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How Much Is the Private Prison Industry Worth?

The private prison industry has grown significantly in the United States over the past few decades. While public prisons continue to house the majority of incarcerated individuals, the number of people held in private, for-profit facilities has risen sharply since the 1980s. This growth has been fueled by policies like mandatory minimum sentencing, the War on Drugs, and immigration detention practices.

Today, the two largest private prison companies in America are CoreCivic and The GEO Group. Together, they generate billions in annual revenue through government contracts. But what is the full scope and value of the private prison industry? This article will explore key facts and figures around America’s system of outsourced incarceration.

The Growth of Private Prisons in the US

In 1980, there were very few private prisons in operation nationally. But that changed dramatically with tougher sentencing laws and the escalation of the drug war under the Reagan administration. Prison populations soared, leading many states to turn to the private sector to quickly expand capacity.

Some key events and statistics around the rise of private prisons include:

  • 1984 – The Corrections Corporation of America (now CoreCivic) opened the first modern private prison in Tennessee.
  • 2012 – Nearly 130,000 prisoners were housed in private prisons, representing almost 9% of the total US prison population.
  • 2016 – Under President Obama, the Justice Department announced plans to phase out private prisons. But this policy was later rescinded under the Trump administration.
  • 2020 – Over 112,000 federal and state prisoners were held in private facilities – about 8% of the total prison population.

So while private prisons still represent a minority share of overall incarceration, their rapid growth over the past four decades is significant. CoreCivic and GEO Group now manage over half of all private prison contracts in the US.

The Business Model and Criticisms of Private Prisons

Private prison companies operate via contracts with government agencies like state departments of correction and the Federal Bureau of Prisons. The companies are paid a per diem rate per prisoner by the contracting agency. This rate varies but can range from $50-150 per inmate per day.

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The companies can then run facilities at lower costs than government-run prisons, generating profits by spending less per prisoner on staffing, healthcare, programming, food services, and more. However, many criticize this business model as creating dangerous incentives to maximize profits by reducing critical services and rehabilitation efforts.

Other frequent criticisms of private prisons include:

  • Lack of transparency and oversight compared to public facilities
  • Higher rates of violence and safety issues
  • Overcrowding and inhumane conditions
  • Excessive lobbying efforts to influence criminal justice policies

Despite these concerns, the prison industry continues to wield substantial political influence, preventing more aggressive regulation and reform efforts.

The Annual Revenue of Top Prison Companies

With tens of billions in annual government contracts, major prison corporations have become very profitable enterprises. For example:

  • CoreCivic reported total revenue of $1.86 billion in 2020.
  • GEO Group reported total revenues of $2.35 billion in 2020.
  • Combined, these two companies generate over $4 billion in annual revenue.

Expanding beyond just private prisons, these corporations now provide a wide range of “community corrections” services like halfway houses, electronic monitoring, and parole management. Their revenues continue growing via these ancillary services and acquisitions as well.

For perspective, CoreCivic and GEO Group alone earn more than leading hotel brands like Hyatt ($3.3 billion) and cruise lines like Carnival Corporation ($7.9 billion). Their deep coffers ensure lobbying clout and influence on justice policies for years to come.

Estimates of the Total Value of the Prison Industry

Given thousands of contracts across multiple sectors like corrections, immigration detention, treatment, and community supervision, it’s challenging to pin down the total market value of the private prison industry. However, some estimates include:

  • $5 billion – Estimated annual revenues from private prison contracts according to reporting by the Southern Poverty Law Center.
  • $12 billion – Projected size of the “corrections market” by 2025 according to industry analysis firm Technavio. This includes prisons, jail management, community corrections, and more.
  • $80 billion – Total estimated value of the broader “treatment and behavioral correctional health market” from 2020-2027 according to Grand View Research. This includes rehabilitation services, counseling, mental health services, and related sectors.

So while precise market scope is uncertain, it’s clear that various segments of the privatized corrections and rehabilitation ecosystem generate tens of billions annually in the US. The industry has substantially expanded and diversified beyond just private prison management.

Major Private Prison Corporations and Market Share

As mentioned earlier, CoreCivic and GEO Group dominate the private prison industry:

  • CoreCivic – Founded as Corrections Corporation of America in 1983, it manages over 65 facilities with a capacity for over 50,000 prisoners.
  • GEO Group – Founded as Wackenhut Corrections Corporation in 1984, GEO manages 55 prisons and detention centers with a capacity of over 49,000.

Combined, CoreCivic and GEO Group represent over 80% of today’s private prison market. Smaller competitors include companies like:

  • Management & Training Corporation (MTC) – Operates 23 prisons and detention centers.
  • LaSalle Corrections – Runs 15 prisons and detention facilities in Georgia, Texas, and Louisiana.
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No other companies come close to rivalling the scale and dominance of the “CoreCivic-GEO duopoly” which continues aggressively growing and acquiring smaller competitors.

Private Detention Centers for Immigrants

A major segment fuelling growth is immigrant detention centers. Companies like CoreCivic and GEO Group manage the majority of centers via contracts with Immigration and Customs Enforcement (ICE):

  • Over 80% of ICE detainees are held in privately run facilities.
  • In 2018, around 27,000 immigrants were detained per day in over 200 facilities.
  • Most contracts mandate guaranteed minimum occupancy. ICE pays for unused beds, creating incentives for maximum detention.

With controversial immigration and asylum policies in recent years, immigrant detention has become very lucrative. Revenues at CoreCivic and GEO Group swelled in 2018-2019 thanks to detention center expansion under Trump administration directives.

Key States Where Private Prisons Operate

Private prisons are concentrated in states with highest incarceration rates like:

Texas – 49 private facilities holding over 29,000 inmates.

Florida – 7 private prisons and a total private capacity of over 18,000.

Arizona – 13 private prisons managing 4,000 prisoners.

Georgia – 6 private prisons holding nearly 3,000 inmates.

Mississippi – 10 private facilities with capacity for over 5,000.

However, states like Illinois, New York, and California only have a few privately run facilities. Efforts to ban contracts with prison companies have gained momentum in more progressive states.

Financial Ties Between Corporations and Government

Close ties between private prison companies and government raise ethics concerns. The industry spends millions on lobbying and campaign finance annually to influence justice policies and secure contracts. Key examples include:

  • GEO Group and CoreCivic gave over $10 million to state-level candidates and committees from 1989 to 2016.
  • GEO Group donated $275,000 to the Trump inaugural committee and $5 million to a pro-Trump Super PAC in 2020.
  • The wife of a recent Arizona governor lobbyist for CoreCivic while he was in office. He later became a consultant to the company.

With such deep government ties, critics argue prison company interests distort criminal justice reform efforts. Reducing inmate populations would threaten revenue and bottom lines.

Attempts at Reform and Oversight

Despite criticism, private prisons remain entrenched in the justice system. But some reform efforts are underway:

  • Multiple lawsuits have alleged mistreatment and human rights violations at private immigration detention centers.
  • Over a dozen states have introduced legislation to limit or phase out private prison contracts. However, none have fully banned the practice yet.
  • In 2016, the Justice Department under Obama announced plans to end all private prison contracts. But the Trump administration reversed this directive in 2017.
  • Congressional hearings have recently scrutinized conditions, oversight, and accountability issues in private facilities.

While the industry’s influence provides obstacles to change, a public reckoning over systemic injustices has fueled momentum for reform. With activism and policy proposals gaining steam in many states, the scope of privatized incarceration may yet face real restrictions.

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The Bottom Line

In summary, the private prison industry has grown into a multi-billion dollar ecosystem deeply entrenched in America’s criminal justice system. CoreCivic and GEO Group generate huge revenues via tens of thousands of government contracts. Close ties between corporations and officials raise questions about integrity and oversight.

While the total market value is difficult to quantify, between direct contracts, community corrections, and rehabilitation services, privatized incarceration is now valued at tens of billions annually and growing. Despite reform efforts, private prisons continue proliferating amid mass incarceration. Addressing the scope and consequences of prison privatization remains an urgent challenge for justice advocates nationwide.

Notable Private Prison Controversies and Lawsuits

DateDescription
May 2019Michigan settles a lawsuit with GEO Group for $860,000 over deaths and abuse at a youth detention facility.
July 2019Three deaths within a 2-month span spark protests over medical neglect at CoreCivic’s Eloy, Arizona immigrant detention center.
December 2019Washington State sues GEO Group for violating minimum wage laws by paying detainees just $1 a day for labor.
February 2020After an inmate death, CoreCivic faces scrutiny over understaffing and mismanagement at an Alabama prison.
March 2020GEO Group is accused of allowing rampant violence, drug smuggling, and squalid conditions at facilities in Mississippi.

Frequently Asked Questions About Private Prisons

What are the main differences between private and public prisons?

Private prisons are operated by for-profit companies via contracts with government agencies. They aim to run facilities at lower costs while generating shareholder profits. Public prisons are operated directly by government corrections departments.

What are common criticisms of private prisons?

Frequent criticisms include: lack of transparency/oversight, cost-cutting affecting safety and conditions, overcrowding, high staff turnover, lack of programming/rehabilitation efforts, and unethical lobbying influence on criminal justice policies.

Do private prisons really save taxpayer money?

Debate continues around costs. Some research shows private facilities having lower operational costs per inmate. But others argue this fails to account for many hidden public costs like monitoring and oversight.

Why are private immigration detention centers controversial?

For-profit immigrant detention has been plagued by allegations of human rights abuses, medical neglect, overcrowding, and dangerously inadequate staffing levels while generating billions in revenue.

Can states ban private prison contracting?

Yes, some states have introduced legislation to ban or phase out contracts with prison companies. To date, no state has fully prohibited the practice but some have imposed restrictions. The industry lobbies aggressively against any bans.

Conclusion

The growth of private, for-profit incarceration has prompted increasing alarm in recent years as prison populations soar. Major companies like CoreCivic and GEO Group now operate many facilities nationwide housing both prisoners and immigrant detainees. With billions in annual revenue and close government ties, these corporations hold formidable influence on justice policies.

While private facilities still represent a minority share of overall incarceration, their continued expansion in an era of mass imprisonment raises fundamental questions around ethics, cost-benefit analysis, and the potentially dangerous incentives of prison privatization. With more investigative scrutiny and public pressure for reform, the future scope and very existence of profit-driven incarceration remains uncertain. But for now, the multi-billion dollar private prison industry remains deeply embedded in America’s ever-evolving justice system.

Prison Inside Team

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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.

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