The Punishment Economy: Who Wins, Who Loses

by Daniel A. Rosen |

Maybe starting with math is a bad idea, but here goes: In Virginia, keeping the average inmate in prison costs the state about $30,000 per year; in some states like New York and California, it’s twice that much. Inmates over 50 years old with chronic health conditions often cost taxpayers as much as $150,000 a year. Yet experts have long agreed that most criminals “age out” of committing new offenses after that point.

Inmates are also worth a lot of money – there’s a price tag on their heads of many thousands of dollars – to those who profit off the punishment economy. In Virginia alone it’s a billion dollar a year ecosystem ripe for profiteering. While it’s difficult to calculate an inmate’s exact worth to prison profiteers, it’s worth exploring what that economy consists of, and who benefits.

First, some more numbers, to underline the scale of the issue: Police in this country will make 10 million arrests this year – on average, a pair of handcuffs used every three seconds of every day. Over 77 million Americans, almost one of every three adults, now have a criminal record. Each one of those arrestees and inmates represented a business opportunity; they needed a lawyer, a bail bond, a jumpsuit, a mattress, a jail phone account, linens, commissary food and hygiene items, some prescriptions, and more.

One in eight jobs in this country relies on punishing fellow citizens by some estimates. There are the directly-related jobs like corrections staff, prosecutors, bail bondsmen, and probation officers – and there are the less obvious ones a step removed: the employees of prison telecoms (Global Tel*Link, Securus); commercial food service companies (Sysco, Aramark); pharmacies and health companies that market specifically to corrections agencies (Diamond, Corizon), makers of cheap jumpsuits and linens and foam mats (Bob Barker Co.); and off-brand snack companies you’ll never see on grocery store shelves that make commissary foodstuffs (Cactus Annie’s, Moon Lodge).

Taxpayers spend $80 billion dollars a year to incarcerate our fellow Americans; in 1980, that figure was just $6 billion dollars. Now, we spend $9 billion alone just to keep about 100,000 senior citizens behind bars – 50 percent more than we spent on incarcerating all inmates 40 years ago. Where is that $80 billion dollars going? Is it keeping American communities safer? Or are we just producing greater corporate profits at the expense of American families and communities?

Besides consumables like blankets and jumpsuits, repeat customers are really all the prison-industrial complex churns out. Recidivists are the primary product of the punishment economy, and the real source of its profits. What other conclusion can one come to, when over 2/3 of those released will be back within a few years? If any other large-scale public enterprise had a track record that dismal, we’d hear calls to overhaul it immediately. To the companies feeding at that bountiful trough, it’s not dismal at all of course – it’s their lifeblood – the revolving door keeps their stock prices on a steady incline.

The carceral system in America is managed primarily by states, and most people with political power at that level avert their eyes from its failings because they benefit from its largesse and don’t want to know what’s being done in their name. And those with loved ones behind bars who pay taxes for that privilege have little political power to change how business is done.

A recent local news investigation in Virginia illustrated this cozy arrangement perfectly. ABC News found the GEO Group had been badly deficient in staffing the privately-run Lawrenceville Correctional Center with guards and nurses, per the company’s contract with the state. GEO has paid hundreds of thousands of dollars in penalties and fines over the last few years due to those shortcomings, but it still costs them less than full staffing would have. Staffing is the single biggest expense for GEO and other private prison companies, and reducing personnel is the best way to maximize profit. Of course, it’s also the best way to ensure inmates are less safe and lacking medical attention.

Worse, the same investigation found that a proposed 2021 state Senate bill outlawing the use of private prisons was killed in committee by nine senators who’d received campaign donations from GEO – some as little as $250 dollars. Sounds like a pretty reasonable investment in continued profiteering by GEO.

One of the other winners is certainly billionaire Tom Gores, owner of the Detroit Pistons. He’s also the founder of Platinum Equity, a private equity firm with $23 billion under management. Platinum owns Aventiv, which provides communications and funds transfer services to prison and jail inmates. Aventiv is the parent company of both Securus Technologies and JPay, both of which gouge inmates for their monopolistic services.

Securus provides telecom services to about 1.2 million inmates – over half of those in the U.S. It boasts that its phone rates are capped at $13.65 for a 15-minute call, and that those calls average $3.57. Securus, like all prison phone providers, claim the extra costs are for recording and monitoring the calls. But in reality, some of these extra dollars are returned to jails and prisons in the form of “commissions” – a fancy word for kickbacks that help Securus and companies like it win telecom contracts in the first place.

American families are the ones paying the $100 dollar a month average price for the privilege of a daily phone call to see if their loved ones behind bars are alright. Also illustrative – in 2018, Securus signed a contract with the Illinois prison system to provide telecom services at $.01¢ per minute – a contract under which Securus still turns a profit. So it seems that those recording and monitoring costs can’t be as high as they often claim.

In the past several years, Securus has expanded its business to provide “video visitation” at jails and prisons, charging visitors up to $1 per minute for the privilege. Mind you, in-person visitation is usually free – but Securus has also lobbied corrections departments to end in-person visits, ostensibly on the grounds that the video version is safer. Nevermind that it’s in no way a satisfactory substitute for the embrace of a loved one. If Securus were offering extra convenience for its service, the profit might be understandable. But many facilities require visitors to show up and use videophone equipment on-site anyway so that authorities can monitor the interactions more easily.

JPay is another example of Aventiv’s greed and profiteering at the expense of inmates and their families. JPay’s services must be used by inmates at many facilities for funds transfers, “email” kiosks, media players to download music, pictures, and games, and release debit cards. All these avenues earn JPay outrageous fees by charging the kind of high service costs to inmates that a monopoly affords. A single email can cost anywhere from $.25 to $.35 cents, and a $200 money transfer to an inmate account earns JPay anywhere from $8 to $13 dollars.

JPay also provides tablets and MP3 media players – cheap made-in-China products that malfunction often and constantly must be replaced at inmate expense – again for hefty fees. The players and tablets are often the only way for inmates to receive cards and photos – for an added fee, of course – since many corrections systems no longer allow those items to be sent by mail. They claim that the ban prevents drugs from coming through the mail – but unsurprisingly, drugs continue to enter prisons and jails through smuggling by officers and staff.

This kind of profiteering by Securus and JPay aren’t isolated examples. They’re emblematic of a system we’ve allowed to flourish for too long in this country, where billionaires like Tom Gores profit off the misery of families with loved ones behind bars. When NBA players protest about social issues, they ought to include a pointed message to Gores and other team owners who run and profit off these enterprises.

Alabama’s prison system illustrates another disturbing facet of the punishment economy. On February 1st, Governor Kay Ivey announced an agreement with CoreCivic (formerly Corrections Corporation of America), one of the nation’s largest private prison companies, to lease two massive state prisons for 30 years, at a cost to taxpayers of $3 billion dollars. The new prison complexes that together hold 7,000 inmates will be built and owned by CoreCivic, but staffed and operated by the state’s corrections agency. The companies that will outfit and service these facilities (like those mentioned earlier) are surely eager to get busy profiting off their construction and operation.

Governor Ivey said that her plan was meant to address Alabama’s troubled prison system without raising taxes or incurring debt. But advocates like the ACLU point out the high cost – $100 million a year – to merely rent a facility while lining the pockets of private prison companies, without solving the underlying problems of understaffing, mismanagement, violence, and overcrowding. They’ve called instead for sentencing reform to reduce the state’s prison population and obviate the need for more prison beds. In December of 2020, the US Department of Justice in a rare move also took Alabama to task, suing the state over its failure to protect inmates from violence and the use of excessive force.

Jails and “correctional centers” don’t correct drug addiction, or mental health issues – yet addicts and the mentally ill are numerous behind bars. So are probation violators, often making a return trip for breaking technical rules (like a failed drug test or missed meetings with officers), not committing new crimes. Instead of getting people the help they need, the system has become a perpetual motion machine, expanding to serve the profit motive of the economic winners who perpetuate it.

People like these – probably half of those in prison – don’t belong behind bars, and communities would be no less safe if they were released. Even better would be a carceral model which gave people who did belong behind bars real tools to prevent their return. But then profits would suffer, and the system has no interest in that kind of efficacy.

Besides the companies who profit off it and the politicians who perpetuate the problem, the system is designed to fail everyone in whose name it purports to operate: inmates, their families, crime victims, taxpayers, corrections officers, and communities.

And make no mistake, there are losers well beyond inmates themselves. Because recidivists create new crime victims by definition, contributing to broken communities. Millions of children growing up with a parent behind bars surely lose – and become more likely to land there themselves as well. Taxpayers lose when billions are spent on incarceration – or even on servicing the debt on municipal bonds floated to finance new lockups – instead of schools and health care. Even corrections officers lose, working in unsafe conditions in understaffed facilities for low pay, so corporations like GEO and CoreCivic can pass on to shareholders the money not spent on proper staffing.

The economic and societal damage that arresting 10 million people a year and keeping two million stuck behind bars does to our society is incalculable. It goes well beyond the $80 billion dollars we spent up front: lost productivity, jobs forfeited, family wealth not accumulated, health problems left untreated, children not parented properly, lives not lived, streets and neighborhoods and communities left broken. The true cost of all this profitable caging is probably incalculable. But it’s clear who’s winning and who’s losing.


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