> The government isn’t making any money here.

Hypothetically let's say govt is allowed to use unpaid labour outside menial tasks and the prison system is setup in a way to efficiently utilize the skills of their labour pool and is allowed to outsource their skills to private entities at attractive rate for covering prison costs (i.e. more money left for govt spending)

E.g. tradesmen employed on their related jobs. A programmer employed in software jobs or a technician "loaned" to a nearby lab etc.

Don't you think the local/state governments will then have incentive to fill their pool with "missing" talent according to the job requirements.