The dramatic rise of the biggest private prison contractor
“You just sell it like you were selling cars or real estate or hamburgers”
On Thursday, the Department of Justice made headlines as it announced plans to shut down all privately-operated federal prisons. The decision came after years of opposition, including a Bernie Sanders-backed bill in the Senate and a helping of bad press. Among the recent injuries to the private prison’s reputation are a riot that left a Mississippi guard dead in 2012, and an undercover report by Mother Jones that exposed the dysfunction and hostility pervading the facilities.
The U.S. private-prison industry as we know it today, which takes in some $5 billion annually, traces its origins to the 1980s. The first on the scene was Corrections Corporation of America (CCA) in 1983, whose first project was an immigration detention center in Houston, housed in a repurposed hotel. You can watch two CCA co-founders describe their delight in scoring “the first contract ever to design, build, finance, and operate a secure correctional facility in the world,” in a company video, backed by a swinging Dixieland-inspired tune.
By 1986, CCA had already become a publicly traded company, enjoying a brisk start as the operator of a handful of immigrant and juvenile detention centers. The company first got into the state prison business in Tennessee, where a court ruled that state-run facilities had become overcrowded. The time to get into the prison business was ripe. With the expanding War on Drugs and stricter sentencing terms, state and federal governments scrambled to manage the resultant influx of convicts. Between 1980 and 1990, nationwide spending on prisons quadrupled. In the last thirty five years, the number of federal prisoners spiked nearly eight-fold, from 25,000 to 219,000.
In 1988, Inc. Magazine covered CCA and the growing trend of the private prison. The piece paints a portrait of a group of enterprising executives who believed the country’s criminal justice woes could be solved by the free market. They were keenly aware of opposition to the idea, however. Thomas Beasley, one of CCA’s founders, described his sales pitch: “[People’s] first impulse is to say only the government can do it, because only the government’s ever done it. But their second reaction is that the government can’t do anything very well. You just sell it like you were selling cars or real estate or hamburgers.”
Here, the cost-consciousness of CCA shines through. The founders espouse the efficient, anti-bureaucratic practices of the free market, while guards monitor the inmates’ hoarding of supplies. They make it part of strategy to keep operations in the South, where costs are low and unions are weak. And through some magic of economy of scale, the company could reduce costs to as low as $7.88 per prisoner per day. In these early days, CCA even had a reputation for keeping facilities somewhat clean and pleasant — as far as prisons go.
Still, the 1988 profile appears quaint. When Inc. reported on the budding company, it was an ambitious organization with a handful of facilities and $17 million in revenue. Today, they operate over sixty prisons to the tune of $1.9 billion in gross annual income. CCA, along with companies like the GEO Group and the Management and Training Corporation, has helped make private prisons a vital component of the U.S. justice system, responsible for some 130,000 of the country’s 1.6 million prisoners.
Private prisons didn’t blossom into a billion-dollar industry through the ingenuity of clever businessmen alone. Legislators and politicians created the climate that made them viable. In 1984, Congress passed the Sentencing Reform Act, which denied parole for federal prisoners and required that they serve no less than 85% of their term. Mandatory sentencing and heavier drug prosecution also helped boost the U.S. prison population to record levels.
When the influx of convicts shocked the prison system in the 1980s, some courts ruled — as one did in Tennessee — that jails must return to safe and manageable occupancy levels. The private-prison industry proposed a solution that could allow states to hold more prisoners without taking on an extra load of debt. This appealed to states in the South with modest budgets to balance, as well as to some who were skeptical. “We have the lowest-cost prison system in the U.S. Private companies can’t do it for less,’’ said Arkansas Governor Bill Clinton in 1986, though conceding, “I personally believe it’s a good thing to explore.’’
In his Mother Jones report, Shane Bauer depicts a Louisiana private prison in a pitiful state. Guards are underpaid (at $9/hour) and the prison is understaffed, operating with as few as one correctional officer per 176 inmates. Bauer’s accounts of violence and misconduct give shape to a system lately facing bad press over wrongful deaths, environments of intimidation, and deadly riots. Some recent evidence even suggests that private prisons cost taxpayers more money in the long run.
Whether state governments join the federal decision remains to be seen.
