Profits, Not Crime, Drive Incarceration Rates

prison-call-centerInmate-run call center

This second post deals with the corporatization of US prisons and the private companies who profit from high incarceration rates.

US rates of violent and property crime have been declining steadily since 1990. Logically dropping crimes rates should produce a drop in incarceration rates. Yet until 2009, when 26 states acted to reduce prison populations, the exact opposite was true. As crime rates declined in state after state, the number of people they locked up skyrocketed.

Presently the US “enjoys” the highest incarceration rate in the world. At 500 per 100,000 population, it’s  five times higher than other developed countries.

A number of factors contribute to this disgrace. In my view, the first and most important is the enormous profit potential of American’s prison industry, resulting in major pressure on state legislatures from private for-profit prison companies and their friends at the American Legislative Exchange Council place on state legislatures. The second is a raft of tough-on-crime legislation driven by deliberate neoconservative race-based fear mongering. The third is the systematic defunding of mental health services in the US, leading to the warehousing of mentally ill patients in federal and state correctional facilities.

Profit, Not Crime, Drives Prison-Building Spree

Prison privatization, which began under Reagan in the 1980s, has turned incarceration and immigration detention into a multibillion dollar growth industry with its own trade shows, conventions, mail order catalogs and state and federal lobbyists. Unsurprisingly Corrections Corporation of America (CCA), Wackenhut and the 16 other for-profit prison companies are major campaign donors to federal and state lawmakers who advocate tough-on-crime and tough-on-immigrant policies. These are usually the same legislators who sponsor bills to replace state prisons with private for profit correctional facilities.

Who’s Making Big Bucks Off Prison Privatization?

The booming private prison industry provides numerous opportunities for banks and other corporate interests to skim off profits at taxpayer expense:
1. The Wall Street investment banks (e.g. Goldman Sachs) who issue the bonds to finance the building of state and local prisons.
2. The private companies who run prisons – Corrections Corporation of America (CCA) and Wackenhut are the largest, but there are now 18 altogether. CCA also operates our federal immigration detention facilities and helped write Arizona ‘s controversial immigration law.
3. Private companies that provide food services, health care, and assorted security paraphernalia to prisons.
4. Bed brokers who, in Texas, earn $2.50 – 5.50 per man-day (for the duration of a prisoner’s sentence) by recruiting prisoners from out of state.
5. Major corporations who save on labor costs in 37 states by contracting cheap prison labor.

The list of corporations employing cheap prison labor is extensive: IBM, Boeing, Motorola, Microsoft, AT&T, Wireless, Texas Instrument, Dell, Compaq, Honeywell, Hewlett-Packard, Nortel, Lucent Technologies, 3Com, Intel, Northern Telecom, TWA, Nordstrom’s, JC Penny, Best Western Hotels, Honda, Chevron, BP, Victoria’s Secret, Revlon, Macy’s, Pierre Cardin, Target Stores, and many more.

Virtual Slave Labor

Inmates in state penitentiaries generally receive the minimum wage ($7.25). Not all do, though. In Colorado state prisons, they get about $2 per hour. In private prisons, they receive as little as 17 cents per hour. The highest-paying private prison is CCA in Tennessee, where prisoners receive 50 cents per hour.

As Vicky Pelaez writes in Global Research, thanks to dirt cheap prison labor, manufacturing jobs that corporations previously outsourced to third world sweatshops are returning to the US. She gives the example of a company operating a maquiladora (Mexican assembly plant near the border) that closed down operations and relocated to San Quentin State Prison in California.

The virtual slave labor that occurs in state prisons also drives down wages in neighboring communities. Pelaez gives the example of a Texas factory that fired its 150 workers and contracted the services of prisoners at the private Lockhart Texas prison, who assemble circuit boards are assembled for IBM and Compaq.

BP also made profitable using of cheap prison labor in cleaning up Deepwater Horizon disaster in the Gulf of Mexico.

Many US corporation employ prison labor to staff their call centers. According to NBC News, If you recently called your motor vehicle department or received a telemarketing call from Microsoft or Hitatchi, it’s likely the person on the other end was a prisoner.

Another great resource on the scandalous prison industrial complex are is the excellent series Nation at Risk  at Deconstructing Myths.

photo credit: The Politics of Information

To be continued.

13 thoughts on “Profits, Not Crime, Drive Incarceration Rates

  1. This is also true about Australia’s rates of incarceration. Especially the warehousing of the mentally ill in prisons. Sure, we are good at printing lofty pamphlets and do TV snippets about ‘mental health’ but it is in direct proportion of not actually doing something and providing the funding.
    Is it true that America has more prisons that universities?


    • New Zealand’s conservative government is trying to follow the US privatization example. Thus far they have privatized one prison – about 2 years ago. The experiment hasn’t gone really well, with half the new staff they hired leaving after a few months owing to safety fears. It’s impossible to make a profit without cutting corners and most private prisons do this by cutting staff numbers, resulting in unsafe staff to inmate ratios.

      I’m not sure if the US has more prisons than universities.The statistic I’m aware of is they spend 6 times as much money on prisons as ALL eduction (kindergarten through university):


  2. I don’t think that most Americans are aware that the prisons in the US have been privatized. I have spoken to employees of prisons who think they are working for a federal or state institution.I also read an interview with someone who had been deep into the rap music business in the early 90s when it was deliberately turned into “gangster rap” in order to cultivate more criminals for the private for-profit prison system. This atrocity needs to be exposed. Thank you for your focus on this situation in which the true criminals are often the ones on the outside.


  3. The privatization of prisons mirrors the efforts underway to do the same in public education and healthcare and is a hallmark of the architects of austerity. The war on terror has made the game deeper for anyone caught in it’s web. Detainees can be held without due process indefinitely and are stripped of all civil rights. The only person standing between the accused and the abyss is their attorney. An example is Lynne Stewart who was disbarred and accused of providing material support because she represented an accused terrorist, sending a clear message to all future members of the bar.

    Thanks for sharing the link, Stuart.


    • Yep, the neoliberals seem determined to privatize all the commons. Nothing is free or publicly owned any more if there’s some way it can be used to turn a profit.

      I included your link because it’s such a vast subject and I had to make a decision on which areas to drill down on. I hope people will be inspired to read your Nation at Risk series.


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