The U.S. Private Prison Industry

The U.S. prison system is massive. The number of those incarcerated has increased by over 700% since 1970, and it is estimated at 2.2 million people behind bars today. An additional 5 million people are estimated to be under the control of the criminial justice system, on probation or parole. The cost of incarceration alone is estimated at $74 billion a year, a cost which eclipses the GDP of 133 nations. According to a 2012 study, the cost of the state system in 40 states was about $39 billion annually.

The federal government, states, and counties sign contracts with publicly traded corporations like CoreCivic, Inc. and GEO Group to operate prison facilities. Half of the Federal government’s immigrant detention centers are privately operated. State levels vary widely, with a total of 5 to 7% of state prisoners held in private facilities each year. Combined, CoreCivic, Inc. and GEO Group generated over $3.3 billion in revenue in 2014, and represent more than half of the private prison business.

The growth of this industry has raised questions about the ethical implications of incarcerating people for profit. Numerous religious denominations and congregations have issued formal statements against mass incarceration in general and for-profit incarceration in particular.

In addition to the basic morality of the industry, all the major private prison corporations have demonstrated patterns of mismanagement, abuse, neglect, and other problems. Riots, escapes, lawsuits and other scandals have piled up over the decades, providing a collective indictment of the business model of for-profit incarceration.

Additional concerns have been raised regarding the lobbying and campaign contributions doled out by the corporations in order to secure contracts and, in some cases, promote legislation that results in higher rates of incarceration and/or immigrant detention. Most of the “tough on crime” legislation of the 1990’s came out of the American Legislative Exchange Council (ALEC). During that time, the Private Sector Chair of ALEC’s Public Safety Taskforce was CoreCivic, Inc.

Finally, there is concern that the profit motive is fundamentally at odds with the purpose of corrections, which is to treat and rehabilitate individuals, thus reducing their chance of returning to prison. Unfortunately, recidivism is in the financial best interest of private prison operators.

However high profile they may be, the companies operating prisons for profit are just the tip of the iceberg of punishment profiteering. This screen goes beyond the focus on facilities management to provide a glimpse at the universe of companies making money from all aspects of America’s criminal punishment system.

James Kilgore rightly points out that, when you look at the big picture, private prisons are just “bit players” in mass incarceration:
"A quick look at the actual footprint of private prisons reveals how marginal they are. Overall, private firms own or control just 9 percent of prison and jail beds in the United States…In terms of income, the combined 2014 earnings of CoreCivic, Inc. and the GEO Group, which amount to about 70 percent of private prison revenue, came to just over $3 billion - less than half of the state corrections budget of California. The annual budget for the Los Angeles County sheriff's office exceeds the revenue of CoreCivic, Inc., the largest of the private prison companies, by about half a billion dollars".

Whether public or privately run, all prisons, jails, and detention centers have to purchase furniture and other goods and services for the facility. They must feed and clothe the prisoners, transport them from place to place, and provide for their medical and mental health needs. They must set up visitation and phone programs to allow incarcerated people to contact their loved ones. There are myriad chances for profiteering from every one of these services: Each contract provides a literally captive market for a given product or service.

Then, there are the profit opportunities outside brick-and-mortar prisons. About 7 million people are on some form of criminal justice supervision, such as probation or parole. Re-entry programs like halfway houses are becoming a new niche market for big companies like CoreCivic, Inc. and GEO Group. While corporations typically charge a lower per diem for this type of facility, the pool of individuals is larger than the incarcerated population, potentially generating increasing levels of profit for the company.

Increasingly, states and the federal government are turning to alternatives to incarceration in order to save money, leading to the creation of new programs.

Those who are not physically held in any sort of institution, yet remain under state supervision through home arrest, probation, parole, or other community corrections programs become potential profit-making engines when corporations can charge for monitoring equipment, supervision fees, drug testing, counseling, and the like. Although the profit generated from this type of supervision is typically low, the length of time under supervision can be much longer.  As a result, this emerging market has the potential to ensnare more individuals, under increased levels of supervision and surveillance, for increasing lengths of time—in some cases, for the rest of a person’s life.

A particularly disturbing offshoot of the Community corrections sector is the trend toward for-profit probation. In at least 10 states (mostly in the Southeastern US), municipal courts contract with private, for-profit probation companies. Unlike state probation programs, in which probation provides an alternative to incarceration for certain crimes, in these states, individuals charged with misdemeanors like minor traffic violations, shoplifting, or public intoxication who cannot afford to pay their court ordered fines are placed on probation.

Once on probation, they are expected to pay the private company monthly fees for the privilege of being supervised, in addition to paying their original fine. Human Rights Watch investigated these schemes and found that “[m]any of these offenses carry no real threat of jail time in and of themselves, yet each month, courts issue thousands of arrest warrants for offenders who fail to make adequate payments towards fines and probation company fees.” The result has been likened to the creation of modern day debtor’s prisons. Not only does this represent an unequal system of justice (one for those who can pay, one for those who can’t), it also puts taxpayers on the hook, paying for jail time that is completely unnecessary and counterproductive.

As long as there are so many potential millions to be made from mass incarceration, the movement to reduce the scope and impact of the criminal punishment system is likely to undermined.