Ads are being blocked

For us to continue writing great stories, we need to display ads.

Un-block Learn more
Back

Whitelist

Please select the extension that is blocking ads.

Ad Block Plus Ghostery uBlock Other Blockers
Back

Please follow the steps below

Why Private Prison Stocks Are Soaring

Investors are betting on Trump’s promise to incarcerate and deport millions, and big changes may be coming to America's prison towns, says Carl Takei of the ACLU.

An unmarked police truck patrols outside an immigrant detention center in Eloy, Arizona. (Ricardo Arduengo/AP)

Among the big winners buoyed by Donald Trump’s victory? The private prison industry. Shares of CoreCivic (formerly known as Corrections Corporation of America) and GEO Group, the two biggest players in the business, jumped 43 and 21 percent, respectively, the day after the election.

Over the last week, their fortunes have continued to rise as Trump’s recent public statements affirm his aggressive deportation plans. In an interview broadcast on CBS’ “60 Minutes” Sunday, Trump insisted he would remove two to three million immigrants upon taking office, incarcerating many in the process. “What we are going to do is get the people that are criminal and have criminal records,” Trump told correspondent Lesley Stahl. “We are getting them out of our country or we are going to incarcerate.”

Trump’s win comes at a crucial time for the prison business. Last October, Hillary Clinton announced she would stop accepting donations from the industry, later declaring, “We should end private prisons and private detention centers.” Then, in August, industry stocks plunged after the Department of Justice's August decision to phase out its use of private prisons. The day after the DOJ announcement, the private prison company GEO Group gave a $100,000 to Trump’s SuperPAC.

To understand what private prison companies expect to see under the Trump administration and how this could affect cities nationwide, CityLab spoke with Carl Takei, a staff attorney for the ACLU’s National Prison Project.

What signal does this send about Trump's plans for the private prison industry, as he begins to put his own people into the Department of Justice and Department of Homeland Security?

The anti-immigrant proposals President-elect Donald Trump has touted on the campaign trail promise to enrich private prison companies and their investors. He has called for a massive increase in roundups, detention, and deportation by ICE, as well as imposing a 5-year mandatory minimum federal prison sentence for people who reenter the country after being deported. If implemented, these proposals would likely increase the ICE detention population by hundreds of thousands of people and also require at least nine new federal prisons. This is true even if he does not deport all 11 million undocumented people at once. Deporting 2 to 3 million people in the first year of his presidency, as he proposed on “60 Minutes,” would require the construction of more than 100,000 new immigration detention beds.

The president-elect has two options for handling the millions of immigrants who would be detained under his proposed policies: He could turn federal prison construction into an enormous, WPA-style public employment program. Or he could put hundreds of thousands more people into the custody of private prison companies.

So either way he goes on making this happen, that means a lot of potential jobs for municipalities from construction to detention. How do you anticipate cities and towns will respond to this move?

As mass incarceration exploded in the 1980s and 1990s, many struggling rural cities and towns, particularly in the South and Southwest, viewed prisons and jails as a source of jobs. Some places, like Eloy, Arizona, have become prison towns whose economies are almost entirely dependent on locking people up. It would not be surprising if various local governments welcomed mass deportation and detention as a chance to get more jobs.

However, locking people in cages is not a wise, sustainable, or humane economic development plan. Many prison towns went bankrupt or ruined their credit ratings in the early 2010s when U.S. incarceration rates briefly dipped. Although the cities were stuck with the unpaid construction debt, the private prison companies they partnered with simply laid off their staffs and left town. Additionally, recent research has shown that private prisons, in particular, can drive down wages and prevent other, better forms of economic growth from taking root.

The private prison industry recently attempted to change its business model and its image, to some degree, by investing in new subsidiaries in other parts of the criminal justice system, such as ankle monitors and halfway houses. Do you expect this evolution to halt and go back towards traditional prison and detention facility infrastructure?

No. Criminal justice reforms are still moving forward in the states. This November, for example, ballot measures passed in both California and Oklahoma that promise to significantly reduce state prison populations. Such measures increase the numbers of people on parole, on probation, and in halfway houses, and the private prison industry’s expansion into halfway houses and community corrections is a response to these trends.

That expansion is vertical integration, not real reform. To avoid getting sent back to prison, a person on supervision or housed in a community corrections facility typically must navigate a maze of behavioral rules, programming, and work requirements. It is in the company’s interest to make these requirements as difficult as possible to complete, since each person who fails the requirements will continue generating revenue for the company. For people entangled in this corporatized criminal justice system, there is only one outcome that would not benefit corporate shareholders: successfully exiting the criminal justice system and not returning.

Given Clinton's loss, what now are the prospects for phasing out the private prison industry at the state and local level? Do you think Trump could or would block such efforts? If so, how do advocates like yourself plan to respond?

Although President-elect Trump praised private prisons in a June 2016 interview with Chris Matthews, that was the only time he mentioned private prisons during the campaign, and it is not clear how much importance he places on the issue. Moreover, while he controls the federal prison system, the president has little power over state prisons and local jails. His Department of Justice can make grants to state and local systems that are contingent on following a particular federal policy, but he can’t force those officials to accept the grants. Regardless of what the president-elect says or does, the ACLU is staunchly opposed to profiteering in the criminal justice and immigration detention systems and will continue to fight it at all levels.

About the Author

  • George Joseph
    George Joseph is an editorial fellow at CityLab, originally from Denton, Texas. He covers schools, policing, and surveillance.