Forced labor in a fixed geographic region with strict security requirements is fundamentally incongruent with pricing power.

I think prisoners should have the option to work and that they should be subject to all of the normal worker protection laws. Wages can go toward some combination of restitution and improving quality of life in prisons: food, lodging, entertainment in off hours, etc.

Restitution should be limited to a fixed percentage of monthly income (as it is in the civilian world). Why? Because removing positive reinforcement from the act of labor has perverse psychological effects. These effects persist after incarceration and contribute to recidivism.

This sort of system is insufficiently punitive for some, so the politics of these reforms are tricky.