Jun 8, 2019

Axios AM

By Mike Allen
Mike Allen

Good Saturday morning. ⚡Breaking: President Trump announced on Twitter that tariffs against Mexican goods were "indefinitely suspended" following Mexico's agreement to take stronger measures to curb immigration. Go deeper.

🎬 Today's Axios AM is a special Deep Dive edition looking ahead to tomorrow's episode of "Axios on HBO" (6 pm ET/PT).

  • This Deep Dive — led by Stef Kight, Alison Snyder, Dan Primack, Erica Pandey, Michael Sykes and Jessie Li (with the awesome work of the Axios Visuals team) — shows how private companies profit from U.S. prisons.
  • 📺 "Where you have people's livelihoods depending on a steady supply of human bodies to put in cages ... it is gonna get twisted up," Philadelphia District Attorney Larry Krasner tells "Axios on HBO." See a clip.
  • Smart Brevity count: 1,578 words — <7 min. read.
1 big thing: Profiting from prison

Illustration: Aïda Amer/Axios

A handful of American businesses have their fingers in almost every aspect of prison life, raking in billions of dollars every year for products and services — often with little oversight, Stef and Dan write.

The big picture: Taxpayers, incarcerated people and their families spend around $85 billion a year on public and private correction facilities, bail and prison services, according to the Prison Policy Initiative.

  • For-profit prison companies arose in response to the government's incapacity to handle the skyrocketing incarcerated population.
  • Now entrenched, they've become "one more hurdle" to changing the American system of mass incarceration, Lauren-Brooke Eisen of the Brennan Center for Justice told Axios.
  • These companies have been known to cut corners — sometimes endangering people — to profit off of the system.

Here's how they make money:

📞 Phone calls

About 80% of inmate calls go through Secarus and GTL, both owned by private equity and known for sometimes charging outrageous fees ($8.20 for the first minute, in one case cited in a lawsuit).

🚑 Medical services

The largest private provider of medical services to prisons is believed to be Corizon Health, operating in 220 facilities in 17 states and owned by a New York City hedge fund.

  • Pricing: Corizon was paid $15.16 per incarcerated person per day for medical staffing in Arizona's prisons, before being accused of cheating state monitors and losing the account to another private company.

🍔 Food services

Two companies — Aramark and Trinity Services — provide meals in about 800 state and local facilities.

  • The Michigan Department of Corrections awarded a $145 million contract to Aramark, then fired the company for everything from "meal shortages to maggots in the kitchen," and replaced the company with Trinity at an annual cost of $158 million.
  • Problems persisted under Trinity, causing Michigan to abandon privatized food services in its kitchens.

🚗 Transportation services

Tennessee-based Prisoner Transportation Services is the largest provider of transportation for jails and prisons.

  • PTS typically charges about $1 per adult per mile.
  • In the past several years, 14 women claimed to have been sexually assaulted by transportation guards and at least four people have died while being transported in PTS vehicles, per the Marshall Project.

👕 Clothes, toiletries, etc.

Incarcerated people and their families spend an estimated $1.6 billion every year on commissary items such as toiletries, clothes and games.

  • While these items aren't generally marked up, people in prison make very little money to afford what they need.
  • Keefe Group and Bob Barker Company specialize in producing secure items as well as supplying cell furniture, guard equipment and supplies.

What’s next: With bipartisan attention focused on fighting high recidivism rates, for-profit prison companies are expanding their businesses beyond prison walls.

Bonus: U.S. incarceration and spending
Expand chart
Data: Prison Policy Initiative, Brookings Institute. Chart: Andrew Witherspoon/Axios

Following decades of a rapidly growing prison population, the percentage of Americans in prison is the lowest it has been in more than 20 years.

  • Still, the U.S. incarcerates people at a higher rate than any other country — 655 people for every 100,000 of the population.

Go deeper: The U.S. incarceration rate fell more than 10% in the past decade

2. Where private prisons are thriving
Expand chart
Data: Bureau of Justice Statistics; Cartogram: Chris Canipe/Axios

Since the first private prison opened in 1984 in Tennessee, for-profit incarceration has ballooned into a $5 billion industry, Erica writes.

  • In 2017, 121,420 people — about 8% of the U.S. prison population — were housed in private facilities, but the share is much higher in some states.

Why it matters: Private prisons tend to hire fewer guards than state and federal prisons and often are more dangerous.

  • A spokesperson for private prison firm GEO Group told Axios the company's services comply with federal standards as well as third-party accreditors’ guidelines.

The big picture: In November 2016, President Obama pushed an executive order to end the Justice Department's reliance on private facilities, but President Trump rescinded the order once he took office.

  • Since then, the stocks of the two biggest private prison companies have surged. CoreCivic is up 56% to $22.78 and GEO Group is up 46% to $23.02.

Go deeper: Read Erica's full story here.

3. Ending cash bail

The lights of downtown Los Angeles shine behind a Quick Bail Bonds building across from the Men's Central Jail. Photo: Robert Gauthier/Los Angeles Times via Getty Images

More than a half million Americans are behind bars without a conviction, many because they can't afford to post bail, Stef writes.

Why it matters: Poor people already are more likely to end up in the criminal justice system. While it serves as a means of ensuring defendants appear for trial, bail can further penalize poverty.

"People should be in jail because they are a menace to society, because they are not going to show up for court. They should not be in jail because they're broke."
— Larry Krasner, Philadelphia district attorney, tells "Axios on HBO"

People who can't afford to pay bail face waiting in jail — sometimes for months — until their court hearing, paying a bondsman a fee to cover their bail or pleading guilty and receiving time served or probation.

The big picture: Krasner last year ended cash bail for most low-level, non-violent crimes in Philadelphia, which led to a 22% decrease in the number of people who spent at least one night in jail, according to one study.

What to watch: Many 2020 candidates, including Bernie Sanders, Kirsten Gillibrand and Beto O'Rourke, have called for ending cash bail.

4. Prisons thrive on poverty

Poverty drives the U.S. criminal justice system and therefore the prison industry, Stef writes.

Expand chart
Data: Brookings Institution; Chart: Chris Canipe/Axios

By the numbers: In the eight years leading up to incarceration, about half of people in prison had no income, according to a 2018 study by Brookings. Less than 10% made $25,000 or more in any one year over the same period.

  • About one-third of all 30-year-old men without work either were or are in prison, the study found.
  • Four years after being released, about half of formerly incarcerated people have no income — just as before.
  • 83% of formerly incarcerated people are arrested at least once within the nine years following their release from state prison, according to the Bureau of Labor Statistics.
5. The war on drugs anchors prison profits

Marijuana plants lined up in a driveway. Photo: RJ Sangosti/The Denver Post/Getty Images

For-profit prison companies boomed with the war on drugs, which led to a 171% increase in drug arrests between 1980 and 2016, Michael writes.

  • About 1.6 million people were arrested on drug-related charges in 2017, roughly 85% of which were possession-related.
  • Racial disparities in arrests are present as well. Black people nationwide are 2.39 times more likely to be arrested on drug charges than white people, despite similar rates of drug use.


  • President Nixon triggered the codification of tough-on-drugs policies en masse. Local police departments were rewarded hundreds of millions of dollars through new programs.
  • Mandatory sentencing laws were created to punish drug-related crimes with harsh penalties. In 2016, 53% of people convicted of a drug offense carrying a mandatory minimum penalty faced at least 10 years in prison as a result.
  • Authorities were enabled to seize cash, cars and real estate and flip those assets into new necessities for police departments.

Fast-forward: The approach to illicit drug use is shifting from criminal punishment to addiction treatment — largely due to the opioid crisis, which has disproportionately impacted white Americans.

6. How companies profit from immigrant detention

Incarceration rates are beginning to fall, but big, for-profit prison companies have a growing line of business: immigrant detention.

Expand chart
Data: USASpending.gov; Chart: Andrew Witherspoon/Axios

By the numbers: As of November 2017, 71% of detained immigrants were being held in private detention facilities, according to government data obtained by the National Immigrant Justice Center, Stef writes.

  • Since Trump became president, ICE has awarded more than $480 million to GEO Group and more than $331 million to CoreCivic.

Between the lines: These privately run detention centers often hire fewer staff or require less training, Randy Capps, director of research for U.S. programs at the Migration Policy Institute, told Axios.

The other side: If private prisons did not hold immigrants, they would likely be sent to local jails, which often struggle to meet the federal government's detention standards, according to a GEO Group spokesperson.

7. The prison labor you benefit from

Photo: Jeffrey Greenberg/UIG via Getty Images

Prison labor is behind some products and services Americans use every day — from call centers and Whole Foods goat cheese to farmer's market fruit, Stef writes.

  • About 18,000 incarcerated people participate in publicly run prison programs that offer vocational training, while providing labor to private companies through Federal Prison Industries, also known as UNICOR.
  • But prison reform advocates see these programs as a form of modern slavery where incarcerated people often make less than $1 per hour.

A look inside: At a local strawberry festival about 50 miles west of Washington, D.C., Virginia's Department of Corrections showcased produce grown by incarcerated people on local, government-owned farms.

  • Incarcerated people are paid 45 cents an hour for the labor, and can earn various certifications such as a forklift operator license or commercial pesticide handler permit, according to the program’s director John “Kenny” Raiford.
  • The vast majority of the vegetables and fruits grown go back to prison kitchens, which has helped lower food costs.
  • But some asparagus and melons are sold locally.
Mike Allen

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