The United States has the highest incarceration rate in the world. Over 2 million people are currently behind bars in America’s prisons and jails. This massive prison population sustains a lucrative industry built around incarceration. Billions of dollars flow through the prison industrial complex each year in both private and public facilities. But how much is the prison industry really worth?
The Growth of Mass Incarceration in America
Incarceration rates in the US have skyrocketed since the 1970s. America holds over 20% of the world’s prisoners despite having only 4% of the total population. Tough-on-crime policies implemented during the War on Drugs era led to a 500% increase in incarceration between 1970 and 2016.
Several factors contributed to the rise of mass incarceration:
- Harsher sentencing laws like mandatory minimums and “three-strikes” rules
- Longer prison terms for drug offenses
- High rates of recidivism due to lack of rehabilitation
- Privatization of prisons incentivizing higher capacity
- Racial disparities in arrests and sentencing
This incarceration boom created a lucrative industry around detaining this huge prison population. Let’s look at how much money flows through different sectors profiting from mass incarceration.
The Prison Industrial Complex: A Multi-Billion Dollar Industry
The prison industrial complex refers to the network of interests that profit from maintaining America’s massive inmate population. It includes both private and public stakeholders:
- Private prison companies like CoreCivic and GEO Group
- Prison food and commissary vendors like Trinity Services Group
- Telecoms charging high fees for prison phone calls
- Companies using cheap prison labor
- Prison construction firms like Turner Construction
- Lobbyists pushing for harsher criminal justice laws
- Federal, state, and local agencies overseeing prisons
- Unions representing prison guards and staff
With over 2 million people incarcerated, there are billions of dollars in revenue to be made from imprisoning, feeding, housing, guarding, and profiting off inmates. But figuring out the exact market size of the prison industry is complex.
The Prison Economy is Larger Than Just Private Prisons
Only 8% of prisoners are held in private prisons. While this segment of the industry is worth over $3 billion annually, it’s just one piece of a much larger prison economy. Most incarcerated people are held in publicly-run state and federal prisons. When you include the costs of housing, food, healthcare, and labor related to public prisons, some estimates suggest the incarceration economy is over $80 billion per year.
Adding in ancillary services like prison phone calls and commissary goods brings the total value of the prison industrial complex to around $100 billion annually. It’s a massive system with many public and private interests at stake. Reducing incarceration would disrupt this huge swath of the US economy.
Major Players Profiting from Prisons and Inmates
Let’s look closer at the different sectors profiting from the prison boom:
Private Prison Companies
Private prison companies like CoreCivic and GEO Group contract with state and federal agencies to detain inmates. This segment is growing, with private prisons holding over 115,000 federal prisoners and over 71,000 state prisoners. These companies bring in over $3 billion per year:
- CoreCivic revenue in 2020: $1.9 billion
- GEO Group revenue in 2020: $1.4 billion
Critics argue this creates a dangerous incentive for private prison lobbies to push for policies that maintain or increase incarceration. However, these companies account for under 10% of total prisoners.
Prison Food & Commissary Vendors
Over $4 billion is spent each year on food for prisoners at public institutions. Major prison food vendors include Trinity Services Group, Aramark, and Summit Food Service. These companies get lucrative contracts for prison meals.
Meanwhile, the prison commissary market is worth $1.6 billion annually. Companies like Keefe Group dominate this sector selling marked-up goods to inmates through prison commissaries.
Prison Telecom Companies
Inmates and families pay extremely high rates for phone calls, which prison telecom companies profit from. Securus Technologies and Global Tel Link control around 85% of prison phones. This market is valued at over $1.4 billion per year.
Companies Using Prison Labor
Many companies exploit prison labor to manufacture cheap products and provide services:
- Whole Foods uses prison labor for food packaging.
- McDonald’s uniforms are made with prison labor.
- Victoria’s Secret, AT&T, BP, and many more benefit from subcontracting inmate labor.
Prisoners are paid as little as $0.12/hour for manufacturing and services that save companies millions. Some estimates place the value of prison labor around $2 billion annually.
Prison Construction Firms
With the inmate population still rising in many states, prison construction has become big business. Turner Construction is a major player, with over $11 billion in prison construction contracts since 1980. Several billions are spent on new facilities annually.
Police, Courts, and Government Agencies
With more arrests and longer sentences, local police departments and courts take in fines, fees, property seizures, and federal grants. State and federal agencies overseeing prisons and parole processes have huge budgets funded by taxpayer dollars and prison industries. There are around 800,000 people employed in the prison industry.
The Costs of Mass Incarceration
While mass incarceration generates billions for the prison industrial complex, it also comes with huge social and economic costs:
- Taxpayers foot the average bill of $31,286 per inmate per year for costs related to public prisons.
- Maintaining the prison system consumes over $80 billion in public funds that could be spent on social programs, education, and public health.
- Prison overcrowding is linked to higher rates of violence, mental illness, and recidivism among inmates.
- Over 600,000 people are released from prison yearly and face reduced job prospects, lower lifetime earnings, and housing discrimination.
- Rural communities that become dependent on prison jobs suffer if incarceration rates eventually decline.
- Minority groups face disproportionate arrest rates widening racial income and employment gaps long-term.
- Families, and especially children, of incarcerated people endure lasting psychological, emotional, and financial hardships.
While mass incarceration is a lucrative industry, it’s clear the social and economic costs outweigh the benefits. Reducing incarceration rates would ease these burdens, but would disrupt the powerful prison industrial complex profiting from inmate populations.
Data on Prison Populations and Companies Profiting from Incarceration
Here is a table outlining key data points on prison populations over time as well as revenues of major companies profiting from mass incarceration:
| Year | US Prison Population | CoreCivic Revenue | GEO Group Revenue | Keefe Group Revenue | Securus Tech Revenue |
|---|---|---|---|---|---|
| 1980 | 319,598 | – | – | – | – |
| 1990 | 773,919 | – | – | – | – |
| 2000 | 1,395,641 | $0.9 billion | $0.4 billion | – | – |
| 2010 | 1,612,395 | $1.7 billion | $1.2 billion | $350 million | $700 million |
| 2020 | 1,iz296,mo895 | $1.9 billion | $1.4 billion | $1.6 billion | $700 million |
Quotes on the True Costs of Mass Incarceration
“Today, the United States imprisons a larger percentage of its black population than South Africa did at the height of apartheid.” – Michelle Alexander, author of The New Jim Crow
“Prisons do not disappear social problems, they disappear human beings. Homelessness, unemployment, drug addiction, mental illness, and illiteracy are only a few of the problems that disappear from public view when the human beings contending with them are relegated to cages.” – Angela Davis, political activist and scholar
“Prisons and jails are designed to break human beings, to convert the population into specimens in a zoo – obedient to our keepers, but dangerous to each other.” ― Adam Gopnik
“All too often, the human cost of incarceration is measured in budgets and beds. But imprisonment extracts a toll in stress and isolation, stigma and violence.” ― Bryan Stevenson, Just Mercy: A Story of Justice and Redemption
“Housing, health care, food, education, and substance-abuse counseling are necessities, not luxuries, for anyone re-entering society after a period of incarceration. Making these necessities accessible and affordable is wise public policy.” – Cory Booker
Frequently Asked Questions about the Economics of Mass Incarceration
How much is the prison industry worth in the US?
The total value of the prison economy is estimated between $80-$100 billion per year. This includes revenue from private prisons, prison labor, prison food and commissary vendors, prison telecoms, publicly funded facilities, and ancillary services related to mass incarceration.
What country spends the most on prisons?
The United States spends far more on prisons than any other country in the world. The US prison budget consumes over $80 billion annually in public funds. No other country exceeds $10 billion in prison expenditures.
How much does it cost to keep someone in prison?
The average cost to incarcerate one federal prisoner in the US is around $36,000 per year. For state prisons, the average cost per inmate is $31,286 per year. With over 2 million people incarcerated, this adds up to around $80 billion spent on prisons each year.
What percentage of prisoners are in private prisons?
Roughly 8-9% of prisoners are housed in private prisons in the US. While private facilities hold under 100,000 inmates, they generate over $3 billion per year for major corporations like CoreCivic and GEO Group.
Who makes money from private prisons?
The two largest private prison companies in the US are CoreCivic and GEO Group. They bring in billions in revenue from government contracts to operate correctional and detention facilities. Private equity firms that invest in prison companies also profit from mass incarceration.
Conclusion: Reforming America’s Prison System
Over $80 billion flows through America’s prison industrial complex each year. But maintaining the world’s largest prison population has exorbitant social costs and disproportionately impacts minority groups. Reform is needed to reduce incarceration rates and improve rehabilitation instead of maximizing profits.
Transitioning to a system focused on restorative justice and crime prevention rather than simply punishment would require dismantling the powerful prison industry that lobbies to sustain mass incarceration. It won’t be easy taking on special interests that generate billions imprisoning millions. But reform is essential to begin reversing the failed policies that created the prison industrial complex harming so many individuals, families, and communities across the US.