The privatization of prisons began in the 1980s as a solution to overcrowding and rising costs. Private companies argued they could operate prisons more efficiently and save taxpayers money. This led to a boom in for profit prisons that continues today.
In 1980, there were no private adult correctional facilities in the US. By 2020, private prisons held 121,718 state and federal prisoners, representing 8% of the total US prison population. The two largest private prison companies are CoreCivic and GEO Group, operating over half of private facilities.
While supporters claim private prisons cut costs, research shows this is not always the case. Some studies have found private prisons keep costs low by paying employees less, providing substandard medical care, and not offering adequate programs to reduce recidivism.
How For Profit Prisons Generate Revenue
For profit prisons make money primarily through government contracts that pay them a per diem rate per prisoner. This rate varies but averages around $60-70 per prisoner per day. With thousands of prisoners, private prison companies can generate huge revenues.
Here are some of the main ways for profit prisons generate income:
- Per diem rates – A daily fee for each prisoner, paid by state and federal agencies. This covers costs for food, security, programs.
- Bonus payments – Governments sometimes pay bonuses for meeting quotas like keeping facilities filled to 90% capacity. This incentivizes high incarceration rates.
- Real estate trusts – Prison companies can create REITs to develop properties and lease land. This provides a separate stream of revenue.
- Inmate services – Prisons charge for phone calls, commissary, copays. These services generate hundreds of millions in revenue.
- Labor programs – Private prisons exploit inmate labor, paying pennies per hour while charging outside companies higher rates.
- Government contracts – Private companies secure lucrative deals to provide prison food, health care, transportation.
- Treatment and rehabilitation programs – Privately run addiction treatment, education and vocational programs funded by government contracts.
In total, the two largest private prison companies in the US generate over $4 billion in annual revenue. The profit margins are between 14-29%, demonstrating that prisons can be extremely lucrative.
Controversies and Ethical Concerns
The for profit prison industry has faced growing public scrutiny and criticism in recent years. Here are some of the main controversies and ethical issues that have been raised:
- Incentives for mass incarceration – Tied to occupancy rates, private prisons benefit from harsh sentencing laws that keep prisoner numbers high. Critics argue this creates perverse incentives.
- Reduced rehabilitation – To maximize earnings, private prisons may cut back on rehabilitative services and programs that could reduce recidivism.
- Lobbying efforts – Private prison companies spend millions lobbying for legislation that could increase incarceration, such as harsher drug and immigration laws.
- Poor conditions and understaffing – To keep costs down and profits up, private prisons often provide substandard living conditions, food, and healthcare. They tend to have lower staff levels.
- Lack of transparency and oversight – As private companies, for profit prisons can avoid public disclosure laws and hide details of their operations from the public.
- Exploiting immigrant detention – Private firms have been accused of abusing immigrant detainees to maximize revenue from government contracts.
- “Pay-to-stay” fees – Some private jails charge inmates daily room and board fees on top of their sentences, profiting further from incarceration.
While private adult facilities still represent a small portion of the total US prison system, the rise of for profit incarceration has alarmed social justice advocates. It reflects deeper problems of racial disparities and overcriminalization in the justice system.
Financial Performance of Major For Profit Prison Companies
Below is a comparison of the revenues, profits and profit margins of the two largest for profit prison corporations in the US. This gives a sense of how lucrative the industry is:
CoreCivic (formerly Corrections Corporation of America)
- 2021 total revenue: $1.86 billion
- 2021 net income: $189 million
- Profit margin: 10%
GEO Group
- 2021 total revenue: $2.35 billion
- 2021 net income: $116 million
- Profit margin: 5%
CoreCivic brings in around $6 million per day in revenues from its government contracts. Meanwhile, GEO Group earns around $8 million daily. In a typical year, both companies generate over $100 million each in pure profit.
Critics argue these earnings are driven by high incarceration rates, not improved rehabilitation. However, executives at CoreCivic and GEO Group defend their business models, claiming they provide a cost-effective service to taxpayers.
Notable Instances of Misconduct and Controversy
Both CoreCivic and GEO Group have faced lawsuits and scandal over their practices. Here are some notable examples:
- Wrongful death lawsuits – Both companies have faced multiple wrongful death suits alleging negligence in inmate deaths due to poor medical care, violence, and suicides.
- Understaffing and poor conditions – Whistleblowers and inmates have reported understaffing, lack of programming, and unsanitary conditions at some facilities.
- Immigrant abuses – GEO Group’s immigrant detention centers have faced accusations of forced labor, physical abuse, and unsafe conditions.
- Escapes and riots – Understaffing and poor security have contributed to prisoner escapes and riots at some private prisons.
- Lawsuits over labor programs – Inmates have sued CoreCivic and GEO Group over poor pay for mandatory labor programs, arguing it violates anti-slavery laws.
- Bribing officials – GEO Group allegedly gave over $1 million in gifts and campaign donations to Florida officials in exchange for lucrative contracts.
Despite these controversies, both prison giants have seen steady growth in revenues and executive pay. Critics argue their financial success comes at the cost of human rights. Advocates are calling for greater oversight and accountability.
Major Cases of Crimes and Convictions in For Profit Prisons
For profit prisons are not immune to crime committed within their walls by inmates, employees, and company leadership. Here is a sampling of notable criminal cases that have occurred:
These cases show that even private corporations managing prisons are not immune to criminal activity within their facilities or their own executive ranks. Critics argue the profit motive incentivizes unethical conduct that puts inmate and public safety at risk.
Quotes on For Profit Prisons from Reform Advocates and Critics
Here are some selected quotes highlighting concerns about for profit prisons from criminal justice reform groups, policymakers, and activists:
“A prison that is operated by a private company simply has different motivations, values and incentives. The job is to maximize profits. The primary goal is to make money. That is fundamentally in conflict with what I understand as the primary goal of incarceration, which is rehabilitation.” – Cory Booker, Senator
“There’s something morally wrong with making a profit from locking people up.” – John Larivee, CEO of Community Resources for Justice
“For-profit prisons have a corrupting incentive to maximize the number of people behind bars in order to maximize profits.” – National Employment Law Project
“When you allow companies to turn imprisonment into a profit-making enterprise, you create a very dangerous set of incentives.” – John Gramlich, Pew Research Center
“Private prison companies have supported and helped enact criminal justice policies that drive up incarceration rates. Despite claims that they can save taxpayer dollars, the evidence shows private prisons don’t save money and jeopardize safety.” – Families Against Mandatory Minimums
“For-profit companies that provide fundamental public services shouldn’t be allowed to have superior political influence as they pursue their financial self-interest over the public interest.” – Public Citizen
These perspectives argue that the incentives created by introducing corporate profit into incarceration undermine broader goals of justice and rehabilitation. With lives at stake, critics contend prisons should not be run as money-making enterprises.
Frequently Asked Questions
How much money do private prisons make per inmate?
Private prisons bring in around $60-70 per inmate per day from their government contracts. With approximately 128,000 inmates nationwide, the top two companies generate over $3 billion annually in revenue from these per diem rates and contracts.
Do private prisons really save states money?
There is no consensus on whether private prisons reduce costs. Some research shows they keep expenses lower by paying less for staff, healthcare, programs. But other studies find they do not save significantly compared to public prisons, while providing worse conditions.
How much are executives at private prison companies paid?
Top executives earn millions in compensation. CoreCivic’s CEO made $1.8 million in 2020. GEO Group’s CEO took home $7.6 million in compensation the same year. These multimillion salaries come primarily from taxpayer-funded government contracts.
Have private prison companies supported policies that increase incarceration?
Investigations have revealed the major prison companies spent millions lobbying for harsher criminal and immigration laws that filled their facilities. They also funded advocacy groups, donated to campaigns, drafted model legislation that benefited their bottom line.
Are private prisons subject to public records laws and transparency requirements?
No, private prisons can claim exemptions from Freedom of Information Acts, public record laws, and disclosure rules that apply to government agencies. This lack of transparency makes oversight more difficult.
Conclusion
In examining how much for profit prisons make, this article reviewed the troubling rise of private prisons over the past few decades and their mechanisms for generating revenue. While prison companies promise cost savings, the reality is more complex, with evidence showing they incentivize higher incarceration rates, reduce rehabilitation efforts, and face chronic understaffing issues that jeopardize safety.
Major for profit prison corporations now earn billions annually through government contracts, inmate labor, fees, and other means – all facets critics condemn as unethical. With numerous scandals, human rights violations, and concerns over public accountability, the debate around privatized incarceration continues. But the lure of profits in punishment persists despite calls for reform.