Early American jails were largely privately managed, holding both criminals awaiting trial and debtors awaiting repayment, and charging holding fees to local governments and creditors. After the first publicly-run prison was established in 1790 in Pennsylvania, private business involvement in corrections largely diminished to providing contracted services, such as food preparation, medical care, and transportation. The major 19th-century exception to the relative separation between public punishment and private industry was the
convict lease system in the American South, in which private parties paid public prisons for forced prisoner labor. During the mass unemployment of the
Great Depression, business leaders and unions successfully pressured the federal government to prohibit private corporations from contracting cheap prison labor and undercutting competition. In 1930, the federal government established
Federal Prison Industries, a prison labor program to produce goods and services for the public sector. Many scholars and activists argue that the contemporary prison–industrial complex has its origins in the
war on drugs, a legislative campaign orchestrated by the U.S. federal government since the early 1970s aimed at
criminalizing and punishing drug trafficking and use. Following tougher anti-drug legislation and harsher sentencing standards under the presidential administrations of
Richard Nixon and
Ronald Reagan, incarceration increasingly became the standard punishment for non-violent offenses. As the overall incarcerated population dramatically increased, new correctional facilities needed to be built, staffed, and maintained, and private-sector prisons began to emerge as cost-effective solutions. In May 2021 the
Federal Bureau of Prisons listed 46.3 percent of federal inmates as incarcerated because of drug convictions.
1970s In 1973, following the lead of President Nixon, New York State passed the
Rockefeller Drug Laws, establishing
mandatory minimum prison sentences for small-scale drug possession. Although not as harsh as Governor
Nelson Rockefeller had originally called for, these laws inspired other states to enact similarly strict punishments for drug offenses, including mandatory minimum sentences in almost every instance. Also in 1973, conservative businesses and tough-on-crime politicians came together to establish the influential lobbying group
American Legislative Exchange Council (ALEC). In 1977, the U.S. Supreme Court case
Jones v. North Carolina Prisoners’ Labor Union restricted prisoners’ First Amendment rights to free speech and assembly, and prohibited them from organizing labor unions. In 1979, inspired by legislation proposed by ALEC, the U.S. Congress overturned the New Deal–era legislation against for-profit prison labor by establishing the Prison Industry Enhancement Certification Program (PIE). Intended to allow inmates to contribute to society, offset the cost of their incarceration, reduce idleness, cultivate job skills, and improve the rates of successful transition back into their communities after release, the PIE program created a cheap captive domestic
labor market, which set the stage for the adoption and expansion of private-sector labor in public prisons.
1980s President Ronald Reagan's
1986 Anti-Drug Abuse Act further accelerated mass incarceration. Very shortly many state prisons were experiencing unprecedented overcrowding. Meanwhile, in 1983, the
Corrections Corporation of America (CCA) was founded by Nashville businessmen who claimed they could build and operate state and federal prisons with the same quality of service provided by government prisons, but at a lower cost. As of 2012, the multibillion-dollar corporation, now known as
CoreCivic, manages over 65 correctional facilities and boasts an annual revenue exceeding $1.7 billion. In 1988, the now-second-largest for-profit private prison corporation,
Wackenhut Corrections Corporation (WCC) was established as a subsidiary of
The Wackenhut Corporation. The WCC is now known as
GEO Group, and as of 2017, their U.S. Corrections and Detention division manages 70 correctional and detention facilities. Between 1980 and 1989, the total U.S. prison population increased by 115%, from 329,821 to 710,054 people. In 1994, President
Bill Clinton signed the
Violent Crime Control and Law Enforcement Act, the largest crime bill in U.S. history, which directly allotted a $9.7 billion funding increase to prisons and introduced the
three-strikes law, assigning unprecedentedly long sentences (25 year to life minimum) to third-time convicts. As the prison population continued to grow steeply throughout the 1990s, the profit margins of private prison corporations such as CCA and GeoGroup continued to increase. In 1995, Congress passed another piece of ALEC-influenced legislation, the Prison Industries Act, allowing corporations to pay prison laborers less than the federal minimum wage and divert the difference to constructing facilities for further prison labor. This included 71,206 prisoners held in privately operated facilities, accounting for 5.5% of state and 2.8% of federal prisoners.
2010s In 2016, President
Barack Obama issued an executive policy to reduce the number of private federal prison contracts, and the
United States Justice Department began developing a plan to phase out its use of private prisons. Deputy Attorney General
Sally Yates rationalized this decision: "Private prisons simply do not provide the same level of correctional services, programs, and resources; they do not save substantially on costs; and as noted in a recent report by the Department's Office of Inspector General, they do not maintain the same level of safety and security." Both
GEO Group and
CoreCivic donated heavily to the Donald Trump presidential campaign in 2016 and inaugural committee in 2017, and following his election, their stock prices skyrocketed: CoreCivic by 140% and GEO Group by 98%. By the end of 2019, the U.S. incarcerated population had dropped to 2,068,800 people, its lowest level since 2003. The incarceration rate had dropped to the same rate as 1995 (810 per 100,000 adult U.S. residents), with 11% of federal and 7.6% of state prisoners incarcerated in for-profit facilities. == Structure ==