The the US isn’t a new concept, but

The Price of Prison –United States of America

The American prison had a
whopping estimated turnover of $74 billion as of February, 2017, which is a
slightly unsettling amount to be fished out of the pockets of tax-payers. The
US Federal Agencies and other bodies of governance thus, have been resorting to
the private sector for correctional services, with a primary motive of cutting down
costs (with short-run savings averaging about 19.25%); it also comes as a
remedy to problems of overcrowding and understaffed prisons (as those run by
the government). Note that the concept of privatized prisons in the US isn’t a
new concept, but dates back to almost 1852, and resurged in the 1980s in the
wake of wide-spread privatization of various sectors. Privatized prisons today
make up 10% of the corrections market in America, and are also prevalent in
other nations such as the United Kingdom and Australia. Besides, by introducing
competition, they also encourage the public prisons to innovate. Cost-benefit
analysis is a major regulatory initiative to measure the effectiveness of such
alterations in the management of prisons.

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average cost of incarcerating American prisoners differs from state to state, ranging
from Indiana managing at $14,000 per inmate, to New York paying $60,000 to keep
each inmate behind bars. Despite public opposition, the costs of running the
prison system have been increasing gradually.


A Local Cost Comparison: A study of two Wisconsin Prisons,
December, 1996.

It concluded that the daily cost
incurred on each inmate in the private facility was, in fact, 23% lower than
that in the public facility.

COMPARISON: Prairie Correctional Facility (PCF) private and Jackson
Correctional Institution (JCI) public




Inmates as % of capacity



Correctional Officers (C.O.s)
Other Staff
Staff per 100 inmates
C.O.s per 100 inmates



Estimated 1995 spending



1995 per diem/inmate



1995 spending/inmate/year



(George Mitchell, “Controlling Prison Costs in Wisconsin,” Wisconsin
Policy Research Institute, December 1996)

As we can see, private-run
prisons are more cost efficient. However, like all other private sectors their
primary motive is that of profit-making. Various reports and analyses show that
the government of the United States has had entered into contracts with these
prisons that require them to keep them filled up to a certain extent, else pay
for the vacancy. These are referred to as “lock-up quotas” or “occupancy
requirements.” For example, the CCA or the Corrections Corporation of America,
whose revenues have climbed by over 500% in the past 2 decades, is one of the largest
owners of private prisons in the USA; as of 2013, a report by the Open Society
Institute and Public Welfare found that 41% of the company’s contracts to the
government mandated an 80 to 100% occupancy rate. What happens when crime rates
take a plunge? Taxpayers foot the bill for the underused cells. Such was the
case in 2009 in three CCA run prisons in Colorado whose occupancy rates fell
below 80%. Christie Donner, executive director of the Colorado Criminal Justice
Reform Coalition, later reported an estimated expense of at least $2 million
from tax revenues to run the underused CCA prisons instead of state-owned ones.


What are the costs & benefits of prisons/ local jails in the US?

Costs: Many wrongly cite the $74 billion as the cost of
incarceration, which is only the amount spent on corrections. The latter
ignores the costs borne by incarcerated persons, families, children, as well as
the overall community. Examples of such implicit social costs are:

The foregone wages of the imprisoned.

Increased Infant mortality.

Occupational restrictions even upon release.

Increased criminal activity or increased chances
of them among children with incarcerated parent(s).

Social cost borne by the families of prisoners
owing to their absence.

As stated by the Institute of Advancing Justice Research
and Innovation, 2014, 66% of incarcerated people and their families reported
experiencing various detrimental mental health effects.

Private prisons have managed to cut down on
costs overtime; one of the reasons for the same is that the staff isn’t adequately
paid. Dissatisfaction of the workers in prisons add on to costs.


List of Costs Borne
by Incarcerated Persons

List of Costs Borne by Family,
Children, and Communities

While such costs, along with
various others, do not appear on the annual budgets, they do in fact lead to
reduction in aggregate welfare of society. Consideration of these may help in
better policy-making decisions.


Creation of job opportunities in prisons.

Ensures a safer society than one without a
prison system.

Rehabilitation and correctional activities
increase chances of inmates leaving behind non-conformist lifestyles.

Reduction in crime rates.


And about the taxpayers’ contributions?

So what do these statistics have
in store for an average American citizen? Let’s take for example, Arizona –it allocates
10% of its budget to corrections each year, owing to the need for “public
safety.” If we assume an average citizen to be a middle class school principal
with a salary of $75,000, he pays $2,309 annually as state taxes, which via
simplified mathematics may imply that he pays $203.90 per annum towards prison maintenance
and rehabilitation and monitoring of their dwellers. Costly.

As far as the question of whether
or not taxpayers’ money should be invested in prison management is concerned,
the answer is yes. There are various prison costs which fall outside the
correction’s budget (for example: employee benefits & taxes, capital costs,
legal judgements and claims, etc); such a set-up ensures that the payers’ contributions
aren’t exploited, but used only in the areas necessary. It is important to make
these contributions since prisons and jails not only provide shelter to criminals
and juveniles, but also make provision for correctional activities. This not
only eliminates the anti-socials in society, but also converts them to make
them conform to law and order.