Punishment & Profits: A cost-benefit analysis of private prisons

This post was written by OK Policy intern Matt Simmons. Matt recently completed his MA in American history at the University of Tulsa. He will be enrolling in the history PhD program at the University of Florida this fall. He can be found on Twitter at @mattfsimmons.

This is the second post in a series of blog posts on private prisons in Oklahoma. The first post explored the history of private prisons. It described how a slew of “tough on crime” measures passed in the 1980s accelerated an already growing incarceration rate in Oklahoma and provided justification for sending more inmates to private prisons.

This post examines the relative costs and benefits of utilizing private prisons versus public prisons. It asks whether private prisons provide a cost-effective, high quality service not only to Oklahoma’s taxpayers, but also to other stakeholders in the prison system such as corrections officers and offenders. 

Advocates for private prisons claim that bringing private contractors into a government run enterprise will result in lower costs to taxpayers.

 Such advocates point to a number of studies which claim that private prisons save taxpayers money, and private prison corporations such as Geo Group claim to provide savings of up to 30 percent below what it cost to house these offenders in public prisons. 

In reality, there is no clear consensus about these much touted cost savings. According to a report by the ACLU, Banking on Bondage: Private Prisons and Mass Incarceration, the studies which claim that private prisons provide a more cost-effective service have been funded by the private prison industry, which  casts doubt on their methodology as well as their conclusions. 

Much of the presumed cost savings of private prisons are achieved through lower staffing costs: private prisons pay their employees less than public prisons. But Oklahoma is not exactly paying exorbitant salaries. The starting salary for a public corrections officer in Oklahoma is $11.93 an hour, or $22,700 a year.  Almost 30 percent of Department of Corrections staff members are eligible for food stamps, while 85 percent qualify for reduced cost lunches for their children. 

Private prisons achieve their cost savings by giving private corrections officers an even worse compensation package than they would receive as public employees.

Meanwhile, executive pay for the CEO of Geo Group and the Corrections Corporation of America (CCA) was $3.5 million and $3.2 million dollars respectively in 2010. 

Prisoners certainly do not benefit from incarceration in private prisons. Private prisons have been shown to have more incidents of misconduct than public prisons. A private prison in Idaho run by CCA (which operates 3 out of 4 active private prisons in Oklahoma) established a reputation as a “gladiator school” because prison guards encouraged violence between inmates; one savage beating that took place while guards watched put the victim in a coma.

One does not have to look outside our own state borders to find similar evidence of poor and negligent management by private prison corporations. A riot at the North Fork Correctional Facility in 2011 resulted in forty-six injuries, while a four hour long “disturbance” at the Cimarron Correctional Facility this year only ended after corrections officers used bean bag rounds and pepper balls to subdue the rioters.

The inexperience of private prison employees is one reason for why this violence takes place. Private prisons have a very high employee turnover rate, no doubt largely attributable to those low staffing costs touted by private prison advocates as a way to save taxpayer money. The end result is a dangerous work environment for inexperienced corrections professionals and prisoners alike.  

With an ever increasing rate of incarceration Oklahomans should be thinking about more than locking up offenders as cheaply as possible. It would be far more cost-effective to prevent crimes and reduce the need for incarceration. Yet a study comparing recidivism rates in private versus public prisons in Oklahoma concluded that “private prison inmates had a greater hazard of recidivism in all eight models tested.” 

This should not come as a shock to anyone. The interests of the private prison industry are diametrically opposed to those of taxpayers, corrections professionals, and prisoners. Private prisons are a business; they exist to make money. If prisoners do not reoffend, they no longer add to the company’s profits.

The CCA’s 2010 Annual Report acknowledges this, stating that, “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.” 

The evidence shows that any short-term cost savings from private prisons may be hugely expensive in the long run. They pay poverty-level wages and create a dangerous environment for corrections officers and offenders. They increase crime by not preparing offenders for reentry into society. Private prisons are a bad deal for every stakeholder in the prison system.

The third and final post of this series will follow the money trail that leads from private prison corporations to Oklahoma legislators. It will look at the lobbying efforts made by the private prison industry in order to influence penal policy.