Profiting on Imprisonment: The Growing Private Prison Industry

Approximately 2.4 million citizens in the United States are incarcerated at various levels of the corrections systems according to The Washington Post.  [1]  To put this number in perspective, the U.S. prison population has more people in it than the number of total residents of 15 of the American states. Since 1980 the numbers detained across the country has quadrupled.

One of the biggest reasons for the upswing in the prison population is more convictions and longer sentences for illegal narcotics offenses. More than half of the Federal Government’s prisoners’ (51%) most serious charge against them is related to drugs. That compares to 20% of the inmates at the state level, although there it is still the highest ranking category among offenses.

It is not the intention here to discuss the efficacy or fairness of the criminal law, enforcement of that law, or the justice system that prosecutes the statutes, but, rather, the funding of the corrections system and the treatment of those employed by it, as well as the treatment of those serving sentences.

In 2011, the National Association for the Advancement of Colored People (NAACP) released a report, called “Misplaced Priorities: Over Incarcerate, Under Educate” [2],  which pointed out that states were spending six times the amount on their jails than their educational systems over the last two decades, reaching a total of $70 billion. Many state legislatures faced with budget shortfalls, and an inability or unwillingness to raise revenues (read: taxes), have looked at doing something unthinkable in past generations— contracting the management of prisons, or the outright privatization of their systems, to for-profit companies.

The biggest player in the for-profit corrections “market” is the Corrections Corporation of America (CCA), which got started when in 1983 it won a large government contract from the forerunner of the U.S. Immigration and Customs Enforcement agency to build and manage a detention center for illegal aliens awaiting hearings or deportation. Today the CCA has revenues from various government contracts totaling $1.736 billion, manages 60 facilities, employs 17,000, and has charge of around 90,000 inmates. [3] As one can see from the major operations of CCA, it can be a lucrative business indeed to be involved in the private prison management “industry”. According to a piece from the news contributor network, the sector as a whole had gross profits of $5 billion in 2011. [4] CCA and its smaller rivals, The Geo Group and the Management and Training Corporation (MTC), are listed on the New York Stock Exchange.

A key difference between a private corporation and a governmental agency is that companies need to insure profitability for their investors. This objective may or may not coincide with the best interests of the public. While any private operator of detention facilities should be concerned that mismanagement can lead to them losing a contract or being replaced by a rival, removing some of the traditional means the public has to assess a government delivered service can lead to a lack of transparency. Private companies are not necessarily compelled to comply with Freedom of Information Act requests, or required to have citizen advisory boards. Private companies may not need to disclose their financial statements. These types of restrictions would never hold water for long if the facilities were run by public departments with frequent demands for accountability.

The main driver in obtaining profitability for private contractors is similar to what any hotel chain would seek: high occupancy. This means that the more prisoners assigned to their facilities, the greater likelihood of increasing revenue. Herein lies the critical moral quandary of privatizing this critical public service: organizations that financially benefit from increasing the numbers of citizens who are incarcerated and for longer periods of time. The companies are quite upfront about that fact. CCA’s filing with the federal Securities and Exchange Commission (SEC) in 2007 said in part “(w)e are dependent  on government appropriations…(t)he demand for our facilities and services could be adversely affected by the relaxation of enforcement efforts or through the decriminalization of certain activities that are currently proscribed by our criminal laws.” [5] Also, like many companies, private prison employers often look for ways to maximize efficiency by keeping costs of doing business as low as they can to maximize those potential profits. In the for-profit prison industry, as we shall see, skimping on staffing and paying their workers less than their public counterparts leads to corner-cutting, questionable practices, and poor staff morale.

The salary and benefits of correctional workers varies widely by state, experience, seniority, and whether the workers are unionized. All reports suggest that private companies pay their employees less than those run by states or localities. Unions are absent from the private industry, which reduces business costs and possible labor unrest, and therefore ensures greater chances for the firms to profit. However, giving relatively low pay to those who work daily in stressful and potentially dangerous situations leads to a high turnover of employees in the industry. 

A startling example of how this pay differential affects worker morale can be seen in a report to the Texas Legislature in 2008. [6]  For-profit prison facilities had a turnover rate of an astounding 90 percent as opposed to 24 percent at government locations. In workplaces where employees leave so often it is difficult to have the continuity afforded by experienced and well-trained staff with a good understanding of policies and procedures, or to maintain quality service. In prison facilities where inmates often present a number of mental health, substance abuse, and socialization problems that may have contributed to their incarceration, having a poorly trained workforce with low morale to guard them can make for a toxic combination.

In 2011, Florida Governor Rick Scott sought to greatly expand the privatization of his state’s correctional facilities and detention work camps. In the 2011-12 state budget, private operators would be given contracts if they reduced costs to the Florida Department of Law Enforcement (FDLE) of 7% or more. [7]  Since the biggest slice of the budget pie was salaries, this would mean cutting current pay or hiring new employees at a reduced rate. Also, training for officers was to be reduced rather than raised in the push for privatization. The Teamsters local that represents some Florida correctional workers reported that a Captain Michael Riley from the Marion Correctional Institute testified to a Senate committee in Tallahassee that training would be reduced by 60%, from 400 hours to 160. Capt. Riley said "I supervise 75 officers. When they go in that gate, I'm responsible to see they leave healthy. I've had to go to three funerals in the past few years for officers who've been killed. Please rethink this. If you choose to privatize the facilities, the next time an officer is killed, I implore you to stand next to me at the funeral." [8]

Ultimately the rush to turn the state’s role over corrections to the marketplace was ruled unconstitutional by a county judge. Ironically, the move was made based on a lack of transparency rather than any moral objections. The FDLE had not commissioned business-study reviews of the pros and cons of privatization as required. The Assembly could have passed a bill changing the law, but proponents of privatization admitted it was unlikely to have successfully passed. [9]

The calls for privatization usually make the claim that a business will operate more efficiently than the government. While all jails have the possibility of violence and abuse occurrences no matter who is administering them, the private prison operators have many cases to date of serious problems at their facilities. The New York Times reported in 2009 that at an immigration detention facility in Arizona run by CCA, detainees had died in custody despite treatable conditions exacerbated by a lack of adequate medical health resources and staff. [10] The father of one of the detained men who died in custody told the paper through a translator, “I understand a prisoner shouldn’t be on a golden bed, but a prisoner is a human being.” Interestingly, the one successful portion of Florida’s privatization attempts has been in farming out the delivery of health care to prisoners to the private sector.

The Examiner piece mentioned above references other scandals in the for-profit prison system. These range from employees threatening prisoners with reprisals for complaints about jail conditions to sexual assault and battery. Many of these incidents are occurring in the burgeoning immigration detention center “business” as the nation’s ongoing failed attempts at reform leave illegal aliens in a complex web after apprehension by law enforcement. The media has underlined the variety of questionable and inhumane actions taken by the U.S. military at the Abu Ghraib prison in Iraq and the detention center for Islamic militants in Guantanamo Bay. Sadly, little is being reported about the conditions in facilities here in the United States as illegal immigration remains a hot-button topic. However, Detention Watch Network (DWN), a non-profit advocacy group, fills this void as a watchdog publicizing the shortcomings and abuses in the immigration lock-ups. 

DWN’s coverage of the private operators touches on a critical matter involving this industry. Now that the industry has grown profitable, its members, like many business trade associations, lobby tirelessly at all levels of government to prevent the golden goose from stopping its supply of golden eggs. [11] The five companies that hold contracts with the U.S. Immigration & Customs Enforcement (ICE) amassed a total of $20.4 million dollars in lobbying expenses between 1999 and 2009. Aside from trying to collect support from as many members of Congress as they can, the for-profit prison management companies target the Department of Homeland Security (ICE’s “parent”), as well as any agencies that have a role in immigration or law enforcement, such as the Department of Justice (DOJ), the Federal Bureau of Prisons (BOP), and the Office of Management and Budget. In addition, the companies also heavily promote their services to cash-strapped states.

CCA, as the biggest company, has supposedly also expanded their political aspirations to trying to shape federal labor regulations, expand immigration incarceration, and privatize the Bureau of Indian Affairs’ prison system according to DWN. The moment where CCA perhaps had reached pure hubris was when it sent identical offers to almost all states in 2012 offering to buy their prison systems in exchange for a 20-year contract and a guaranteed occupancy rate of 90% or more. [12] The offer was criticized as pure opportunism, but raised the specter that if states took them up on it they would be required to meet the prisoner number quotas. It can also be expected that the private corrections industry will take a “law and order” approach to such touchy issues as “three strikes” convictions, tougher enforcement of immigration laws, mandatory minimum sentencing, and truth-in-sentencing laws. When they support them it will be hard to believe it is for any other reason than that they are “good for business”.

While one might hope that CCA’s attempt to wrest control of the vast majority of the nation’s prisoners comes across as the plot of the latest dystopian young-adult novel, the company has lobbied effectively since its earliest days. Ken Silverstein of Prison Legal News recounted the ability of the company to pull off all the conflicts of interest and kickbacks of a much more experienced and cynical company. “The first prison the company managed was the Silverdale Workhouse in Hamilton County, Tennessee. After Commissioner Bob Long voted to accept CCA’s bid for the project, the company awarded Long’s pest control firm a lucrative contract. When Long decided the time was right to retire from public life, CCA hired him to lobby on its behalf.” The company has long supported Tennessee Senator Lamar Alexander. That might explain why his wife Honey Alexander was able to make a $5,000 investment in CCA become earnings of $130,000. Another CCA stockholder from the 1990s, former Tennessee Governor Ned McWherter, has unsurprisingly called for the federal government to privatize all of its facilities. [13]  

CCA also played a shadowy behind-the-scenes role in the passage of Arizona’s then toughest in the nation immigration law, the “Support Our Law Enforcement Act” in 2010, which sought to have local and state police enforce federal law regarding the immigration status of persons they might come into “lawful contact” with. Persons with questionable status would need to be detained, which is where CCA entered the picture. [14]  

Charles Albino, a retired 35-year veteran of the New Jersey criminal justice system as correctional officer, probation officer, and warden of Southern State Correctional Facility, is a columnist at the popular-interest Corrections One website for correctional officer professionals. In 2012 Mr. Albino made an analysis looking at the arguments made by both the pro and con sides in the privatization debate. [15] Albino’s findings included studies done by the BOP (2001), DOJ (2001), and the University of Utah (2007) that had looked at the differences in private rather than public management of prisons. The aforementioned studies seemed to indicate that initial switches to for-profit companies did mean some lowered costs. However, over time, the savings would be “minimal at best”. The savings that did occur with private operators were with respect to the very quality of life issues that can affect the attitudes of the employees and the prisoners they must interact with. These included less pay and training (as noted earlier) for workers and less per-inmate spending on food service, health care, and rehabilitative assistance.

The State of Arizona made a study in 2010 that tried to equalize spending differences between public and private systems. They found that public facilities maintained the central administration and records offices that private systems lacked. Public systems also tended to retain more of the prisoners with delicate health—physically and/or mentally—(often a requirement of private contracts) which made their costs higher. Finally, the state agreements meant that the public facilities were responsible for transportation costs of prisoners. They conclude that if these budgetary items were equally distributed there would not be any savings at all with for-profit companies. Albino writes “(t)he notion that a private concern can operate more cost effectively while still generating a profit, is just that—a notion, not a fact.” Albino does suggest that the introduction of the private companies has had a positive effect on public agencies, in causing them to review their own processes and streamline operations.

Albino also returns the debate back to its essence, namely: is it morally permissible for a state to pass and enforce criminal statutes but refuse the burden of detaining and hopefully rehabilitating those who are in violation of the law? A case can be made that there are few, if any, social compacts greater than the one the government makes with its citizens than that it will keep them safe from anti-social actors and will try to rehabilitate and give a second-chance to those who break laws.

America, the Jesuit news review magazine, editorialized that a coalition of faith organizations banded together to encourage opposition to CCA’s proposal to buy 48 states’ prison systems. The group indicated that what was at stake was the “moral strength of your state”. [16] The U.S. Conference of Catholic Bishops’ “Responsibility, Rehabilitation, and Restoration” statement as far back as 2000 warned against the profit motive as a possible conflict in corrections as an instrument of the common good. “((T)he profit motive) may lead to reduced efforts to change behaviors, treat substance abuse, and offer skills necessary for reintegration into the community.”

No matter who runs prisons, more must be done to prevent persons from sliding into the need for incarceration. The Catholic Bishops urged “more effective programs aimed at crime prevention, rehabilitation, education efforts, substance abuse treatment, and programs of probation, parole, and reintegration.” National and local policy needs to focus on getting communities involved to assist through volunteerism and public investment of resources to prevent law-breaking at an early stage rather than spending higher amounts to pack and house broken people away later.

Kirk G. Morrison

Kirk Morrison is chairman of the National Committee of the American Solidarity Party.