Debunking the Myth of Lower Cost Private Prisons

As the specter of drug abuse began to haunt America’s cities during the 1970s, Americans experienced a rising sense of moral panic—which culminated in President Nixon identifying the crisis in a 1971 press conference as “public enemy number one.” Three years later, Nixon created the Drug Enforcement Agency in order to combat drug crimes. To calm the moral panic, Congress also passed harsh drug laws, some of which included mandatory sentencing minimums for various kinds of drug offenders.  These new laws led to a sharp increase in the prison population. In particular, the Anti-Drug Abuse Act of 1986 introduced mandatory minimums for drug possession. So great was the pressure from the public that Congress declined to hold committee hearings or create reports for legislators before voting on the bill; in fact, the entire law was passed a month and a half after its proposal by the Speaker of the House, Jim Wright. States began to pass mandatory minimums as well, including New York’s  infamous Rockefeller Drug Laws of 1973, which required a mandatory sentence of 15 years in prison for the possession of two ounces of most major substances. Michigan followed with the so-called “650 lifer law”, passed in 1978, which required life imprisonment for the possession, manufacture, or delivery, inter alia, of 650 grams of cocaine and other substances.

As a result, according to data from the Sentencing Project, the population of incarcerated drug offenders increased nearly fifty-fold at the federal level—from 4,700 to almost two hundred thousand—between 1980 and 2013. The overall population of imprisoned drug offenders has increased nearly ten-fold, from 40,900 individuals to 489,000, during the same timeframe. In consequence, the rate of federal prison overcrowding has been relatively high. In 2011, the rate of overcrowding was 39 percent—which is in fact down from the overall high of 41 percent in 2004. States are also over capacity: Illinois is at 151 percent of capacity; North Dakota at 150 percent; Nebraska, Ohio, Delaware, Colorado, Iowa, and Hawaii are all at more than 110 percent of capacity. Though prison overcrowding is not entirely attributable to harsher drug laws, it is true that as of 2013 nearly half of the federal prison population and 16 percent of state prisoners are drug offenders,. Lastly, many undocumented immigrants are also detained in private prisons: in one report, nearly half of all immigrants detained by the federal government are interred in a for-profit facility.  

States and the federal government, of course, had to respond: state expenditures on correctional institutions from 1982 to 2010 jumped from $11.2 billion to $41 billion. Over those three decades, that aspect made up 73 percent to 80 percent of total correction expenditures. Federal expenses, more shockingly, rose from $970 million to more than $6.7 billion—an enormous 595 percent increase. Many state governments, frustrated at the massive spike in incarceration, began to contract out prison management to deal with both the spike and the resulting uptick in expenditure. The first completely private prison was opened in 1984 by the Corrections Corporation of America (CCA), and privatization has continued to spread ever since. As of 2014, private prisons house 8.4 percent of America’s prison population, a number that has doubled since the early 2000s. CCA, the largest private prison company, currently owns sixty-five facilities in the United States, with a total bed capacity of 90,000; the second largest, the GEO Group, has ninety-six facilities worldwide, which can hold about 73,000 inmates. The types of detention centers that private prison firms own vary, from non-secure to maximum security, juvenile to adult. These companies also contract at both the state and federal level, with the majority of contracts coming from the states.

When the Great Recession hit America, localities again were confronted with challenging budgetary issues. As the economy contracted, states struggled to find places to reduce budget outlays. CCA, looking to expand their markets, offered to buy up prisons in forty-eight states as a panacea for states’ budget problems. Furthermore, GEO Group was able to acquire Cornell Companies, a third firm, in 2010 for a deal worth $730 million. Given the still-tepid economy, the still-high prison population, and the gridlocked political atmosphere, it is likely that these corporations will continue to grow. CCA, GEO Group, et al. assert that as private companies they reduce costs while maintaining quality, a claim that is in accordance with the basic economic theory of competition, since these corporations provide the same service as state-sponsored at an allegedly lower cost and similar quality.

In short, private prisons have grown in the United States over the past three decades by simple economics: at the end of the day, these firms are responding to a growing niche need. As the American prison population exploded and budgets grew out of hand, governments increasingly began to see the private sector as a solution to this problem.

Although private prisons claim to lower costs while maintaining quality, the vast majority of data has shown minimal or no gains from using private prisons. For several years, private prisons did seem to be benefiting state governments: before 2001, an analysis of twenty-eight case studies showed that twenty-two found cost savings from private prisons. In all, these savings ranged from 3.5 percent to 16 percent. However, cost savings would not hold for long, and more recent data does not support this claim. In one defining 2007 meta-study, researchers at the University of Utah concluded that there was little to no cost-related benefit from private prisons. Four years ago, it was found that private prisons in Arizona, for example, cost $1,600 more a year to run than state-run prisons. In many cases, cost-savings measures are actually required by law; but many of these facilities fail to meet their obligations. In five states—with required savings ranging from 5 percent to 7 percent—private prisons failed to save any money, a failure which raises suspicion about the industry as whole. In terms of quality, the same case study analysis found that sixteen studies (done before 2001) discovered that private prisons perform as well as or better than government prisons. These studies analyzed many indicators such as escape rates, homicides, assaults, and riots. However, the same meta-analysis from the University of Utah found that there were no discernable increases in quality from private prisons. One measure of quality to consider is staff training. Of course, cutting expenses on staff is one method of saving money. Regardless, private prison staff receive, on average, fifty-eight hours less training than public prison employees do; additionally, turnover rates are higher at private prisons than at public prisons. Yet, what constitutes quality is so imprecise that it makes little sense to evaluate it; thus, many academics and researchers default to recidivism as a quality barometer.

Recidivism, i.e. the rate at which prisoners relapse into criminal behavior, is a significant aspect of understanding (and consequently reducing) the current prison population. Recidivism rates for private prisons are not usually analyzed, so researchers have relied mostly on four studies from Florida. Three of these four found lower rates among those held in private prisons than in public prisons. Another recidivism study, using models from the Florida studies applied to Oklahoma, found that there was a 3 percent greater risk of relapse for prisoners held in private prisons than in public prisons. Men held in private prisons were 5 percent more likely to recidivate, whereas women were 5 percent less likely to relapse. However, there are several factors that may have impacted the outcomes of these studies. First, private prisons are more likely to hold younger inmates, who are more likely to be incarcerated due to drug offenses; drug offenders have a recidivism rate of 76.9 percent. Secondly, the four Florida prisons had massive educational programming, involving academic, vocational, and substance abuse elements. Private prisons, however, are in general significantly less likely to offer these kinds of programming. In fact, 12.4 percent of private prisons are without any form of education programming, compared to only 8.8 percent of state prisons—and 0 percent of federal prisons. This reality is unfortunate, as inmates who undergo education programming while incarcerated have a 13 percent lower risk of recidivating by 13.

When cost savings do occur, they are often a result of cuts in areas like labor or staff training—tactics that often decrease the quality of prisons. When private prisons cost less, it’s often because they reduce training, hire fewer guards, and offer lower wages. In fact, Bloomberg reports that wages for every job are 21 percent lower in private prisons than they are in public prisons. Furthermore, private prisons also have one guard for every seven inmates on average, compared with one for every five in public facilities. Due to this reduction in spending on labor, private prisons have become more dangerous than their public counterparts. In one case, a youth prison in Mississippi, the Walnut Grove Youth Correctional Facility, had the highest assault rate in the nation as a result of poor staffing. This prison was plagued by violence: employees smuggled in weapons for inmates and frequently had sex with them. In fact, the Department of Justice found that nationally there were at least one-half more assaults on staff and nearly 65 percent more inmate-on-inmate assaults in private prisons than there were in public prisons.

Private prisons, then, don’t usually reduce costs and are often more violent and dangerous than are public prisons. Often, private prisons companies cut outlays by reducing staff expenses, especially in training, wages, and the number of employees. Moreover, for-profit prisons are also more likely to have higher recidivism rates, a goal contrary to both the punitive and rehabilitative notions of incarceration.

This is the first of a two part series on the state of prisons in America. The second installment can be found here. 

The image featured in this article is licensed by Creative Commons. The original image can be found here.