Above Photo: A secured unit, where prisoners are kept in windowless cells, at Pelican Bay State Prison in Crescent City, California, February 9, 2012. Photo: Jim Wilson / The New York Times.
The following is an excerpt  Chapter 12, “Incarceration Inc.,”  from Understanding Mass Incarceration: A People’s Guide to the Key Civil Rights Struggle of Our Time.
In addition to the private prison corporations, a wide range of companies, organizations, individuals, and even towns profit economically or politically from prisons. They all have “skin in the game” – and have a definite interest in opposing attempts to reduce or end mass incarceration.
These prison profiteers recognize that incarcerating people is an economic as well as a political operation. Keeping a person in prison is costly, whether in New York, where in 2010 it cost on average $60,076 a year to lock up one person, or in West Virginia, where the price tag was $26,498. The question is: where does that money come from and where does it go?
James Kilgore. (Photo: Terri and Lonnie Barnes)
It is pretty simple to see where the money comes from. Almost all funding for operating prisons and jails comes from tax revenues. The money to build them, however, usually requires issuing some kind of bond. The repayment of the bond then comes from taxes.
Where the money goes is more complicated. Expanding and sustaining mass imprisonment requires at least three costly activities:
1. Building the infrastructure. Whether in the public or private sector, those who will run the prison must pay architects, engineers, and contractors to design and build the cells, security fences, guard towers, visiting rooms, offices, et cetera.
2. Employing staff. Once the prison is built, the major operating costs for prisons and jails are wages and salaries. These are paid not only to guards but to counselors, case managers, administrators, accountants, maintenance people, cooks, drivers, secretarial staff, doctors, nurses, and a host of other employees. All told, staffing costs generally consume at least half of expenditure on corrections.
3. Supplying goods and services to people in prison. Each prisoner needs food, clothing, water, and medical services. Most prisons also have some kind of recreational equipment, televisions, telephones, and a store where prisoners can buy supplemental food, clothing, and hygiene items.
Building
The expense of building a prison varies, depending on the cost of labor, the style of accommodation, and the technology used for security. According to an IBISWorld report, corrections construction brought in an average of $2.8 billion per year from 2001 to 2012. In 1996, at the height of the prison building boom, California conducted a comparative study of construction costs. The average for the nine medium- and high-security prisons the state built at that time was around $200 million each (about $300 million in 2014 dollars). A similar prison in Arizona would have cost a third less; in Texas, 20 percent less. The California average translated to $92,000 per bed, nearly as much as the national average selling price for a house at that time, $115,000.
Prisons and jails are major construction projects. In many counties or rural areas, building a prison or jail constitutes by far the biggest infrastructure item in an annual budget. For most prison building projects, a major construction company manages operations. A number of large global firms have become national leaders in this field.
These companies don’t build just prisons but also a host of large-scale construction projects – malls, government buildings, bridges, highways, and luxury hotels. Three construction companies account for about 30 percent of the prison market.
Turner Construction, a New York-based firm, is the largest player in corrections construction. It is a subsidiary of the German company Hochtief. Turner’s average annual income for prison and jail construction from 2007 to 2012 was $278 million. The company’s average annual revenue for all activities in 2013 was $9 billion, making it the fourth largest of all U.S. construction and engineering firms. Perhaps the most famous project in its portfolio is New York’s Lincoln Center for the Performing Arts, but Turner has also completed work for the FBI, the Department of Veterans Affairs, and the Centers for Disease Control as well as building corporate headquarters for Boeing and the RAND Corporation. Turner has about five thousand employees worldwide.
Number two in this industry is Gilbane, which had average annual prison construction revenue for 2007 to 2012 of $153 million. Its 2013 total revenue was just over $4 billion. Gilbane built the Baltimore County Detention Center and specializes in courthouses and county jails. The company is based in Providence, Rhode Island.
Number three in the prison construction sector in 2013 was Hensel Phelps Construction, with annual revenue of around $2.3 billion. From 2007 to 2012, it earned an average annual income of $186 million from corrections construction.
Construction companies are not the only businesses that share in the profits of carceral construction, however. A host of architects and consultants are essential to prison and jail building. Before any construction can take place, most authorities want some kind of feasibility or needs-assessment study to give them an idea of the options available and the costs involved. Such needs assessments can be quite costly – from a few thousand dollars in a small county to the $30 million contract Los Angeles County awarded in 2014 for design sketches and an environmental impact study on a $2 billion jail construction project. Firms such as Justice Concepts, Nacht and Lewis, DLR Group, and CGL are leaders in this type of work.
Prisons could not be built without financing, and even small county jails call for expenditure in the tens of millions. Because of the scale of these investments, corrections officials need to secure loans to pay for construction. They then make an arrangement to pay them off over time. In the past, this was done largely by setting aside money in the annual budget to make the required loan repayments, a pay-as-you-go arrangement. Alternatively, local or state authorities have issued general obligation bonds, which are sold in the market as an investment vehicle. These have to be approved by voters. In the late 1980s, however, voters began to sour on bonds for prisons and jails. Because the authorities remained determined to build these facilities, they frequently turned to lease-revenue bonds, which don’t require voter approval. State and local authorities in several states, including California, Texas, New York, Florida, Alaska, and Michigan, made use of these bonds to build correctional facilities.
Arranging the financing for prison and jail construction, especially through lease-revenue bonds, is a high-profit enterprise. For the nine prisons the state of California built in the 1990s, the finance charges came to $3.5 billion, nearly twice the cost of the actual construction. The opportunity to fund these prisons attracted some of the biggest names in finance, including Goldman Sachs, Morgan Stanley, the late Bear Stearns, and Bank of America Securities.
Employees of the Correction Industry
Nationwide approximately 2.4 million people work in the justice system, about one per prisoner. At the financial apex are the CEOs of the large private corrections companies, with their multimillion-dollar annual compensation packages (see chapter 11). Big winners also include the heads of state departments of corrections, the director of the federal Bureau of Prisons, and other high-level officials. They have reaped opportunities for promotion, salary increases, and political power and influence.
Second-tier administrators and professional staff also have benefited from mass incarceration. Salaries for these administrators vary, however. The director of the Oklahoma Department of Corrections earned $160,000 in 2014. In California in 2014, the chief physician and surgeon for the Department of Corrections and Rehabilitation earned $569,000, and eighteen professional staff had salaries in excess of $300,000.
Down another financial rung rest about eight hundred thousand who work directly in corrections, whether inside prisons or jails or in the lower levels of corrections bureaucracies.
The employment figure for corrections has almost tripled since 1979. About 60 percent of these corrections jobs are in state departments. Local jails represent about a third of this sector, and the federal prison system employs about 4 percent of corrections workers.
Apart from high-level administrators and professionals, people who work in corrections fall into four broad categories:
1. Office personnel – people who work in offices at departments of corrections or on-site at prisons. These range from professionals, such as accountants, to administrative assistants, clerks, and nonprofessional workers employed outside the correctional facilities.
2. Civilians or “free staff” – people who work in prisons or jails providing a service and dealing directly with prisoners. These might include nurses, cooks, maintenance personnel, teachers, and transport workers.
3. Those who directly maintain custody of prisoners – wardens, guards, counselors, and case managers.
4. Those who work in postincarceration capacities – parole and probation officers.
Guards, officially called correctional officers, make up about half of all corrections employees. In 2013, according to the Bureau of Labor Statistics, 432,688 people were employed as correctional officers. In 2012 the national average pay for a correctional officer was $39,950. In California, the use of extraordinary amounts of overtime has led to thousands of guards earning more than $100,000 a year in wages since 2006. In New York, New Jersey, Illinois, and Massachusetts, guards did almost as well, earning more than $60,000 on average in 2013. By contrast, in Georgia average pay was $29,180.
Much of the financial fortune of correctional employees depends on the presence of unions. Those who work in states where corrections unions are strong tend to earn more money and have better benefits. Four major national unions organize corrections workers. The American Federation of State, County and Municipal Employees is the largest, with 62,000 correctional officers and 23,000 other correctional employees. The American Federation of Government Employees has 30,000 members, all of whom work at federal prisons and detention centers. Others are represented by the Service Employees International Union and the Teamsters Union. In addition, a number of states have their own local unions for correctional officers. Two of the most notable are the California Correctional Peace Officers Association (CCPOA) and the New York State Correctional Officers and Police Benevolent Association.
The CCPOA has been particularly controversial. This association has consistently donated large sums of money to political candidates who back harsh sentencing legislation. In 2002 it made a $2 million contribution to tough-on-crime governor Gray Davis’s campaign.
At times unions have clashed with those fighting to end mass incarceration. An extreme case of conflict between unions and social justice activists occurred in the battle over closure of the Tamms supermax prison in Illinois in 2014. Tamms had become the focus of a human rights campaign because of its policy of keeping prisoners in their cells twenty-three hours per day and denying them any contact with other men in the institution. In some cases, people had been held in solitary confinement for more than a decade. After activists from Tamms Year Ten and other groups had pushed for the closing of the supermax for many years, Governor Pat Quinn decided to shut the prison down and relocate those held there, and the workers, to other institutions. The American Federation of State, County and Municipal Employees (AFSCME), the union that represented the Tamms prison guards, came out in opposition to the closing, however, arguing that it would cost jobs and economically disadvantage the small rural town where the prison was located. Ultimately, the prison was closed, but the union maintained its opposition to the end.
Suppliers of Goods and Services
A host of suppliers have found prisons and jails to be a growing source of profits. One company that has flourished in this new marketplace is Bob Barker Industries. Based in Nashville, Tennessee, Bob Barker produces a wide range of goods for prisoners and prison staff. The firm bills itself as a “worldwide leader in delivering innovative products and services to correctional and rehabilitation customers.” The company vision invokes religious inspiration: “Transforming criminal justice while honoring God in all we do.”
Barker offers prisons and jails a wide variety of cheaply made goods: jumpsuits, sandals, T-shirts, board games, and black-and-white striped canvas shoes. They also sell steel stools and benches for dayrooms and offer staff a range of uniforms, handcuffs, leg shackles, metal detectors, and isolation cells that can be installed in vans to transport “violent prisoners.” A company specialty is marketed as the “convict classic” uniform, a retro outfit that puts prisoners back into black-and-white stripes. The company’s total sales are about $100 million a year.
Health Care
Prison and jail administrators have embraced outsourcing, creating more business opportunities. Health care is one of the major services where outsourcing has taken hold.
As of 2012, about twenty states had contracted their prison health care to private companies. Many county jails have done the same. Corizon Correctional Healthcare, the largest prison medical provider, takes in around $1.5 billion in annual revenue with contracts for prisons in twenty-eight states and jails in numerous cities and counties. Some of Corizon’s contracts are with major municipalities, such as Atlanta, Philadelphia, and New York City. In addition, the company has its own in-house pharmacy division, PharmaCorr.
Unions and many human rights groups are critical of private companies delivering health care in prisons. As Kerry Korpi of AFSCME maintains, “Private correctional health care companies have a track record of cost cutting that puts both inmates and staff at risk. These companies’ goal is profit, not public safety.”
A number of lawsuits and protests have been lodged against Corizon. In 2012 it paid out almost $1.8 million to settle claims filed by Vermont prisoners from 2007 to 2011.
Prison Food
Another service where outsourcing is the dominant trend is food provision. The giant in this market is Aramark, which has a presence in more than six hundred correctional facilities throughout North America, serving more than a million meals per day according to its website. It holds or has held food contracts with state prison systems in Florida, Indiana, Kansas, Kentucky, Michigan, and Ohio, as well as with dozens of county jails. The state contracts tend to be the most lucrative. A two-year contract with Ohio in 2013 paid out $110 million. A similar agreement with Michigan was concluded for $145 million.
Aramark’s record reveals a number of controversial incidents. In 2014 Ohio fined it $142,000 for various violations, including not hiring enough workers. An $86,000 fine in Michigan in 2014 targeted shortages of food. In both states, there were also several reports of maggots in the food.
Prison Phones
The annual value of the carceral phone business is estimated at $1.2 billion. A small number of telecommunications providers have cornered the bulk of this market. In most instances, they have institutionalized extremely exorbitant phone rates. Family members bear the burden of extra costs.
Typically the contracts include not only normal service fees and profits for the telecommunications company, but also, as noted in chapter 9, a “site commission” (“kickback”) to the government or institution. In an era when many customers have unlimited long-distance calls, thirteen states charge more than $5 for a fifteen-minute in-state phone call from a prison. All told, the kickbacks from all prison phone calls come to more than $460 million annually.
The largest firm in this industry is Global Tel*Link, which has about a 57 percent market share. According to its website, the company serves twenty-nine state departments of corrections and more than eight hundred counties. The parent company of Global Tel*Link, American Securities, bought the firm from financial giants Veritas and Goldman Sachs Direct for $1 billion in 2011. The high rates for prison phone calls have sparked a nationwide campaign for federal regulation of the cost of calls. After considerable lobbying led by prisoners and their families, along with groups such as the Media Action Grassroots Network, Working Narratives, Prison Legal News, and the Prison Policy Initiative, the Federal Communications Commission put a cap on the charges for interstate calls from prisons and jails in 2014.
Contract Labor
A small number of companies have reaped profits from contracting cheap prison labor. Overall estimates are that about sixty thousand incarcerated men and women work under contract. The bulk of these workers produce goods and services for government departments, however – making clothes or mattresses for prisons, assembling telecommunications equipment for the Department of Defense, or, in the most iconic example, making license plates. About 60 percent of these government contracts are with the Department of Defense. The largest contractor, the Bureau of Prisons Federal Prison Industries, often called Unicor, employed some thirteen thousand such workers in 2013.
All incarcerated workers under contract to a private company must be registered with the Prison Industries Enhancement Certification Program. In 2013 just 4,735 prisoners were under such contract. According to the program’s regulations, such workers are supposed to receive the legal minimum wage, though this is not always the case. While a few contract workers are employed by large companies, such as Cisco, most are under contract with small firms.
One typical example of a small firm contract involved Lufkin Industries and Direct Trailer, two Texas firms. Lufkin Industries’ trailer division was doing well when suddenly a local competitor, Direct Trailer and Equipment Company, began to produce much cheaper trailers. Eventually Lufkin closed down its trailer business and laid off 150 workers. Only later did Lufkin’s owners realize that the entire Direct Trailer and Equipment operation had been moved inside a prison, providing not only a source of cheap labor but also factory premises at a rent of $1 a year. Although federal regulations forbid shutting down an entire company and relocating it inside a prison, Direct Trailer and Equipment managed to pull it off.
Apart from those who work for small companies, the largest number of prisoners under labor contract to private firms work on prison farms in southern prisons.
Prison Farms
In many facilities in southern states, incarcerated men produce crops on prison farms. Most of these crops are used in the prison system, but some are sold to the public. On the Mississippi State Penitentiary farm, 5,700 acres were planted in 2012 with the value of production totaling $1.3 million. Oklahoma’s Agri-Services produces or processes some 723,000 pounds of beef, 115,000 pounds of pork, 1,445,000 pounds of processed meat, and 568,000 gallons of milk, along with 7,500 tons of hay and 4,500 tons of livestock feed, in a typical year. In 2012, in the wake of a labor shortage due to harsher immigration law enforcement, some Georgia farmers employed prisoners as an emergency measure to harvest the onion crop. Due to the rise of high-tech agriculture, however, some states, including Pennsylvania and Iowa, have closed prison farms, deciding that they are unable to compete in the modern marketplace.
A new sector employing people in prisons is call centers. At least a dozen states house call centers inside prisons, employing some two thousand people. Unicor, the government-subsidized contract-labor corporation of the federal Bureau of Prisons, markets its call centers with the lure of Third World labor conditions right here at home, as in this notice on the company website:
UNICOR now has the same authority to work with private sector firms that are sending their work offshore, or in lieu of sending it offshore. We call it “smart-sourcing.” Let’s face it. Outsourcing offshore can be a hassle. There are language barriers, monetary exchange rate concerns, time zone differences, etc. And to visit your offshore operations may require a transoceanic flight…. UNICOR can provide call center support at highly competitive rates, right here in the USA! Imagine … All the benefits of domestic outsourcing at offshore prices. It’s the best-kept secret in outsourcing!
The human rights concerns of contract labor are the most worrisome to many. As David Fathi, director of the American Civil Liberties Union National Prison Project, put it, “There’s real opportunity for exploitation here. They can’t unionize. We don’t want a situation where business has an interest in increasing the prison population.” Prison owners and suppliers obviously have that interest already, but critics worry that contract labor will generalize it to many other businesses.
Despite claims by some writers that penitentiaries have become a “niche market” for the exploitation of prisoners by the corporate sector, the vast majority of incarcerated men and women have no links at all to private companies, however. If they are employed, they engage in basic labor to keep the institution operating – cleaning, cooking, maintenance, and clerical tasks. In 2013 about seven hundred thousand prisoners had this type of employment.
The vast majority receive little pay for such labor, from nothing at all to perhaps twenty-five cents an hour, though some clerical jobs may pay up to a dollar an hour.
While private corrections companies, especially Corrections Corporation of America and the GEO Group, have been the most prominent prison profiteers, many other actors have gained financially and politically by promoting mass incarceration. From architects to toilet paper vendors, from construction firms to producers of orange jumpsuits, private concerns have been lining up to secure and maintain carceral contracts. For three decades, government at all levels has continued to spend more and more money on criminal justice, thereby attracting more companies and individuals wanting their share of an ever enlarging pie.
Finally, around 2009, the bubble began to at least leak, if not burst. Gradually some of the focus turned to alternatives – ways to lock up fewer people and spend less money on a sector that has grown beyond all rational boundaries. After years of campaigning by activists and those directly impacted by imprisonment, some policy makers have begun to question the logic of mass incarceration as well as examine possibilities for change and potential alternatives.