Prison privatization in its current form began in 1984 as a result of the War on Drugs. While crime rates otherwise remained steady dating back to 1925, the number of arrests quickly exploded. While the War on Drugs initially had a small impact on incarceration, it was President Reagan’s Anti-Drug Abuse Act of 1986 that kickstarted the prison boom.
From 1970 to 2005, the prison population rose 700 percent, while violent crime remained steady or declined. Between 1990 and 2009, the populations of private prisons shot up 1,600 percent. Today, the US has the highest incarceration rate in the world – 754 inmates per 100k residents as of 2008. This is roughly 600% that of the rest of the civilized world, with England and Wales having 148, and Australia 126 inmates per 100k residents. As of 2010, private corporations house over 99,000 inmates in 260 facilities nationwide.
Corrections Corp. of America and other private contractors became members of the American Legislative Exchange Council, a non-profit 501(c)(3) association that advocates “tough on crime” legislation. In their 2010 report to the Securities and Exchange Commission, Corrections Corp. of America discussed how drug policy reform threatens their business model:
The demand for our facilities and services could be adversely affected by the relaxation of enforcement efforts, leniency in conviction or parole standards and sentencing practices or through the decriminalization of certain activities that are currently proscribed by our criminal laws. For instance, any changes with respect to drugs and controlled substances or illegal immigration could affect the number of persons arrested, convicted, and sentenced, thereby potentially reducing demand for correctional facilities to house them.
To ensure those pieces of legislation aren't passed, Corrections Corp. of America spent $970,000 and GEO Group spent $660,000 lobbying Congress in 2010 alone. In Corrections Corp. of America’s Feb 2011 press release, CEO Damon Hininger stated, “...we are pleased our populations have remained strong, in excess of the 80,000 inmate milestone we surpassed late in 2010.” With the 3.2% increase in inmate population over the previous year, Corrections Corp. of America was able to make $511.26M profit, earning their CEO over $3,000,000 in compensation.
Private prison proponents claim that private corporations are able to provide the same service more efficiently than the government. However, according to the Department of Justice’s “Emerging Issues on Privatized Prisons” report, private prisons offer at best a 1% cost savings over their government operated counterparts, while at the same time having 49% more assaults on staff and 65% more assaults on other inmates.
Corporations owning correctional facilities is not the only way that prisons and the War on Drugs have been used as a source of income. For instance, even in government-ran facilities, inmates and their families are regularly subject to price gouging by phone carriers. While the average cost of a phone call in the United States is 3 cents per minute, inmates and their families end up paying between 16 cents and $5.00 per minute. The profits are then split between the carrier and the government body who awarded the contract. In fact, it is not uncommon for the government body to receive a signing bonus from the carrier, like $17M in the case of Los Angeles County. Unlike the public, the Federal Communications Commission has no safeguards against price gouging when it applies to those behind bars.
In the federal prison system, all able-bodied inmates who are not a security risk are forced to work for UNICOR or another prison job. UNICOR, also known as Federal Prison Industries, is a government-created corporation that provides many products and services, including clothing, electronics, furniture, data entry and military hardware. UNICOR enjoys a “mandatory source clause” that according to US laws & regulations, forces all federal agencies with the exception of the Department of Defense to purchase products offered by UNICOR instead of the private sector. However, despite the Department of Defense not being required to purchase its products, many defense contractors take advantage of the cheap labor offered by prisons. For example, inmates make as little as 23 cents an hour manufacturing components used in Patriot missiles, which then sell for $5.9 million apiece. Prisoners also made helmets for the military, until 44,000 defective units were recalled due to their inability to stop bullets. Despite its shortcomings, UNICOR generated $854.3M in sales for fiscal year 2008 – of which 4% went to inmate salaries. Much of this money later ends up in the hands of the local government, as the inmates use their salary to pay for phone calls home. In New York, inmates refusing work assignments have been known to be placed in solitary confinement for 23 hours a day until work is resumed. At the same time, it is illegal to import products made using prison labor into the United States.