More than a year after I called the trend "The Coming Immigration Detention Boom," the Wall Street Journal reports that "The prison industry looks ready to stage a breakout." Reports the Journal ("Profits for private jailers," May 27):
the Department of Homeland Security's Border Initiative and its detention of undocumented immigrants has further burdened the system. Federal prisons already have 33% more inmates than they were designed to house and state prisons are similarly overcrowded.
The upshot? A severe shortage of prison space -- and a robust outlook for the three biggest private jailers. ...
The vast majority of prisons are still owned and operated by federal or state governments; less than 8% of prisons are outsourced to private operators. But the private market -- dominated by Corrections Corp. of America, Geo Group and Cornell -- is expected to grow substantially over the next five years.
A February report from the Pew Charitable Trusts, a nonprofit research foundation, forecasts a 13% increase in the inmate population by 2011 -- in line with past growth rates, but further compounding the overcapacity problem. That amounts to as much as $27.5 billion in new prison construction and operation.
That kind of burden leaves states and the federal government with little choice but to outsource incarceration to private companies.
Corrections, Geo and Cornell are "far and away the biggest beneficiaries of that trend," says Patrick Swindle, an analyst with boutique investment bank Avondale Partners in Nashville, Tenn.
Bucking the national trend, actuarial estimates by Dr. Tony Fabelo indicate that with funding for alternatives, new treatment beds and the passage of several new laws, the state of Texas doesn't need to expand prison capacity (though budget writers have chosen to do so, anyway). But the feds are likely customers for these companies in Texas thanks to political pressures to increase immigration enforcement.