Private Prisons Make Money in the U.S.


Private Prisons

The federal government is contracting with a third party to house convicts in private prisons. In 2017 the private prisons accounted for about 8.2% of the state and federal prison population incarcerating 121,718 people. This number has increased by 39.3% since the year 2000. This is in comparison to an overall rise of 7.8% in the prison population. 

Largest Private Prison ‘Businesses’

There are not a lot of companies in the business of operating private prisons. The largest include the Corrections Corporation of America (CCA), the GEO Group, Management and Training Corporation (MTC), and Community Education Centers. During the last two decades, CCA has had profit increases of more than 500 percent. Years back, in 2012, CCA had a revenue of $1.7 billion.

Why Use Private Prisons?

The private prison systems can be operated at lower costs than those funded by the government. It is also said that they can control the population of prisoners, and create jobs in the community. It is believed that private prisons include a lack of cost-effectiveness, safety and security concerns, poor conditions, and the potential for corruption. Private companies, operating prisons, can usually negotiate lower rates for needed items while also saving money in other ways. A private prison takes the burden off the federal government. One report, from the Justice Department, shows that private prisons had a 28 percent higher rate of inmate-on-inmate assaults and more than twice as many inmate-on-staff assaults. 

The Private Prison

The government provides a contract with each private prison. The government then pays a per diem amount for the prisoner or a monthly rate. This is paid for each prisoner in the facility, or for each space available whether it is occupied or not. Many of the contracts are based on the total number of inmates and the average length of time served. These prisons are much less likely to report data involving inmate population, staffing, or where the budget was spent. The biggest difference between a private and public prison has to do with money. If a private prison can cut expenses then this will increase the bottom line – money – and, like any business, that’s the reason for the operation. This means the prison has the opportunity to cut costs in different areas. If the prison houses 1,000 prisoners, and they cut back a specific food in their meals, saving $2.00 per day in expense, that, alone, equates to $2,000 per day. A psychiatrist investigated a private prison in Mississippi. He found that inmates often lost 10 to 60 pounds, as they were severely underfed. When you consider all of the areas where expenses can be cut this allows a private prison to make a lot of money in a year. In 2015 CCA and the GEO Group earned around $3.5 billion all together and more than $4 billion in 2016.

Reports From Prisons

Public prisons are required to provide certain information about the prison to the public. This information explains how well taxpayers’ money is being spent. Private prisons, however, are not required to release information on how they spend their money. They also have the option of accepting or declining any offender they want to. Generally, they choose not to accept a prisoner who has medical or mental conditions as this makes them a more expensive prisoner to house. Research also indicates that private prisons choose less violent offenders. This results in less expense needed for security. It is a fact that private prisons hold a majority of prisoners who have committed non-violent drug-related offenses. 

Policy Changes

The Justice Department, following a review, determined that private prisons were more dangerous and less effective at reforming inmates than facilities operated by the government. This led the Obama Administration to phase out private contracts. However, the Trump administration reversed this directive in 2017 so private prisons received a reprieve.