The first step to stop corporations from profiting from incarceration in the United States Why the criminal justice system needs to be returned to public hands

Over the past decades, private corporations have increased their control over prison services in the United States and around the world. Despite enormous lobbying efforts by the private players, citizens have started to reject this agenda of profiting from the criminal justice system, and instead demand to return prison management to public authorities. Biden has announced an end to renewing federal private prison contracts, which should be the starting point for wider changes.


Article by

Louisa Valentin

"Profiting from Criminalized Immigration 1806241324" by Patrick Feller is licensed under CC BY 2.0

On 26 January 2021, the newly inaugurated President of the United States, Joe Biden, signed an executive order directing the Department of Justice (DOJ) to phase out contracts with private federal prisons in what he called ‘the first step to stop corporations from profiting off of incarceration that is less humane and less safe’. The Federal Government of the United States is the single-largest customer of the private prison industry [1], yet the executive order (EO) is said to only have a limited impact on prison privatization and mass incarceration in the country, as it only affects a fraction of the privatized prison system. For example, the Department of Homeland Security, which is in charge of the Immigration and Customs Enforcement Agency (ICE), is not included. To put it into context, only nine percent of people incarcerated in the federal prison system are housed in private prisons, while, as of January 2020, 81 percent of ICE detainees are held in privately operated facilities. Nevertheless, the EO throws a major curveball at a multimillion-dollar industry that influences the lives of tens of thousands of incarcerated people, possibly costing the companies almost 20 percent of their annual revenues in the United States [2].

Currently, the Bureau of Prisons has contracts with three private prison operators: CoreCivic (formerly known as Corrections Corporation of America), GEO Group, and MTC (Management and Training Corporation), which together operate twelve private federal prisons across the country. The executive order had its first effects at the end of March 2021, when the contracts with two privately owned federal prisons expired, the Moshannon Valley Correctional Facility in Pennsylvania and the Rivers Correctional Institution in North Carolina. The people imprisoned at the two facilities were transferred to public federal facilities.

TNI has investigated these cases of de-privatization in the context of its work to develop an international database of de-privatization of basic public services. The criminal justice system is a critical service for society and is of a highly sensitive nature regarding human rights. As such, you would think it should be a core business of public authorities. Prison services have increasingly been run by private companies for the last few decades in many parts of the world. For example, in the United Kingdom, private prisons were introduced in the 1990s and despite security concerns, contracts for two new private prison sites were awarded in 2019. The private management of prisons, detention centers, and integrated services in the United States, as well as elsewhere in the world, has led to declining quality of service provisions, increased security issues, and higher safety incidents at privately managed facilities [3]. According to several studies, the security risk at privately operated prisons is higher than at publicly operated facilities; for example, the rate at which assaults occur within private prisons is double that at public prisons.

Given the first step President Biden took through signing the EO on 26 January 2021, this article explores the underlying characteristics of the privatized criminal justice system in the United States and the necessity to transfer ownership and control into public hands.

Prison Population, Mass Incarceration and the ‘Need’ for Private Actors

The United States hosts the largest prison population worldwide in absolute numbers, with a prison population more than four times higher than that of India, whose general population is four times greater than that of the United States. Out of over two million people currently in the US prison system, roughly eight percent are placed in privately run facilities, both at the federal and the state level for 31 states [4]. Private federal prisons, which are now directly affected by President Biden’s EO, incarcerate almost 14,000 people, or nine percent of the federal prison population [5]. During the time period between 2000 and 2019, the number of people held in private federal prisons increased by 77 percent. Even though this number has dropped again in the past five years, the federal government remains the single largest user of private prisons in the United States.

One reason for this steep increase in the private federal prison population, as well as of the private prison population in general in the United States is the country’s extraordinarily high incarceration rate. In March 2020, the Prison Policy Initiative, an organization supporting decarceration, reported the incarceration rate of the US to be 698 per 100,000, higher than any other country worldwide. However, the high incarceration rate alone does not explain the extensive use of private detention facilities in the US, but it is one part that contributes to overcrowding of the entire system, increasing the need for more facilities. The main characteristic of the US criminal justice system that re-enforces high incarceration numbers and plays in favor of large private prison operators is the fact that the prison system in the US is not built to rehabilitate. It is built to keep people in the system for a long time and is centered around incapacitation and retribution.

Figure 1: Prison Population Rate. Created using data from World Prison Brief

A System of Incapacitation and Retribution

The flaws in the system of the United States become obvious when comparing it to that of high-income countries in Europe, such as the Netherlands and Germany. Both countries have significantly lower incarceration rates than the United States, with Germany at a rate of 76/100,000 and the Netherlands at 69/100,000 at the time  a report by Vera Institute of Justice was written.

A key explanation for these significantly lower rates lies in the philosophical and practical approaches of certain European nations, which are very different from the approach taken in the United States. One of the biggest differences within the approaches is the focus on normalization from the two European countries, which is making life in prison as similar to life in the community as possible by granting various freedoms to people in prison. The European model is organized around the central elements of resocialization and rehabilitation, which is reflected in much shorter prison sentences, as well as the extensive use of alternative mechanisms such as fines, community-based sentences, and probation.

A major consequence of the approach followed by the United States is the fact that people are not being prepared to re-enter the community once they are released from prison. This causes the US to have much higher re-incarceration rates compared to Germany, the Netherlands or Norway. This vicious cycle, paired with high incarceration rates, creates a constantly saturated, even overcrowded criminal justice system with vast profit opportunities for private operators.

Profits. Above all Else?

Originally entering the market after the Civil War, the private prison industry experienced a boom due to the mass incarceration which followed the government’s war on drugs in the 1980s. Since then, the for-profit prison sector has evolved and turned into a billion-dollar industry – at the cost of those living in private prisons. Why? Because private corporations, just like any other business, follow one major objective: making the largest profit possible. In doing so, they keep prison budgets as low as possible by employing mostly non-union and low-skilled workers at lower salaries, offering limited benefits compared to publicly run institutions, and keeping all kinds of additional expenses for utilities, healthcare and food at the bare minimum [6].

These cost savings come at a price. Employing fewer and lower-skilled guards leads to significantly higher employee turnover rates in privately operated prisons, which ultimately results in safety and security risks for the imprisoned people, due to the inexperience of the guards. The Department of Justice (DOJ) found in its 2016 report that in private federal prisons, there are significantly higher safety issues than in public federal prisons.

Even though stories reporting the conditions in privately operated prisons regularly surface, state-level governments and the federal government continued to award private corporations with contracts over the past decades. From the government’s perspective, this is done for two major reasons: to deflect responsibility for the conditions away from the government and, allegedly, because letting a private operator provide the service saves money. However, several reports indicate that there were no findings that suggested that the use of private prisons is more cost-effective than public prisons. These falsified claims often originate from the private prison industry and are misleading because most private prisons are low-security facilities, which are less expensive to operate. According to the Bureau of Justice Statistics, when accounting for security levels and other variations, supposed cost savings have not materialized [7].

Prison Profiteering

To understand the mechanisms at play, it is important to examine the concept of prison profiteering, the influences the private prison industry has on politicians and policymakers, and how a whole industry behind it emerged. The primary objective of for-profit prisons is to be profitable and generate stakeholder value. Like any other business, private prison companies constantly seek to obtain new contracts to develop and manage new facilities [8].

Private prisons rely on being full to be economically viable, due to the way their contracts with the government are constructed. The government pays the private company an agreed-upon yearly cost per prisoner. In return, the private facility provides a mandatory ration of food, clothing, healthcare and other needs, often at low quality and restrained to the bare minimum to keep profit margins as high as possible.

To maintain a high occupancy rate, many private prison operators mandate the state government to ensure that the privately run facilities are always filled at a certain occupancy rate, which usually lies around 90 percent. In Arizona, three private prisons even operate under a 100 percent occupancy guarantee. Private prison operators claim their practices have no impact on the criminal justice system. However, a study by the Washington State University uncovered that privately owned prisons, on average, lead to an increase in the prison population, as well as an increase in the sentence length for non-violent crimes [9]. Coincidentally, private facilities predominantly host non-violent offenders [10].

From Single Service to Billion Dollar Industry

What started as a relatively small industry focused on detention facilities in the 1980s has evolved into a multibillion-dollar giant. Together, the GEO Group and CoreCivic have spent over $2.2 billion to acquire smaller companies to branch out to new industries beyond incarceration. For example, the GEO Group has acquired BI Incorporated, an ankle bracelet monitoring company, which also provides prison healthcare services and operates residential reentry centers. This is only one example of how private prison operators have extended their reach and diversified the services they provide to include reentry programs, rehabilitation centers, food and health services, ankle bracelets, transportation services and more [11]. These services are diverse, yet they have one thing in common: they all depend on people being imprisoned to survive.

Corruption, Lobbying and Political Influence

Despite the obvious objective of for-profit prison companies to expand their contracts, they claim that opportunities to do so depend on factors completely out of their control. In a 2014 annual report, Corrections Corporation of America, now CoreCivic, appealed to its stakeholders that the relaxation of sentencing practices, falling conviction rates, and changes in criminal law would, among other factors, negatively affect the company’s profit perspectives. Several cases of corruption, as well as the industry’s active involvement in lobbying and political campaigns reveals that private prison operators indeed try to influence these factors. In 2009, the profit-maximizing incentives led to a major case of corruption, when two judges in Pennsylvania were found to have received a total of $2.6 million from two juvenile detention facilities [12]. The payments were part of an agreement, which led to the conviction of twice as many children as the state’s average, over a period of several years. While such illegal actions are not the norm, they clearly show that the profit objective of private prison companies can impair the functioning of the whole criminal justice system – at the cost of those being unfairly judged and imprisoned.

Private prison operators, such as CoreCivic and the GEO Group, despite claiming their objectivity, are involved in several activities to influence the political and legal landscape and bend conditions in their favour. Both private companies were actively involved with the American Legislative Exchange Council when it worked to draft model legislation that impacted mandatory minimum sentences, the three-strikes law, and other laws, all of which contribute to higher prison populations. Moreover, the companies have close ties to politicians. For example, US Senator Marco Rubio, a former speaker of the Florida House of Representatives, has close ties to the GEO Group. During his time in Florida, he awarded the GEO Group a $110 million contract for a new private prison. Throughout his career, he has received over $40,000 in campaign donations from the GEO Group.

Furthermore, CoreCivic and GEO Group contributed millions to the election campaign of former President Trump, an investment that did not remain unrewarded, as private prison operators largely benefitted from Trump’s strict immigration policies. The close ties to politicians and strong lobbying activities of the companies show that private prison corporations are not only hosting convicted and imprisoned people; they also play an active role in deciding who is a criminal in the United States by influencing policymakers, politicians and directly lobbying on laws that impact sentencing patterns.

A Wave of Change

Over the past decades, an increasing number of activist and advocacy groups have strengthened their fight against the privatization of the prison system. Initiatives, such as the Sentencing Project and the Prison Policy Initiative direct their efforts toward educating others about the harmful consequences of public services being in the hands of profit-oriented private corporations. A series of scandals and reports about the conditions in private facilities triggered former President Obama to phase out contracts between the Department of Justice (DOJ) and private operators, a decision that was overturned under the administration of former President Trump but has now been reinstated through President Biden’s EO of 26 January 2021.

And although contracts between the DOJ and private operators will be phased out, possibly costing the two largest operators, CoreCivic and GEO Group, roughly 20 percent of their annual revenues, the remaining parts of the privatized criminal justice system are enormous. Privately run immigration detention centers host over 80 percent of Immigration and Customs Enforcement Agency (ICE) detainees and have grown by 739 percent between 2002 and 2019. They also account for almost 30 percent of CoreCivic’s revenues.

A crucial step to fight against these privately run detention centers was undertaken in 2019 by the state of California. The state passed Assembly Bill 32, which phases out contracts with private prison operators and privately run immigration detention facilities until 2028. In doing so, California is well ahead of the federal government and shows how state laws can work on a complimentary basis to federal government decisions, potentially paving the way towards a future version of the criminal justice system fully under public management.


Further resources:

[1] Gotsch, K. & Basti, V. (2018). Capitalizing on Mass Incarceration: U.S. Growth in Private Prisons. The Sentencing Project.

[2] Duguid, K. (2021). U.S. private prison revenues under pressure from new Biden rules. Reuters.

[3] Williams, T. (2018). Inside a Private Prison: Blood, Suicide and Poorly Paid Guards. The New York Times.

[4] The Sentencing Project (2021). Private Prisons in the United States.

[5] Federal Bureau of Prisons (2021). Statistics.

[6] Kim, C. (2019). Private prisons face an uncertain future as states turn their backs on the industry. Vox Media.

[7] Vittert, L. (2018). The cold hard facts about America's private prison system. Fox News.

[8] Cohen, M. (2015). How for-profit prisons have become the biggest lobby no one is talking about. The Washington Post.

[9] Weybright, S. (2020). Privatized prisons lead to more imates, longer sentences, study finds. Washington State University.

[10] Laughland, O. (2016). Private federal prisons are more dangerous, damning DOJ investigation reveals. The Guardian.

[11] Sawyer, W. & Wagner, P. (2020). Mass Incarceration: The Whole Pie 2020. Prison Policy Initiative.

[12] Urbina, I. (2009). Despite red flags about judeges, a kickback scheme flourished. The New York Times.

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