Making Profits on the Captive Prison Market

Earlier this year, I attended a prison trade show in Louisiana, which has the nation’s highest rate of incarceration. Cheery representatives from CrossBar, a Kentucky-based company, demonstrated the bendable electronic cigarettes that are sold in prison commissaries. I chatted with employees of Wallace International, which makes the automated front gates for jails. Sentinel, which makes ankle bracelets to track parolees, distributed slick handouts. A couple hundred more exhibitors were packed into a two-hundred-and-twenty-four-thousand-square-foot space in a New Orleans convention center, a space larger than three professional football fields, including the end zones. It was an education in the scale of the industry of profiting on America's incarceration system.

A part of that industry was much discussed earlier this month, when the Department of Justice announced it would phase out its use of private prisons. Private prisons—both state and federal—represent just a small slice of the eighty billion dollars spent yearly on corrections, and they housed only about a hundred and thirty-one thousand inmates in 2014, compared with the 1.4 million inmates locked up in government-run facilities. But, because private prison companies routinely lobby Congress for lengthier prison sentences, the federal government’s announcement was seen as a modest victory for criminal-justice-reform advocates, whose long-term goal is to end mass incarceration.





In February, 2015, for instance, the company paid out an $8.3 million settlement to the family of Martin Harrison, an inmate at the Santa Rita Jail, in Alameda County, California, who died, the plaintiffs charged, in part because of medical neglect. The lawsuit revealed that Corizon, in a bid to cut costs, used licensed practical nurses to assess inmates at intake—a job that, under California law, only registered nurses are allowed to complete. A court-ordered investigation of Corizon in Idaho, in 2012, revealed “inhumane” conditions in a prison south of Boise, where terminally ill inmates were left for periods of time without food or water and slept in soiled linens. “How does this for-profit prison healthcare company keep its costs low and profits high?” the A.C.L.U. notes on its Web site. “By failing to provide sick prisoners with needed care.”

(Martha Harbin, a spokeswoman for Corizon, said that “malpractice lawsuits are a fact of life," especially in the correctional environment, where “the patient population is highly litigious.” In response to the Harrison case, she said that “Corizon Health’s contract in Alameda County stipulated our staffing structure” and added that, in Idaho, many conclusions in the court-ordered report “were unsupported by facts and conflicted with the thorough audit of care performed” two years earlier. She also noted that the facility has since been reaccredited.)

The prison economy is expansive. In many prisons and jails, basic commissary items like cereal and canned soup can cost five times the retail price. As the country’s inmate population has ballooned, so has revenue. The Prison Policy Initiative, a nonprofit criminal-justice think tank, estimates that commissary companies earn $1.6 billion per year.

The list of for-profit prison venders goes on: there are companies that use technology to scour prisons to find cell phones, companies that sell prisoner-transport vans, and companies that sell radar systems to prevent drones from dropping contraband into prison yards. Even the American for-profit bail market has grown to an estimated annual three billion dollars, according to the market-research firm IBISWorld. These companies’ activities tend to get less scrutiny than those of private prisons. Wagner has a few theories for why this might be. For one thing, physical prisons are run by contractors, “which makes them easy to demonize.” And, secondly, he said, “they’re publicly traded.”

This is an important point. In reporting and researching the industry around incarceration, you quickly discover that finding accurate financial information about many of these companies is nearly impossible. Why? They’re almost all privately held—except for the private prison companies. And, because the two largest private prison operators, Corrections Corporation of America and the GEO Group, are publicly held and must therefore make more information public, reporters (myself included) find them easier to write about.

“Private prison companies have to disclose offensive-sounding things in their prospectuses, like ‘If crime goes down, it will be bad for our bottom line,’ ” Wagner said. “The privately held companies are never forced to say something so impolite. So the attention that the private-prisons industry gets is a side effect of our corporate transparency laws for publicly traded companies.”

Private prisons deserve to be investigated: they have been found to provide substandard living conditions, improper medical care, and poor training for guards. In announcing the decision to phase out private prisons in the federal system, Deputy Attorney General Sally Q. Yates noted that private prisons “compare poorly” with government-run institutions—they don’t save much money and provide worse security. But it also raises the question: Would eliminating private prisons end mass incarceration? It’s unlikely. And it certainly won’t prevent private companies from profiting on prisoners.

  • Eric Markowitz is a writer who splits his time between New York and Los Angeles.

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