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Posted on
12/04/2008 5:43 PM EST
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Immigrants drive private prison profits
Part 1 of 2
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Tom Barry
Immigrants are behind one of América's fastest growing, most profitable industries. That shouldn't come as a surprise. Immigrants have always been a core factor in U.S. economic development.
Mining, railroads, agribusiness, and, recently, construction have been among the many U.S. industries that historically been driven by an abundant supply of immigrants. But now, when the economy is imploding, most industries are shedding immigrants. The private prison industry, however, is booming, largely because of the ever-increasing supply of immigrants supplied by the federal government.
In the past, when the government detained immigrants—legal or illegal—they were placed in one of a handful of official processing centers where they awaited a hearing or deportation. The Department of Homeland Security (DHS) still runs seven immigrant detention centers.
Since the early 1980s, sparked by the Reagan administration's new enthusiasm for privatization and the free market, the Justice Department and now also DHS have been outsourcing most of the immigrant detainees to private firms that own or manage scores of prisons that annually hold hundreds of thousands of immigrants.
At a time when most other industries are reporting slackening consumer demand and plunging revenues, the executives of the major private companies providing prison services attribute their fortunes to the sorry fate of America's immigrant population. They routinely tell investors that their major "customers"—Federal Bureau of Prisons, U.S. Marshals Service, and Immigration and Customs Enforcement (ICE)—keep "bed occupancy" near capacity.
To understand how well the prison business is faring and how immigrants are key to prison profits, you can listen in on the prison firms' quarterly conference calls with major Wall Street investment firms. In early November, the country's prison corporations reported soaring profits.
Corrections Corporation of America (CCA), the country's oldest and largest prison corporation, boasted that it enjoyed a $33.6 million increase in the third quarter over last year, while earnings rose 15% during the same period. Formerly known as Wackenhut, GEO Group, the nation's second largest prison company, saw its earnings jump 29% over 2007 (earlier this year they were awarded another contract to build a facility in Aurora, Colorado). Another private prison firm that imprisons immigrants is Cornell Companies, and it reported a 9% increase in net revenues in the third quarter.
Private prisons have been booming over the past eight years. From 2000 to 2005, the number of private prisons increased from 16% of all prisons to 23%. All of the increase in federal prisons has been in prisons owned or operated by private firms.
Immigrants are the fastest growing sector of the federal detainees and prisoners, and there are hundreds of millions of dollars to be made by enterprising businesses and governments. The annual ICE budget for "detention and removal" is $1.2 billion.
In addition, the Justice Department's Office for the Detention Trustee has hundreds of contracts with local governments and private prison firms that provide beds for immigrants. Both ICE and OFDT have special offices that oversee the outsourcing of its immigrant prisoners. OFDT even boasts of its "enterprise" system of detention.
Private prison companies aren't worried that the Democratic Party sweep will mean that fewer immigrants are sent their way because of party promises of enacting comprehensive immigration reform. GEO Group's chairman George Zoley assured investors on Nov. 3: "These federal initiatives to target, detain, and deport criminal aliens throughout the country will continue to drive the need for immigration detention beds over the next several years and these initiatives have been fully funded by Congress on a bipartisan basis."
Not only has the DHS crackdown on illegal immigrants have bipartisan support in Congress, it was the Democratic Congress, say private prison chiefs, that increased the 2009 budget for the crackdown. "The president only asked for a program funding of $800 million," noted Zoley. "It was the Democratic chairman [of the Homeland Security subcommittee] ... that added another $200 million to this program."
Part 2 reveals the private prison company representatives boasting to investors.
Tom Barry directs the TransBorder Project of the Americas Policy Program (www.americaspolicy.org) at the Center for International Policy in Washington, DC.
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