The Financial Argument for Prison Reform

Originally written for ARCH 4020: Mutable Architecture Thesis Studio with Alex Yuen, UVA SARC Spring 2021

The American Prison is an $182 billion per year industry. Key players in this system financially benefit from mass incarceration at the expense of inmates, their families, their communities, taxpayers, and at the state and federal levels. This multi-billion dollar industry contains 2.3 million people that are currently incarcerated in the United States. The US Sentencing Commission report on recidivism of prisoners shows that about “45% of the former prisoners were arrested within one year of release,” and that “68% were arrested within three years, 79% within six years and 83% in nine years” (Clarke, 2019). While the cost of prison for taxpayers is increasing, so are prison populations while at the same time recidivism rates remain high. The current American prisons mainly focus on prison as a means for punishment. By shifting the system to utilize a mix of more rehabilitation and less punishment, the overall cost of prisons can decrease for taxpayers while decreasing recidivism rates and increasing the likelihood of successful reintegration of prisoners back into society.

To understand the vastness of mass incarceration as well as who benefits and who may be resistant to reform, it’s important first to understand the financial breakdown of the system. The key players benefiting off of the US mass incarceration system are both from within the federal system and from the private sector. In Figure 1 (on page 2), there is a breakdown summary of the financial system upholding the US Prison System from the Prison Policy Initiative report. The majority of the money spent on running the correctional system goes to paying staff. “This group is an influential lobby that sometimes prevents reform and whose influence is often protected even when prison populations drop...The government payroll for corrections employees is over 100 times higher than the private prison industry’s profits” (Wagner). So, even when the prison populations have decreased, staff payroll remains the same, or even increases in some cases. Outside of correctional staff, many private companies benefit from mass incarceration.

Figure 1: Breakdown of Prison Financials (Diagram made by Alex Wright based on Prison Policy Initiative Report)

For example, healthcare is largely contracted to private companies. Corizon, a private correctional medical services company, earns about $1.5 billion annual revenue. Although the prison system must provide care for prisoners, private healthcare companies often focus on driving profit up at the expense of the patients. There have been a multitude of cases from inmates accusing Corizon of deadly medical neglect, not getting proper treatment, medication, etc. Another facet of the prison industry which is taking away big profits are specialized phone companies like Global Tel-Link. Global Tel-Link earned around “$1.2 billion annually” with a semi-monopolistic contract allowing them to make outrageous costs of up to “$24.95 for a 15 minute call” (Tylek). Often the families of the incarcerated foot the bill in order to communicate with their convicted lived one. Furthermore, commissary vendors make about $1.6 billion annually, again which fall on families of the incarcerated to pay for. The catalogue of benefactors of mass incarceration goes on in Figure 2 which outlines companies from each sector that profit off of the system.

Figure 2: Catalogue of Companies Benefitting off Prison (Rose)

While each of these companies make exorbitant financial gains, they also lobby to maintain the current conditions of the flawed system at the cost of the taxpayer.

Prison costs US taxpayers about $80 billion per year according to a financial report by the Vera Institute of Justice. Along with this report, the institute broke down the average cost per prison per state to the taxpayer (outlined in Figure 3) and the price of each inmate per state to the taxpayer. One large finding was that the “ the total taxpayer cost of prisons in the 40 states that participated in this study was 13.9 percent higher than the cost reflected in those states’ combined corrections budgets.”

Figure 3: Taxpayer Costs of State Prisons Figure 4: Taxpayer Costs of State Prisons Per Inmate

Figure 5: Incarceration Rates and Crime Index

So, while state governments dedicate budgets to correctional facilities, the costs are actually a bit higher than intended. As the companies who benefit from mass incarceration lobby to maintain the current system, taxpayers are spending the real money. In other words, taxpayers are spending more money to uplift a system that doesn’t work. Why would the average taxpayer want to pay for a system which yields high recidivism rates, higher prison populations, with crime rates staying the same? Analyzing Figure 5, it’s clear that increased incarceration doesn’t necessarily decrease the crime index. Taxpayers are paying to increase profits for private companies associated with correctional services and not solving the issues at hand. The system needs a change.By transforming the American Prison from a philosophy of punishment to that of rehabilitation, the system may actually cost less to governments and taxpayers, while benefiting the incarcerated population.

A study published in Crime & Delinquency found that “if just ten percent of offenders were treated in a drug treatment program instead of going to prison, the justice system would save $4.8 billion.” If there was a prison that embraced rehabilitation like a substance abuse treatment ward, the cost of prisons would decrease severely. The Justice Policy Institute’s "Substance Abuse Treatment and Public Safety" states:

"Substance-involved people have come to compose a large portion of the prison population. Treatment delivered in the community is one of the most cost-effective ways to prevent such crimes, and costs approximately $20,000 less than incarceration per person per year. A study by the Washington State Institute for Public Policy found that every dollar spent on drug treatment in the community yields over $18 in cost savings related to crime. In comparison, prisons only yield 37 cents in public safety benefit per dollar spent. Releasing people to supervision and making treatment accessible is an effective way of reducing problematic drug use, reducing crime associated with drug use, and reducing the number of people in prison.”

The Justice Policy Institute found that by just rehabilitating prisoners with drug abuse issues, the prisons can actually spend less money and decrease recidivism rates. When a prisoner goes through rehabilitation, they often can function in society, joining in to participate in the economy via job. So, rehabilitation has added value by guiding prisoners to reintegrate into communities, work jobs, and generate more economic activity for their communities. While incarcerated individuals with drug abuse problems and addictions are put behind bars, there’s a high likelihood that those individuals won’t be treated or rehabilitated, but will eventually re-enter society with the same medical afflictions and drug addictions. This means the chance for reintegration is low, meaning it’s likely they’ll be arrested again within one to eight years. The taxpayer will then have to pay more money to put these individuals through a system that will likely do nothing to rehabilitate them again. A more effective strategy is to give these inmates opportunities to be guided back to the right path with programs to increase their education, employment skills, mental health, and other programs of rehabilitation.

Figure 6: Drug Treatment vs Incarceration Figure 7: Drug Treatment Increase, Violent Crime Decrease

Recidivism rates remain high although prison populations have decreased in the past few years. Prison destroys wealth, creates debt, and decimates job opportunities. This means that any inmate with a family may inevitably put that family through financial burdens. Inmates generally have highly controlled, severely dependent lives in prison which destroys their personal autonomy. By the time they’re released, their criminal record will deny them job opportunities. Any wealth they accumulated is quickly depleted by fees and other costs. With accumulated debt, depleted wealth, and no job opportunity, coupled with the reality of having been controlled with little independence in prison, many formerly convicted individuals have to turn back to crime for financial support, landing them back in prison. Prisons should work to rehabilitate individuals with medical care, mental health treatment, therapy, education, vocational skills, employment skills, and coursework that will help them succeed in reintegrating into communities.

Interested in this article? Check out my architecture thesis on designing a Rehabilitative Prison + Public Park!

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