NEW YORK - Though state governments are no longer fueling a private prison boom,
the industry's major companies are upbeat — thanks in large measure to a
surge of business from federal agencies seeking to house fast-rising numbers of
criminals and detained aliens.
Since 2000, the number of federal inmates in private facilities — prisons
and halfway houses — has increased by two-thirds to more than 24,000. Thousands
more detainees not convicted of crimes are confined in for-profit facilities,
which now hold roughly 14 percent of all federal prisoners, compared to less than
6 percent of state inmates.
Critics, including prisoners rights groups and unionized corrections officers,
contend the policy amounts to a federal bailout of an industry that would otherwise
be struggling with a checkered record. The companies and the government say
they provide a flexible, economical alternative to building new federal prisons
as get-tough policies boost demand for space in an overcrowded system.
"If the Bureau of Prisons is going to build capacity for themselves, they
have to plan eight years in advance," said John Ferguson, chief executive
of the Corrections Corporation of America, the biggest company in the field.
"It takes a lot longer in the public sector than private sector to get
The industry expanded rapidly in the 1990s on the assumption that business
in a tough-on-crime era would grow indefinitely. But escapes and violence at
a few private prisons, along with questions about cost savings, tempered enthusiasm.
Saddled with thousands of empty beds, CCA teetered near bankruptcy before new
federal contracts helped it rebound. Since 2000, the Nashville, Tenn.-based
company has doubled its number of federal prisoners to 18,200 — 29 percent
of its overall inmate population.
"The federal government smiled on them just in time," said Judith
Greene, a New York-based prison-policy analyst.
Business is certain to grow. Bureau of Prisons spokeswoman Traci Billingsley
said the number of federal inmates is expected to rise from 185,000 to 226,000
by 2010, with private companies likely to be relied on for housing non-citizen
immigrants convicted of federal crimes.
The number of people detained by U.S. immigration officials also is increasing
rapidly — up three-fold in the past 10 years to more than 21,000 at a
given time. In December, Congress passed a terrorism prevention bill calling
for 40,000 additional beds by 2010 for aliens awaiting deportation.
Many of the detainees are housed at facilities run by CCA and its main rival,
GEO Group — formerly Wackenhut. Both companies anticipate their detention
business will grow.
"Those two are huge beneficiaries of overincarceration in the immigration
system," said Lucas Guttentag of the American Civil Liberties Union's Immigrants
The private facilities are required to meet "rigorous federal standards,"
said Immigration and Customs Enforcement spokeswoman Jamie Zuieback. Yet critics
insist privatization will lead to cost-cutting and accountability problems affecting
"They're putting in a system where it's easier to pass the buck,"
said lawyer Dan Kesselbrenner of the Boston-based National Immigration Project.
Rep. Ted Strickland (news, bio, voting record), D-Ohio, a former prison psychologist,
tried unsuccessfully to block privatization approval in Congress. "When
the primary goal is profit, that can and probably does lead to a variety of
abuse," Strickland said. "I don't see any end in sight."
On the state level, there is no comparable boom for private prisons, but neither
is there the bust some industry critics anticipated. As of mid-2004, private
prisons housed 74,285 state inmates, compared to 76,763 in mid-2001.
About 30 states use private prisons, notably in the South and West. Texas has
the most inmates in private facilities — more than 16,000; New Mexico
has the highest portion of inmates in them — 43 percent.
Most states' policies remain unchanged since the 1990s and the bottom line
is that overcrowding remains a stubborn problem.
Still, arguments persist over the pros and cons of private prisons, which pay
lower average wages than government agencies. Whether this undermines performance
is hotly debated, although federal researchers concluded in 2001 that high staff
turnover did aggravate security problems at many private facilities.
Industry officials insist they have addressed such concerns.
"For those who think the public employee monopoly should be maintained,
and sentencing advocates who believe we send too many people to prison, we're
an easy target," said CCA's Ferguson. "But if I'm chief executive
of a state, I'd see a value to having competition in my prison system."
The industry's future is bright enough that GEO Group is buying rival Correctional
Services Corp., but prospects hinge largely on incarceration trends. Many states
have balked at funding new prisons, and now face crowding problems they could
ease by using private prisons or diverting some offenders to alternatives like
"The drug war has been the main cause of profits for private prisons,"
said University of North Florida criminologist Michael Hallett. "We've
gotten so extreme in overusing incarceration that we have for-profit industries
with an interest in high crime rates."
Geoff Segal of the pro-privatization Reason Foundation predicted private companies
will diversify their state business — offering more health and rehabilitation
programs, for example.
"States with private prisons aren't going to get rid of them," Segal
said. "It's a tough sell for a state to say it's going to spend more money
on corrections rather than on Medicaid."