> * These are inmates, serving a sentence as punishment for a crime they were convicted of.

If the gaol sentence is their punishment, why are they being penalised further by reduced wages?

> * If inmate labor cost what non-inmate labor costs, why would anyone hire inmates?

Government-backed incentives. It's in everyone's best interests for people convicted of crimes to have a path back on to the straight-and-narrow. Investing in reducing recidivism is far better value for money than almost any other anti-crime measures.

> * The labor programs are largely voluntary. [...] Alternatives include doing nothing all day instead of a job.

These statements are contradictory.