Absolutely agree, but recent news articles suggest that many of the rural communities that contain prisons are functionally dependent on this free/cheap labor for public services (landscaping, trash clean up, etc.). When prison populations decline, there is a perception that the community suffers in excess of the potential for lost employment. Paying the inmates a proper wage would have a comparable effect.
Of course removing the slave labor will radically change the economy and render parts of it untenable. imho an economy predicated on slave labor doesn't really deserve to exist at all.
> b.) Immigrants in prison are good, because they do work for less then minimum wage.
I think that (b) doesn't really respond to the argument. Those who worry that "the immigrants are taking our jobs" are worried precisely that immigrants will do 'our jobs' for less than we would, making it likely that an employer will hire them instead. The situation being described is precisely one where prisoners will do work for free, as a result of which no non-prisoner members of the community has a chance of being paid to do that work.