Private Prison Industry: Overview

Introduction

For years, the United States has had one of the highest imprisonment rates in the world. In 2021, the US ranked sixth in the world, with 531 prisoners per 100,000 people, according to the World Prison Brief database. Likewise, the United States has the most people behind bars in the world: over 1.76 million, versus 1.69 million in China, the second-place finisher, and the numbers drop steeply from there, with far fewer than a million imprisoned people each in Brazil, Russia, and India. Federal, state, and local government spending on US prisons is upward of eighty billion dollars per year. The incarceration rate more than quadrupled over the four decades from 1972 to 2012—the result, primarily, of the War on Drugs and mandatory minimum and three-strikes sentencing laws passed in the 1980s and 1990s. The government responded to the staggering challenge of housing and servicing the expanding incarcerated population in part by looking to private companies to fill this demand.

The private prison industry has a long history in the United States, but its modern incarnation was born in 1984 in Tennessee when the Corrections Corporation of America, now known as CoreCivic, was awarded a contract to take over a facility in Shelby County. An increasing number of private prisons followed. Private prisons are controversial in the United States, though they do provide some practical benefit. These for-profit companies can be more nimble than public prison systems, which are subject to government bureaucratic processes. Private prisons can alleviate overcrowding and save taxpayers money. With the management of prison facilities and responsibility for inmates delegated to private companies, supporters argue that the government can focus on other pressing public issues.

The introduction of for-profit prisons, however, means higher incarceration rates now benefit private interests, and some companies even hold contracts requiring states to reimburse them when a prison is below capacity. When the regular prison population began shrinking around 2000, private prison companies acquired contracts to run immigration detention centers. Critics argue that the profit motive has led to a greater dehumanization of the prison population and that while private prisons responded to a need initially, they now have a financial stake in ensuring rising incarceration rates. These companies are heavy political contributors and a powerful lobby in state and federal government, further reinforcing the criticism that profit can drive legislation regulating incarceration. Critics argue that private prisons work against the public interest, since they have no motive to drive down the highest prison population in the world.

Understanding the Discussion

CoreCivic (formerly Corrections Corporation of America, or CCA): The first private prison company in the United States, founded in Nashville, Tennessee, in 1983, and the largest such company in the country by 2024.

Federal Bureau of Prisons: An agency of the US Department of Justice, established in 1930, responsible for the administration of the federal prison system.

Incarceration: Confinement in a jail or prison.

War on Drugs: An umbrella term for the set of US government policies aimed at stemming the importation, production, and distribution of illegal drugs in the United States; coined in 1971 by President Richard Nixon, and credited as a major contributor to the steep rise in the US prison population.

History

The history of private prisons in the United States is complex. Though the vast majority of prisons and jails have been operated by a government entity, there is also a long history of transferring control and care of incarcerated people to private entities, most often in order to use them for labor. During the Gold Rush in California, and its resulting jump in crime, prison ships were used to house imprisoned people. Arguably the most famous privately operated prison was built by the inmates of one such ship, the Waban, who constructed the first prison at San Quentin, on the San Francisco Bay, on twenty acres of land purchased by the state. Completed in 1854, the prison was run by a series of individuals who leased the facility and then hired the incarcerated people out as forced labor. However, the San Quentin experiment in private prison management was short-lived: conditions at the prison were so bad that by 1858 the state opted to take control.

Alex Friedmann, managing editor of Prison Legal News, links the development of the modern private prison industry to developments in the American South after the Civil War. "The modern private prison industry has its origins in the convict lease system that developed during the Reconstruction Era following the Civil War, as a means of incarcerating freed slaves and leasing them to private companies," he said in a 2014 article in Mother Jones. Convict leases were issued to private entities until the early twentieth century. These were forerunners of the private prison system in the sense that the private companies that leased incarcerated people were responsible for their room and board; a major difference, however, was that the companies paid the state, rather than the other way around. Convict leases of the kind common during Reconstruction were gradually phased out in the first half of the twentieth century, in large measure because organized labor was unwilling to allow prison labor in mines and factories, and legislation was enacted preventing the sale of prison-made goods across state lines. By 1940, private management of prisons and the people held in them was extremely rare.

Most experts point to shifts in the social and political landscape of the 1970s as the root cause of today's mass incarceration and the rise of private prisons. According to Byron Eugene Price in Merchandizing Prisoners: Who Really Pays for Prison Privatization? (2006), increased crime rates, particularly in urban areas, combined with widespread violations of immigration policy, resulted in a "law and order" political backlash in the early 1980s. Mandatory minimum sentences, the War on Drugs (which had begun under President Richard Nixon in the 1970s), and long-term sentences for people accused of committing repeat crimes all combined to dramatically increase the incarcerated population, creating a national crisis of prison overpopulation, and ballooning costs for local, state, and federal corrections departments. At the same time, particularly during the administration of President Ronald Reagan, privatization and "small government" was heralded as the solution to wasteful spending and high taxes. To cut costs and streamline budgets, prison systems increasingly relied on outside contractors to provide specific goods and services, including transportation, medical services, and food and laundry care. In addition, beginning in the 1980s, some private businesses gained leases on transitional or halfway housing, work-release programs, juvenile facilities, and immigrant detention centers, clearing the way for private contracts for the management of prisons.

The private prison industry of the twenty-first century traces its roots to the founding of the Corrections Corporation of America (CCA), in Nashville, Tennessee, in 1983. The CCA was headed by Thomas W. Beasley, a lawyer and businessman, who also served as the chair of the Tennessee Republican Party. He, along with his cofounders, saw an opportunity to address the substandard conditions in overcrowded government-run prisons, and to make a profit doing it. Beasley and his partners saw prison operations as any other business. He was famously quoted in 1988 as saying that prisons could be sold "like you were selling cars, or real estate, or hamburgers." The CCA began by pursuing a joint venture with the Federal Bureau of Prisons and the Immigration and Naturalization Service to house detained immigrants, and opened their first facility in Texas in an old motel complex in January 1984. Later that year, CCA became the contract manager of jails in Hamilton County, Tennessee. In 1985, CCA proposed a takeover of the entire Tennessee prison system, but amid strong opposition from unions and public employee organizations, this bid was unsuccessful. By then, CCA was not the only private prison company looking for contracts, however, and in 1986, the first state contract was awarded to US Corrections Corporation in Kentucky (CCA acquired US Corrections in 1998). Other companies like Wackenhut Corrections (now GEO Group) and Management and Training Corporation also joined this growing market. It was the beginning of the private prison boom in the United States.

By the early 1990s, private prisons were entering a period of meteoric growth. Between 1986, when it became a publicly traded company, and 1994, annual revenues at CCA grew by a factor of nine, from $14 million to $120 million. Similarly, revenues at Wackenhut went from $19 million in 1989 to $84 million by 1994. A 2001 study from the Institute on Taxation and Economic Policy showed that the number of beds in privately managed adult corrections facilities went from three thousand in 1987 to twenty thousand in 1992. Meanwhile, the number of incarcerated Americans at all levels (federal, state, and local) continued to mushroom, tripling from around half a million in 1980 to more than 1.5 million in 1995. Beginning in 1997, the Federal Bureau of Prisons also began to contract out to private companies.

Private Prison Industry Today

By the 2000s, reports of abuses in private prisons had increased. Private prisons across the country were investigated for substandard facilities, inadequate security, and high levels of violence and abuse. A multitude of studies, taken together, have reached no consensus about whether private prisons have, in fact, saved money or provided a better service (in terms of conditions for both employees and imprisoned people) than government facilities, and arguments for and against them continued. In 2016, the Justice Department under President Barack Obama released a report by its Office of the Inspector General that was critical of private prisons, saying they did not save money and were less effective than government facilities. In August, the Justice Department announced that the Bureau of Prisons (BOP) would phase out its contracts with private prison companies. Stock in companies like CoreCivic (as CCA was rebranded in 2016) and GEO (formerly Wackenhut) took a nosedive.

The industry's fortunes turned around once again, however, with the surprise election of Republican Donald Trump as president. Trump, who campaigned on a law-and-order, anti-immigration platform, reversed the decision on private prisons, and the stock market, anticipating a surge in the population of both native offenders and detained immigrants, responded with a spike in the value of private prison companies.

Despite such changes in the private prison industry, the share of incarcerated people in private facilities did not change drastically during the early twenty-first century; in 2022 that figure remained at 8 percent, the same as in 2000. However, the population in private prisons has decreased over the past decade. In part, this was attributed to a 2021 executive order issued by President Joe Biden calling for the BOP once again to phase out the use of private prisons. By 2022, private prisons held about 90,800 people, according to the Sentencing Project; in 2015, that number had reached well over 120,000. Meanwhile, at the state level, use of private prisons varied greatly. While states such as Montana, Tennessee, and Arizona relied heavily on private prisons in the 2020s, about two dozen states did not use private facilities at all.

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Bibliography

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