THE AVERAGE PSYCHOLOGISTS EMPLOYED IN PENAL INSTITUTIONS ARE NOT CORRECTIONALLY TRAINED SPECIALISTS, BUT RATHER HAVE CLINICAL OR COUNSELING TRAINING. THEY TEND TO ENGAGE IN INTENSIVE, SHORT-TERM PSYCHOTHERAPY, PSYCHODIAGNOSTICS, ASSESSMENT, AND ADMINISTRATION. WHILE PENAL INDUSTRIES HAVE GREAT POTENTIAL FOR VOCATIONAL AND EDUCATIONAL TRAINING, AS WELL AS FOR PROFIT, MORE THAN ANY OTHER CORRECTIONAL ACTIVITY, THERE ARE PROBLEMS. CORRECTIONAL PSYCHOLOGISTS HAVE UNREALISTIC WORK EXPERIENCES WITH CIVILIANS BEFORE COMING TO INSTITUTIONS. THEY CONFRONT USELESS EQUIPMENT AND INEFFICIENT INMATE INCENTIVE SYSTEMS. MANY INMATE WORKERS ARE BADLY TRAINED AND EDUCATED, AND CORRECTIONS MANAGEMENT PRINCIPLES OFTEN REINFORCE POOR CIVILIAN WORK HABITS. LIMITED CONTACT AND COMMUNICATION, HIGH TURNOVER RATES, RESTRICTED COMPETITION, AND IMPROPER USE OF INMATE RESOURCES FURTHER PLAGUE THE INDUSTRIES. FINALLY, PSYCHOLOGISTS MUST WORK WITH BEHAVIORALLY DISORDERED AND POSSIBLY DANGEROUS INDUSTRIAL WORKERS, COPE WITH INTERFERENCE WITH PRODUCTION FROM OTHER INSTITUTIONAL FUNCTIONS, AND VIE AGAINST COMPETING INSTITUTIONAL NEEDS. THE PAPER CONCLUDES THAT CORRECTIONAL INDUSTRIES MUST RECEIVE A HIGHER PRIORITY IN TERMS OF FUNCTION AND PLACE, ALONG WITH A GREATER ROLE IN TRAINING AND DEVELOPING INMATES FOR CIVILIAN LIVING. ALSO, CORRECTIONAL INDUSTRIES MUST RECEIVE SEPARATE STATUS, WHILE CORRECTIONAL AUTHORITIES MUST EMPLOY PSYCHOLOGISTS WHO EITHER HAVE INDUSTRY-RELATED PSYCHOLOGICAL SKILLS OR ARE TRAINED BOTH CLINICALLY AND INDUSTRIALLY. FOOTNOTES, SIX REFERENCES, AND TABLES ARE INCLUDED. (JLF)