Prison Workers Behind Bars

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Are taxpayers really saving money?


A major issue that has been reoccurring among all states is whether or not private prisons save taxpayers money.

Now according to the article Last Resistance, it states how private prisons do save taxpayers money.  In fact, private prisons are much more suitable than public prisons, when it comes to safety and cost.  The only way for private prions to save money is if the “system” doesn’t get corrupted by the government.  If the system does get corrupted by the government, then that’s when these private prisons will become dangerous for the inmates.  According to Hakim and Blackstone who conducted this study believe that

“exposing public prisons to greater competition should lead to lower costs and improved performance of both public and private prisons, because the threat of further privatization leads prisons administrators to make more-determined efforts to reduce costs and induces public employees to temper their demands.”

I have to disagree with the article above.  Private prisons do not save taxpayer’s money at all!  In fact, private prisons cost more to maintain and handle than public prisons.  According to, only 23% of the prisons budget is spent on private prisons.  According to Andrew Neilson, who is the director of campaigns at the Howard League for Penal Reform stated:

“If the Ministry of Justice is looking at modeling cuts of a further 25% to 40% to the department’s budget, then these figures suggest the solution does not lie in privastising more prisons.  Private prisons have driven down cost thanks to their ability to make savings at scale.”


Private prisons are just a cover up to exploit prisoners for a profit.  In a study conducted by the University of Wisconsin, it gives a breakdown on how private prisons keep inmates incarcerated longer than they’re supposed to, just so they can increase their profit.  Companies really don’t care if private prisons are saving taxpayer’s money or not, as long as they’re making a profit off of these prisoners, they will continue to support private prisons.


Private Prisons Offer Little in Savings


According to the New York Times, private prisons offer little when it comes to saving money. More than 30 states believed that private prisons would be beneficial in saving them more money than state prisons. Contrary to this belief, data in Arizona suggest that private prisons can cost more to operate than state prisons. Despite the state law that indicates all private prisons should be “cost saving,” Arizona’s own data points out that inmates in private prisons can cost around $1,600 more per year, and that’s roughly around the same amount as state prisons. The research that was conducted by the Arizona Department of Corrections, explained why private prisons seem less expensive than what they really are.  It’s because they only incarcerate inmates who are healthy, or how the State Representative Chad Campbell likes to call it “cherry picking.”

Inmates who are severely ill automatically get turned away from a private prison.  Five out of eight private prisons in Arizona turned away inmates that were either very ill, mental, had chronic conditions, etc; They were “saving” money by not providing medical health care to inmates.  Steve Owens, the spokesman for Corrections Corporation of America, indicated that private prisons in Arizona were in fact saving money.   However, when asked to provide factual evidence, he couldn’t do so.  Instead he stated

“There is a mixed bag of research out there.  It’s not as black and white and cut and dried as we would like.”

In the article Do Private Prisons Really Save Us Money?  Eric Young states that private prisons are not cost effective and doesn’t save taxpayers money as many claim to think. Without hardcore evidence, private facilities cannot claim to be less cost efficient than state prisons.  Private prisons don’t supply the safety that inmates need. Young stated that

“Time and time again, we’ve proven that federal prisons are the most cost- effective institutions to help rehabilitate our nation’s inmates.”

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The real question is are private prisons saving money?  The answer is no!  Based from what I got from both articles,  private prisons are more cost efficient than anything else, in fact, private prisons cost more than state prisons. I totally agree with Eric Young, private prisons are nothing but facilities to use and abused inmates, and if money isn’t being saved, then why have them?

Are we Really Saving Money?

According to a report by the Independent Institute by Blackstone and Hakim, states have been underestimating cost savings of private prisons.

For state-run prisons, important avoidable costs are not included in cost calculations and it is ambiguous whether short or long-run costs are considered. Often, avoidable state prison costs are delegated to other departments of the state government, which are not included in the state’s calculation of cost per inmate per day. Thus, these cost omissions are not adjusted for and deflate costs for state prisons.

However, the same can be said for private prisons.

According to a journal by Alex Friedmann published in Prison Legal News and the Fordham Urban Law Journal, cost-shifting factors (e.g. differences in prisoner populations, security levels, medical expenses, transportation costs and administrative overhead) inflates the expenses paid by the public contracting agency, while deflating the expenses of private prisons.

The article pulls out several examples highlighting the need to adjust for these cost-shifting factors, mainly emphasising that the non-adjusted rate of private prisons indicated cost savings while the adjusted rate instead indicated a net loss. The article also states how the cost of private facilities in Hawaii in 2007 and 2009 increased by 14.9% and 19.4% respectively, after adjusting for cost-shifting factors. The article quotes from the Florida Center for Fiscal and Economic Policy 2010 report, stating that

“[t]here is no compelling evidence that the privatisation of prisons has actually resulted in savings…. It is very difficult to ensure that a private prison is in fact 7% less costly to operate than a comparable public prison.”

Furthermore, Blackstone and Hakim’s report states that private prisons lower costs and improve quality by introducing more competition into the industry. However, according to The Hamilton Project, the extent of the competition is not substantial due to the small number of firms in the business. Compared to the year 1999 where there were 12 for-profit prison firms, since then, eight have been acquired and only two new firms have opened.

They calculated that the “two largest private prison companies account for around 55 and 30 percent of all private prison beds, respectively, and the 3 largest firms provide over 96 percent of the total number of private prison beds.”

Due to the complexity of the industry and difficulty in calculating accurate costs that take into account cost-shifting factors, how are we to know if private prisons are actually cost effective? With many of research articles and yet no clear answer, Friedmann suggests that we may be asking the wrong question. Instead, he invites us to take a step back and look at the bigger picture:

“Should we incarcerate people in private, for-profit prisons even if they do save money?”