Earlier quoted context omitted.
> It feels instinctively wrong to tie prison time to pay - it should be tied to rehabilitation. You seem to be reasoning under the assumption that prison exists for rehabilitation. It doesn't. Incarceration serves to punish. And forced labour is an additional punishment. Therefore substituting prison time with extra work seems a fair trade-off, and one well aligned with the intended goals of the prison system.
It's a pretty big complete coincidence that all of these additional punishments happen to be a major source of revenue for prisons, states, and private businesses. The most likely reason we're offering to knock off prison time is because we really stinking need firefighters. It's not a punishment, we're exchanging prison time for a service that we want very much. If there wasn't a forest fire, we wouldn't be offering…
The same applies to a lot of other sectors. All the basic utilities and universal healthcare should be public-sector, because any benefits relating to market efficiency are more than offset by distortions to the political process resulting from lobbying.
Still, the basic point stands that incarceration is a form of punishment, and it is legitimate for it to include a component of hard labour.