Hyundai's use of prison labor in Montgomery significantly reduces wages for its other employees, according to a recent study by the Columbia Labor Lab.
The study, The Impact of Incarcerated Labor in Hyundai's U.S. Supply Chain, provides a 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 public records, the report also documents the greater exposure these workers have to occupational hazards and poor 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 professor Suresh Naidu, the 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."
A spokesperson for Hyundai told 1819 News the company and its suppliers haven’t participated in the prison work program since September 2024.
“HMMA has been a proud and longstanding member of the Alabama community and economy for 20 years and is deeply invested in the state’s growth and prosperity. Our operations in Alabama employ 4,500 people and support an additional 18,000 jobs statewide, generating more than $2.4 billion in private disposable income each year,” the Hyundai spokesperson said. “Hyundai is aware that some suppliers previously participated in the State of Alabama’s inmate work release program. However, Hyundai was not involved in any supplier’s decision to participate in such program. Consistent with the standards and values to which we hold ourselves as a company, we mandate that our suppliers and business partners strictly adhere to the law, and we have an established track record of taking action when alleged violations occur. None have participated in the program since September 2024. Also, Hyundai’s Supplier Code of Conduct has a section on Forced Labor (pp. 10-12) which includes the following statement: “Suppliers should ensure that they do not produce for Hyundai Motor Company, in whole or in part, goods produced by Forced Labor or produced in whole or in part by persons or entities subject to the Forced Labor Regulation or supplied in violation of Forced Labor Regulation.”
Our HMMA Business Partner Code of Conduct and expectations for current and interested suppliers can be found on our website here.
According to the report, 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. The workers reported 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.
According to the report, Hyundai's auto supplier wages in Montgomery 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, according to the report's authors. 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. According to the report, 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.
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.
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.
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