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Using The Private Sector To Deter Crime
Privatizing the Prison System
Studies show that prisons can be built and maintained less expensively in the private sector. A number of studies find savings of 20 percent for private construction costs and 5 to 15 percent for private management of prison units.91 Further, independent observers who monitor, for example, the contracts of Corrections Corporation of America (CCA), a Nashville, Tenn., company, praise the quality of the company’s operations.92 George Zoley of Wackenhut Corp. in Coral Gables, Fla., years ago predicted a gradual building process in which the private sector establishes a " good track record and proves it can do the job."93 "Studies find savings of 20 percent for private prison construction and 5 to 15 percent for private operation."It has come to pass:
- With 20,698 adult prisoners in private correctional facilities on June 30, 1993, the market share of private prisons has risen to 1.5 percent of the prison and jail population.94
- The number of management firms with contracts for prison operations rose from 17 to 21 between 1992 and 1993.
- Private facilities under contract also rose from 62 to 71 (including 65 in the United States), a one-year increase of 14.5 percent.
- The Federal Bureau of Prisons awarded its first contract to design, construct and manage a 1,000-bed medium security prison (to be located in Eloy, Ariz.) to Concept, Inc., of Louisville, Ky.
- Texas leads the nation with 28 private adult correctional units, followed by California with seven.
- CRSS Constructors, Inc., has over $1 billion in corrections construction across 12 states under way.95
Major companies in the industry include CCA, with a rated capacity of 9,045 including facilities under construction and planned expansions, Wackenhut Corrections Corporation with 6,109 and Concept, Inc. with 4,044. Profits, however, remain elusive.96 For example, CCA reports that it makes a small profit, but Pricor, Inc., of Murfreesboro, Tenn., an early leader in the industry, recently exited adult corrections after suffering a series of losses.
The evidence indicates that if there were a formal market to buy, sell and rent prison cells, there would be much less of a problem in funding and efficiently allocating prison space for convicts. And there are numerous - but unexploited - opportunities to reduce the net costs of prisons by creating factories behind bars, having prisoners earn their keep and compensating victims.
The most promising ways to control taxpayer costs involve the privatization of prison construction and operation. Short of full privatization, government-operated correctional facilities could be corporatized and operated like private businesses.
Prison Operation.
There is no insurmountable legal obstacle to total privatization of prison operation.97 Unlike government agencies, private firms must know and account for all the costs of prison operation, including long-run costs.98 If they can do so and still operate prisons for less than the government " and all indications are that they can " then government should set punishments for felons and let the private sector efficiently supply prisons.- CCA charges Harris County, Texas, and the Immigration and Naturalization Service only $35 per inmate per day to operate a 350-bed minimum security facility in Houston, a charge that includes recovery of the cost of building the facility.99
- Operating costs for government-run prisons can run twice that amount, even without taking construction and land costs into account.100
Employing Prisoners.
Prisons originally were intended to be self-supporting and during the l9th century many state prisons ran surpluses, returning excess funds to their state governments. In 1885 three-fourths of prison inmates were involved in productive labor, the majority working in contract and leasing systems. Fifty years later only 44 percent worked, and almost 90 percent worked in state rather than private work programs.101 Today, prison inmates are a huge drain on taxpayer wallets despite the millions of available hours of healthy, prime-age labor they represent."Prisons originally were intended to be self-
supporting."
Increasing productive work for prisoners requires the repeal of some federal and state statutes and clearing away bureaucratic obstacles. The federal Hawes-Cooper Act of 1935 authorized states to prohibit the entry of prison-made goods produced in other states. The Walsh-Healy Act of 1936 prohibited convict labor on government contracts exceeding $10,000. The Sumners-Ashurst Act of 1940 made it a federal offense to transport prison-made goods across state borders, regardless of state laws.102
Throughout the nation, a score of exceptions to the federal restrictions on prison labor have been authorized, provided the inmates were paid a prevailing wage, labor union officials were consulted, other workers were not adversely affected and the jobs were in an industry without local unemployment.103
A survey commissioned by the National Institute of Justice identified more than 70 companies that employ inmates in 16 states in manufacturing, service and light assembly operations.104 Prisoners sew leisure wear, manufacture water-bed mattresses and assemble electronic components. PRIDE, a state-sponsored private corporation that runs Florida’s 46 prison industries - from furniture making to optical glass grinding, made a $4 million profitin 1987.105
Such work benefits everyone. It enables prisoners to earn wages and acquire marketable skills while learning individual responsibility and the value of productive labor. It also ensures that they are able to contribute to victim compensation and to their own and their families’ support while they are in prison.
South Carolina and Nevada have become leaders in private sector use of prison labor, yet nationally only 5,000 prisoners (far less than 1 percent) work for private companies because of the additional costs of doing business in prisons.106 By the end of 1992, South Carolina prisoners in the start-up phases of two private-sector programs had already earned $2.4 million in wages, of which nearly $500,000 went to taxes, $119,000 to victim compensation, $322,000 to room and board and $364,000 to family support. The prisoners retained $1.1 million in inmate savings accounts.107
"South Carolina and Nevada have become leaders in private sector use of prison labor."
Fred Braun, Jr., president of Workman Fund in Leavenworth, Kan., has been a key promoter of Private Sector Prison Industries - PSPI. Organized as a nonprofit foundation, Workman lends venture capital to private enterprises interested in training and employing prisoners on-site in “real world” work. Workman reported promising results from an enterprise in which convicts worked along side nonconvict labor. Braun also is president of Creative Enterprises, the umbrella company for two plants, Zephyr Products, Inc. (sheet metal products and Heatron, Inc. (electric heating elements), which train and employ minimum-custody inmates at the Lansing East Unit in Leavenworth.108 Braun’s original vision was an industrial park of three or four firms employing 200. Thirteen years after opening Zephyr, no more businesses had been added, but the two original plants were employing about 150 prisoners.109
Bureaucratic inertia slows the transition to private work for prisoners. For example, the state corrections system in Texas traditionally was a leader in state-run prison industries, which probably has hindered the initiation of private-sector opportunities for prison employment and production there.