Privatizing prisons may be one way for the prison population to get back under control. Prisons are overcrowded and need extra money to house inmates or to build a new prison. The issue of a serious need for space needs to be addressed. “As a national average, it costs roughly $20,000 per year to keep an inmate in prison. There are approximately 650,000 inmates in state and local prisons, double the number five years ago. This costs taxpayers an estimated $18 billion each year. More than two thirds of the states are facing serious overcrowding problems, and many are operating at least 50 percent over capacity. (Joel, 1988)” Private prisons may be for profit, but if they can solve the issue of cost then it may be a better option than what is currently in place. Cost is one main issue that pushes for private prisons. The cost has the potential to be much lower in private prisons than in government run facilities.
Everyone can see there is an opportunity to make money as a company in a way that helps everyone in America, i.e. saving taxpayers money. The market structure is unique for private prisons. Demand for prisons seems to be ever increasing. Nearly every prison in America is overcrowded and will continue to be so if new prisons are not built. This problem of prison shortages could be lessened by supplying more prison space at a lower cost than federal prisons can. This market is special because demand for prisons is high, while supply of prisons is low. That’s what makes this industry so appealing. The private prison never has to worry about being thrown out the window or not having enough business. The niche is that private prisons are a good substitute for the federally run prison. As their costs go up, the more government will desire their services. The laws ensure that they will have inmates. Technology won’t be a problem since most prisons have very basic amenities and haven’t changed dramatically over the past years. The cost factor of private prisons is the item that made them desirable. They were claiming to operate at a lower cost and were able to prove so. “Advocates claim that the private sector can finance, build, and operate prisons less expensively and more efficiently than government agencies without lowering the quality of services. (Shichor, 1998)” The reason for being able to operate at a lower cost is mainly due to the employees. The employees of private prisons do not work for the government and do not get paid the same higher wage. These employees also do not get the same amount of benefits. Benefits and wages of employees cost the company quite a bit of money. With these cut back the company can operate at a lower cost than federally run prisons.
It has only been in the last 20 years or so that private prisons have started to pop up. Some of the facilities are not even prisons. Some are halfway houses and others are juvenile facilities or other programs that can help offenders to stay out of prison. At first the private prisons were contracted out for low security prisoners and only a few of them. That has now changed and grown into a larger capacity. “Today, however, it is common to see contract awards for facilities with rated capacities of between 1,000 and 2,000 prisoners and for prisoners requiring medium or high security. (Thomas, 2001)” Federally run prisons are starting to contract out more often and with larger numbers than ever before. These new privately run prisons are held to a higher standard than federal prisons and have to account for all money spent, which makes it easier to find out why the cost is lower. Private prisons in the past were seen as not such a good idea because they were for profit and not regulated very well. They claimed to cut costs and provide better care without having to prove that they could do so. Cutting costs is a hard thing to do in a business. Lower costs could be due to lower standards and cutting...