Federal Prison Industries, a business that is run by the government, employing prisoners for $1.35/hour (or less), is catching a lot of heat lately. In addition to the pay scale edge, FPI is exempt from taxes and basic regulations.
To make matters worse for business owners, all government agencies are required to purchase FPI products, unless FPI signs a waiver. This hampers many small businesses, as FPI dabbles in a plethora of items from tech support to missile components.
Currently, a bill has passed the House and currently awaits a vote from the Senate can change this. Stefanie Starkey of the US Chamber of Commerce, supports this bill stating "It's causing companies to lay off employees and in some cases shut down". Source