Made in the USA – The Prison Industry and Its Profits

4796934The prison population has grown nearly-exponentially in the last few decades, and the US now holds 25% of the world’s prison population, yet has only 5% of the world’s population. The incarceration rate per capita is far higher than any other industrialized nation.  According to the World Prison Population list, the United States has the highest prison population rate in the world, 743 per 100,000 of the national population. The next closest is Rwanda at 595. Why is this?  Is there something about US society that produces such massive numbers of criminals, or is something else going on?  Former Senator Jim Webb of Virginia tried to ask this question, by establishing a commission to recommend changes to the criminal justice system, only to see his efforts blocked in the Senate, despite widespread support from law enforcement groups as well as civil liberties organizations such as the ACLU.

 Examining the structure of US prisons provides a simple clue as to what is going on: there is a great deal of money to be made from prisons, way too much money to allow reforms to threaten it.  While the US is not the only country to have privately-owned or managed prisons, it stands alone in the size of its prison business, which is a unique business.   First, human beings are its basic “raw material.”  Without an ample, and increasing, supply of prisoners, the need for private prisons would decline, threatening the bottom line of several extremely profitable corporations.   The prison industry is very active in promoting policy that will ensure this supply.  Most of those who make up the huge increase in the prison population in over the past thirty years are either drug offenders or undocumented immigrants awaiting disposition or deportation. However, some are victims of the “extreme sentencing” craze, or “three strikes and you’re out,” that swept some of the states several decades ago – sponsored in part by the right-wing American Legislative Executive Council (ALEC).   Corrections Corporation of America (CCA), the largest private prison firm, is a member of ALEC, and works hard through lobbying and other techniques to ensure an ample supply of prisoners. (ALEC staff worked closely with Arizona legislators to create the controversial legislation allowing law enforcement officers to investigate the immigration status of anyone stopped for anyone other reason.)

 The industry also works to increase the number of prisons it controls.  For example, the chief corrections officer of CCA, Harley Lappin, came directly to the corporation after 25 years in the Federal Prisons Bureau, seven as its director.  In 2012 Mr. Lappin was the signatory on a CCA letter to prisons authorities in 48 states, offering millions of dollars to buy or manage their public-financed facilities, in exchange for contracts of up to twenty years in duration with a guarantee of 90% occupancy.  Perhaps you wonder how such occupancy rates can be guaranteed (hotel industry executives would certainly like to know!).  From the point of view of the prison corporations, the solution is to prevent any changes in drug laws, reduction of “mandatory sentencing,” or alteration in policy concerning detention and expulsion of immigrants without the correct papers (discussed below under immigration policy).  And indeed, many federal and state government actions are more readily explained seen from this perspective, even as these actions are contrary to massive public opinion against them.  (Quite a few current and former officials from the immigration and drug policy agencies also work to prevent change that might reduce or eliminate their agencies.)

Overcrowded PrisonsPrison expenditures in the US are in the many billions, and the private prisons do well.  CCA had $1.7 billion in contracts last year, and GEO Group, which specializes in housing immigrants to be deported, taking in $1.6 billion; all of this comes from the taxpayers.  Per-prisoner expenditures can run higher than costs at a local college  (According to the federal Bureau of Justice Statistics, in 2010, state corrections institutions spent $37.3 billion to imprison a total of 1,316,858 inmates) – and minimizing expenditures on the prisoners, including what they eat and drink, can maximize profits.  Numerous CCA prisons have seen riots or “strikes” by prisoners protesting inhuman conditions (generally to little effect as the mass media and many politicians claim that prisoners enjoy luxurious housing, free TV and recreation facilities and the like and ridicule their protests).   Both New Mexico and Texas have major investments in private prisons; New Mexico had the highest percentage of its prisoners held privately in the nation in 1999 and in 2010, and Texas has the largest number overall.  Private prisons in both states have been the subject of major protests and charges of abuse.

 Once in possession of these commodities, or prisoners, the corporations (and, to be fair, the public prisons) find they are more than just the source of housing payments – they can be turned into a labor force.   Imagine, for example, workers in a firm in a small town who lose their minimum wage jobs when the firm relocates to China, or outsources its IT work to India, and suppose that this firm is the only significant employer in the town.  If these laid-off workers foolishly become involved in the drug trade, or even smoke a few joints with friends to relieve the job-search stress, off they go to court and into the prison system, where they will have new jobs – at maybe 25 cents an hour, or even less.  This is golden for prison managers; there are no strikes, no worker benefits to pay, no unions to fend off.  If prisoners do not want to work for such wages, they can be forced to do so – many prisons now charge prisoners for their room and board, or access to the law library, or even amenities such as toilet paper.  The federal government itself has a prison industry corporation, UNICOR, which makes a wide range of products – sold only to government agencies, but nonetheless at prices that no company paying a living wage to its employees can match.  (The federal government’s argument for UNICOR asserts that it does not compete with private business and is good recidivism training.) And so, prisoners have worked for a wide range of US corporations such as Starbucks, Victoria’s Secret, J.C. Penney, Boeing, and even political candidates from prison call centers. When you see a label on your clothing that touts it as “Made in the USA,” you might want to ask yourself, “where exactly in the US?”

As noted, the long-standing War on Drugs, predated by drug prohibition programs from the early 1900s, is one of the key factors producing the huge prison population.  (El Paso has the uncomfortable distinction of being among the first municipalities to outlaw marijuana, claiming a public health emergency.)  Maintaining draconian laws against all forms of drugs (except alcohol and tobacco) has become a priority for private prison corporations. In its 2010 annual report, CCA is fairly transparent about its stake in the anti-drug battle: “Any changes [in laws] with respect to drugs and controlled substances or illegal immigration could affect the number of persons arrested, convicted and sentenced, thereby potentially reducing demand for correctional facilities to house them.”  And he and his counterparts in the industry have been remarkably successful, as the prison population of the US has ballooned to the huge numbers today, virtually all of it through the War on Drugs.  There are more prisoners today for drug-related offenses than there were for all crimes combined just three decades ago.

A second major component of the prisoner supply business is immigration policy.  The Bush Administration’s Operation Streamline began increasing the deportation rate, but the major push has come from the Obama administration, despite its periodic calls for policy reforms.   Some 400,000 people are administratively imprisoned every year while awaiting deportation.  A revolving door between government agencies and the prison business makes it possible for individuals with policy authority to later benefit personally.   For example, David Venturella, executive director of the Secure Communities program run by Immigration and Customs Enforcement (ICE), instructed field agents in 2011 that the only performance metric that counted was removal of “criminal aliens,” which included almost any minor offense such as shoplifting or a traffic offense. A few months later Venturella moved on to become Executive Vice President of Geo Group, the second largest private prison firm, and one that specializes in holding immigration detainees. GEO Group CEO George Foley assured stockholders that same year that “at the federal level, initiatives related to border enforcement and immigration detention with an emphasis on criminal alien populations … have continued to create demand for larger-scale, cost efficient facilities.”  The cost to the taxpayer since Operation Streamline began is over $5 billion.   Not surprisingly, the prison industry spends millions on lobbying and campaign contributions at state and federal level to prevent any adverse change in immigration policy.  CCA, Geo Group, and Management and Training Corporation (how’s that for an Orwellian name?) invested some $45 million in lobbying in the past decade, according to an AP study.  Interestingly, two of the members of the Gang of Eight (Senators McCain and Rubio) charged with finding a bipartisan compromise are among the major recipients of this cash. 

A final note: even once freed, most of these prisoners will lose their civil political status forever, being deprived, as felons, of their right to vote by virtually all states.  Yet the states and counties where the prisons are located benefit from their existence, as the prison populations are counted for purposes of federal reimbursement, voting districts and the like.   Thus the criminal justice system of the US, and the remorseless drive to ensure a steady supply of prisoners, deforms our political system of the US, in particular affecting minority groups, who lose much higher percentages of their members to this political exclusion.–Marshall Carter–Tripp

For additional information

 On private prisons in general:

and on private prisons and immigration detention:


2 thoughts on “Made in the USA – The Prison Industry and Its Profits

  1. A rather absurd analysis. The profitability of private prisons is not an incentive to commit crimes. Committing crimes is what lands you in jail. The argument that drug laws results in increased incarceration is valid, but one must ask oneself, why does the country as a whole think use of narcotics and other prohibited drugs is a bad thing? What will the author say about gun control laws that criminalize law-abiding people and increase the prison population? Will he say that the profitability of private prisons drove the adoption of new gun control laws in New York and Maryland. That would be a ridiculous conclusion — as silly as the rest of this analysis.

    • Mitch, you are comparing apples to oranges. Gun control laws are not likely to increase our prison population or criminalize “law abiding citizens”–this is just hype from the NRA. Overcrowding of prisons, enforcement of three strike laws, putting non-violent drug offenders into prison are what is driving the prison populations as all the statistics for the past 3 decades published by DOJ show. Unfortunately, this has also spawned a growing and lucrative industry for the private sector which will only increase the number of people we are willing to put in jail rather than deal with the real issues or policies related to illegal versus legal drugs. Just follow the money to see where our politicians go.

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