I wouldn’t be able to use the phone. Leon hooked me up with Trevor, who had the job of head orderly in the unit. There was a long waiting list of guys who wanted to work in the unit. I had my mom send Trevor $50. He arranged for me to move to the top of the list. Instead of being stuck in facilities all day, I just complete what I’m supposed to do, and I’m free to use the rest of my day as I see fit. It works out well for me.”

Final word about the underground economy in federal prison:

Individual hustles and the underground economy are a part of every prison. We’ve described some of the ways that prisoners participate in the underground economy to achieve their goals, or to ease some of the pains of confinement.

Besides the services we’ve described, there are many goods procured through the underground economy. Some contraband exposes people to far more serious disciplinary infractions than what one could receive for giving something of value to another. For example, many prisons have a problem with drugs, with prison-made alcohol, and with theft. People that play a role in such activities may subject themselves to prosecution, which is much more grave than disciplinary action taken by the prison system.

People ought to have a plan while they are serving their sentences. They ought to think of how they can use their time in confinement to grow in some way, on some level. Some may choose to use aspects of the underground economy to achieve their goals. It is an individual choice, as Juan certainly uses it differently from Corky. It is nevertheless important for individuals who are coming to prison to know that the underground economy exists. People should prepare themselves to adjust.

If sending money into the account of another prisoner, be aware of the dangers. Mailroom attendants will vigilantly watch over both the incoming and outgoing mail. It’s wise not to discuss transactions over the phone or write about transactions through the mail.

Corky told us of his “technique” for sending money to others. He told the person to write a postcard to a friend of Corky’s. The friend’s address did not appear on Corky’s visiting list. When Corky’s friend received the letter, he sent $300 and Corky’s wife reimbursed the friend later. That way, Corky explained, he didn’t send anything to anyone.

Corky didn’t realize that although he believed he didn’t violate any prison rules because he did not give anything of value to anyone else if a prison staff member learned of the transaction, Corky could face a disciplinary infraction.

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