Skip to content

How Much Does The State Make Off Of Prisoners?

The United States has the highest incarceration rate in the world. As of 2020, there were over 2 million people incarcerated in state and federal prisons and local jails across the country. This massive prison population has led many to characterize the American criminal justice system as one of “mass incarceration.”

While the ethical and social implications of mass incarceration have received much attention, the economic side of this issue is equally important to examine. This article will analyze the financial costs and incentives behind mass incarceration, addressing questions such as:

  • How much money do states spend on prisons?
  • What industries profit from prison labor and prison privatization?
  • How does the economics of mass incarceration affect incentives for reform?

By looking at the numbers behind the prison industrial complex, we can better understand the forces that drive incarceration rates and evaluate proposals for change.

The Rising Costs of Incarceration

Over the past four decades, state and federal spending on prisons has increased dramatically. According to the VERA Institute of Justice, nationwide expenditures on incarceration rose from $17 billion in 1980 to $81 billion in 2017. When accounting for inflation, this represents more than a threefold increase in prison spending.

Several factors have driven the rising costs of incarceration:

Construction of New Prisons

  • To house the growing incarcerated population, states and the federal government have constructed new prisons and expanded existing facilities.
  • From 1980 to 2000, states opened more than 1,000 new prisons and jails. This prison construction boom cost taxpayers billions.

Operational Costs

  • The average cost to incarcerate one prisoner for a year is over $30,000. With over 2 million behind bars, this adds up quickly.
  • Major operational costs include prison staff salaries, inmate healthcare, food services, and utilities. These costs have risen along with the incarcerated population.

Specialized Facilities and Programs

  • States have built specialized supermax prisons to house violent or disruptive inmates in solitary confinement. These facilities cost 2-3 times more per prisoner than minimum security prisons.
  • Many prisons also offer rehabilitative programs like education, vocational training, and mental health treatment. While often beneficial, these services also drive up per prisoner costs.
See also  How Much Prison Time Did Lorena Bobbitt Get?

With incarceration rates starting to level off, prison spending is now consuming an ever larger share of state budgets. Corrections departments routinely lobby legislators for greater funding, competing with other priorities like education and healthcare. Reducing incarceration could potentially save states billions, but there are economic disincentives working against reform.

The Prison Industrial Complex

Beyond just operating prisons, mass incarceration has given rise to a lucrative private prison industry and a market for cheap prison labor. These for-profit interests create economic incentives to maintain high incarceration rates.

Private Prisons

  • Private for-profit companies like CoreCivic and GEO Group operate hundreds of prisons and detention centers nationwide under contracts with state and federal agencies.
  • The private prison industry generates over $4 billion in annual revenue and spends millions on lobbying state legislators and members of Congress to protect and expand the use of for-profit incarceration.

Prison Labor

  • Prison labor provides a cheap and readily available workforce for both public and private employers. Inmates typically earn less than $1 per hour working prison jobs.
  • Many prisons contract with private companies for work programs. This $2 billion industry includes manufacturing, telemarketing, package handling for major retailers, and even call centers fielding customer service lines.
  • Agriculture, textiles, furniture making, and mining also utilize thousands of prisoners for cheap manual labor. All of these industries lobby to maintain access to this captive labor pool.

Through campaign contributions and lobbying, the prison industrial complex perpetuates tough-on-crime policies that keep incarceration rates high. Prison privatization and labor raise ethical issues as well, regarding the exploitation of inmates for profit motive.

Impacts on State Economies

The economics of mass incarceration have affected broader state and regional economies in complex ways. Experts continue debating these impacts, but some clear relationships have emerged:

Effect on Employment Markets

  • With over 800,000 inmates released each year, economists have studied how increases in former prisoners entering the job market affect employment rates and wages for different demographics.
  • Evidence suggests that low-skilled workers are most negatively impacted by competition from formerly incarcerated individuals re-entering their communities. However, results overall are mixed.

Effect on State Budgets and Taxes

  • As incarceration consumes an ever larger portion of state budgets, there are concerns that spending on prisons displaces funding for other public programs and services. However, higher incarceration rates do not appear to consistently decrease non-prison expenditures.
  • Some research indicates that incarceration increases crime rates later on, imposing public costs through more policing, courts, and victimization. But these effects are difficult to quantify at a macroeconomic level.
  • There is also limited and conflicting evidence on how incarceration impacts state tax revenues. While reducing potential tax revenue from imprisoned individuals, inmate populations are excluded from unemployment figures and contribute economic activity through prison labor.
See also  How Much Money Does Prison Labor Generate?

Impact on Rural Towns with Prisons

  • While urban communities are disproportionately impacted by incarceration, hundreds of small rural towns across America host large prisons. This provides jobs but has not proven an economic boon.
  • Rural prison towns typically have higher unemployment and poverty rates than average. Prisons fail to attract new industries or generate significant tax revenue. Residents also shoulder costs like damaged roads from prison transports.
  • However, many struggling rural towns actively seek to attract prison construction, considering it their best economic development option, despite mixed results.

The overall economic consequences of mass incarceration remain debated as a complex issue intersecting labor markets, government budgets, rural economies, and more. But reform efforts typically centre on the staggering direct costs of maintaining such a large imprisoned population.

Reform Efforts Target Prison Costs and Incentives

With heightened public scrutiny on the justice system in recent years, both political parties have embraced certain reforms aimed at reducing incarceration rates and correcting imbalances. Many of these proposed reforms directly address the economic burdens and perverse incentives created by mass incarceration.

Cutting Corrections Spending to Fund Alternatives

  • Rather than spending billions to imprison non-violent offenders, many states seek to funnel more funding into alternative programs like drug treatment, probation, and vocational training.
  • California’s Proposition 47 in 2014 reclassified several non-violent felonies as misdemeanors. The state estimated this would reduce prison populations by 10,000 and save $150-200 million per year.

Eliminating Mandatory Minimum Sentences

  • Reformers propose eliminating mandatory minimums and “three strikes” laws that compel long sentences. This grants judges more discretion to avoid ineffective and costly incarceration.
  • Bipartisan efforts in Congress with the Smarter Sentencing Act aim to roll back overly harsh federal mandatory minimums and expand early release programs.

Curbing Prison Privatization and Limiting Cheap Prison Labor

  • Activists urge states to cut ties with for-profit prison operators that lobby for policies driving incarceration. Private facilities may also cut costs and compromise prisoner welfare and labor rights.
  • Some states have passed laws mandating that prison labor not harm existing private sector jobs. But debate continues on allowing prison labor in general.

Investing More in Prisoner Education and Re-Entry Programs

  • Education programs for inmates reduce recidivism rates after release, saving states from re-incarcerating repeat offenders. But many prisons have cut back these offerings to cut costs.
  • Similarly, expanding transitional jobs programs and social services for ex-prisoners may yield major savings from reduced future crime and re-incarceration. But these require upfront public investment.
See also  How Much Does Prison Labor Contribute To The Economy?

While states adopt differing combinations of these reforms, most approaches recognize that mass incarceration has become an inefficient use of public funds. But undoing the prison industrial complex also requires confronting entrenched economic and political interests. With so many interconnected financial and social costs in the equation, finding the right policy balance remains challenging.

Notable Crimes and Convictions

Here is a summary of some notable crimes, dates, convictions, and quotes about the cases:

Bernie Madoff Ponzi scheme2008-2009150 year prison sentence“I am responsible for a great deal of suffering and pain, I understand that.” – Madoff
Enron fraud scandal2001Jeffrey Skilling sentence reduced to 14 years“I recognize that I’m going to prison, likely for a long time.” – Skilling
Oklahoma City bombing1995Terry Nichols life sentence“I harbor no personal animosity toward anyone.” – Nichols
OJ Simpson murder trial1994Acquitted but later jailed for robbery“I will not give up my quest for the truth.” – Simpson
Rodney King beating19912 year sentence for one officer“This has been a long journey for all of us.” – King
Son of Sam murders1976-197725 years to life sentence“I believe that society has to take the blame for what happened here.” – Berkowitz
Patty Hearst kidnapping197435 year sentence, later commuted“With the help of family and friends, I have made some progress.” – Hearst
Charles Manson cult murders1969Life sentence“Look down at me and you see a fool, look up at me and you see a god.” – Manson

Frequently Asked Questions

How much does it cost to incarcerate each prisoner?

The average cost to incarcerate one prisoner for a year is over $30,000, depending on the state. With over 2 million people incarcerated nationwide, this adds up to over $80 billion per year in corrections expenditures.

What industries profit from mass incarceration?

Major beneficiaries of mass incarceration include the private prison industry, companies that use cheap prison labor, prison food and healthcare providers, construction companies that build prisons, and lobbyists who support policies keeping incarceration rates high.

Do prisons provide any economic benefits to communities?

Prisons do create jobs in the rural towns where many facilities are located, but research shows these economic benefits are fairly limited. Prisons often fail to attract new industries or generate substantial tax revenue.

Why are so many ex-prisoners unemployed?

In addition to lack of qualifications and the stigma of a criminal record, some economists believe competition from formerly incarcerated people re-entering the low-wage labor market drives down wages and opportunities for similar workers who were never incarcerated.

How does the US prison population compare historically and internationally?

With over 2 million incarcerated, the US imprisonment rate of 655 per 100,000 residents is the highest in the world. Before the 1980s prison boom, America’s incarceration rate was similar to other developed nations at around 100 per 100,000.


Mass incarceration in the United States has reached a scale unprecedented globally and historically. While policy and social factors enabled this prison boom, economic incentives and entrenched financial interests now help maintain America’s vast incarcerated population. Examining the full costs of imprisonment makes clear the need for reform aimed at reducing inefficient spending on corrections and reinvesting in alternatives proven to enhance public safety.

But undoing the deeply rooted economic and political infrastructure underlying mass incarceration presents a major challenge requiring collective political will and a rethinking of how our society pursues justice. With both major parties acknowledging the current system’s unsustainability, this issue will likely remain the subject of intense debate in the years to come.

Prison Inside Team

Share this post on social

See also  How Much Does Prison Labor Pay? An In-Depth Look

Welcome to ‘Prison Inside,’ a blog dedicated to shedding light on the often hidden and misunderstood world within correctional facilities. Through firsthand accounts, personal narratives, and insightful reflections, we delve into the lives of those who find themselves behind bars, offering a unique perspective on the challenges, triumphs, and transformations that unfold within the confines of these walls.

See also  How Much Does Prison Labor Contribute To The Economy?