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 askscales 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.

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5 thoughts on “Punishment & Profits: A cost-benefit analysis of private prisons

  1. When I began to read the article I was interested in both the content as well as the credibility, but to my dismay, the “number of studies which claim” savings, instead of going to a link instead simply go to an article. Therefore, based upon the lack of representation of for profit prisons and lack of evidence that the author’s purpose was to poorly portray for profit prisons. Thus I post these links hoping anyone reading this article is interested and wants to be well informed and does some research.
    http://www.heritage.org/research/reports/1988/05/bg650-a-guide-to-prison-privatization
    file:///home/chronos/u-86ecbd8eafeb458cf801fceafcf142b253f342f4/Downloads/Cost-Analysis-of-Public-and-Contractor-Operated-Prisons-FINAL3.pdf
    http://www.azcentral.com/opinions/articles/20140111private-prisons-keep-money-taxpayers-pockets.html
    http://www.riograndefoundation.org/papers/prison_study_march18.pdf
    Meta analysis, save money
    http://www.csa.com/discoveryguides/prisons/reviewf.php
    10-15% savings
    http://reason.org/news/show/127446.html
    http://reason.org/files/d14ffa18290a9aeb969d1a6c1a9ff935.pdf
    Efficiency and promote competition
    http://www.independent.org/newsroom/article.asp?id=1411

  2. The links in the comments above are a response from the private prison industry. It is propaganda that omits the real issues. Private prison are designed to make money, not rehabilitate prisoners. We are less safe as a result. The bottom line should focus on human development, not monetary.

  3. They mite of been cheaper in the beginning.However, now that they are over capacity and oklahoma has no where to house these inmates they’ve raised their price imagine that. So many are getting convicted for small stupid reasons. The courts are suppose to be trying to help people with addiction instead of sending them to prison. Thats only gonna give a person an even worse addiction. My son is currently in one of our private facilities. They have done him wrong since he arrived. They take months to send a packet for a different facility in to Population. The female guards lie and these inmates end up with write ups that cause their packet to be denied. Therefore the inmate stays at their facility.And cannot Appeal it other than that facilities Administration. Which is whatr happened to my son. Took 3 months for his packet to get to population. The facilities classification lied to me 3 times about when they were gonna send it. And population cannot do anything until they receive that packet.It was only a few weeks after he was approved. All of a sudden he gets a write up.A guard was positive it was his celle first. Then my son ends up with write up. Now she positive its him. So of course a guard says it he is found Guilty. Appeals to the facility Affirmed! Goes to file a Greivance, told NO! Appeal to facility is as high that he is allowed to fight his write up. That he is innocent of. Why did they do this? Because his packet was denied after being approved to go to a minimum facility. And he is stuck at this private prison due to a false write up. So DOC is telling us. That there is nothing we can do. And he is innocent of this! Where is the rights of this inmate? If they can get away with doing this, that means a person can get trapped at these facilities forever!! just so they can make a buck off of these human beings! They are warehousing human beings like animals! This is gonna cause bad bad tempers! This is what makes a person give up trying. Not care anymore.They feel trapped when done nothing wrong and no one is gonna help them! So why should they keep doing the right thing. This will cause a person to be suicidal! All for these ceo’s can make a buck!Where is the Justice? Why can’t you people see what is happening in Oklahoma?There are so many wrongfully convicted. So many is denied a Fair Trial and Due Process! At this particular private prison there are about 135 housed in one pod. Guess how many guards are there? One,and most of the time my son said there is none in these pods.These people are in danger. Their lives are not protected. DOC is responsible for protecting inmates from another inmate or guards. It’s in the policy. This is how 4 inmates were stabbed and killed in Cushing,OK. Cimmarron Facility yet they didn’t learn from that,nor do they care. If these human beings, most shouldn’t even be there, live or die! Someone needs to do something! These people needs help!! I just hope I get to be there on Judgement day! Remember All Ye Will Be Judged in the end!!

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