In some states like California prisoners can be paid no less than the state's minimum wage. California also requires companies to treat prisoners much like other employees. There are, however, several distinct advantages to hiring prison labor. And there's almost no overhead. Companies can add eight or eighty employees to their workforce without worrying where to put them.
Prisons allow companies to rent space for a modest fee.
Prisons also provide an endless supply of labor - all in one spot. When holiday times roll around and companies are looking for a few extra hands, the prisoners are still there. Prisoners don't commute to work or go on holiday. If a prison employee is paroled prison officials say there is always someone to take their place. And there is little chance prisoners will complain about a private company's working conditions even though the wages they receive are low.