A recent study from The Sentencing Project sheds light on the troubling role private prisons play in driving excessive incarceration across the United States, as well as the financial costs.
By operating on a for-profit model, private prisons create financial incentives to maintain high occupancy rates, disproportionately affect marginalized communities, and undermine efforts to create a fair and equitable legal system.
Data from 2022 shows connections between privatized incarceration, tougher sentencing policies, cost-cutting measures, and their collective impact on America’s criminal justice system.
The findings call attention to the urgent need for policy reforms to address the profit-driven motives of private incarceration and their far-reaching consequences.
This report analyzes the impact of private prisons on justice and equity in America, comparing states that use private corporations to run some of their correctional facilities to those that do not.
The Business of Incarceration: How Private Prisons Profit from Mass Incarceration
Prison Policy Initiative estimates that private prison corporations make about $374 million annually. To make a profit, private prisons charge the government a daily fee per inmate, which is often more expensive than the actual cost ($150 per day/inmate vs. $100 per day/inmate), according to Investopedia.
National statistics show that:
- As of year-end 2022, 8% of the 1.2 million people in federal and state prisons—approximately 90,873 individuals—were incarcerated in private prisons.
- In 2022, 7.4% of all prisoners nationwide were held in a private facility.
- Since 2000, the number of individuals housed in private prisons has grown by 5%.
- The two largest private prison corporations in the United States, CoreCivic and GEOGroup, manage more than half of all U.S. private prison contracts and collectively generate around $3.5 billion annually.
Labor Costs and Cost Savings in Private Prisons
Inmates in private prisons are often paid between 13 and 52 cents per hour for their labor, significantly lower than minimum wage standards outside of prison.
Cost savings for private prisons:
- Private prisons reportedly spend about 12% less per inmate compared to public prisons, which is a key selling point for their continued use.
- These cost savings often result from reducing operational expenses, such as lower wages for staff, fewer benefits, and minimal compensation for inmate labor.
- CoreCivic Inc., the largest private prison company in the U.S., owns or manages 74 prisons and jails, which account for 56% of all privately owned prison beds in the country. This company exemplifies the business model of private prisons, which relies on reducing costs through labor practices and efficient facility management.
By leveraging low inmate wages and reducing operational expenses, private prisons achieve substantial cost savings. However, this raises significant ethical and policy questions about the treatment of inmates and the quality of facility operations.
Which States Still Use Private Prisons and Why?
In 2022, a total of 27 states and the federal government rely on private corporations, such as GEO Group, CoreCivic, LaSalle Corrections, and Management & Training Corporation, to operate some of their correctional facilities.
According to the Bureau of Justice Statistics (BJS), these private prisons housed 90,873 prisoners, representing 8% of the total state and federal prison population.
States Most Reliant on Private Prisons
- Montana leads the nation, with 49.4% of its prison population housed in private facilities as of 2022.
- New Mexico follows at 30.6%, while Arizona and Tennessee each house 28.8% of their prisoners in private prisons.
- Hawaii rounds out the top five, with 23.3% of its prison population in private facilities.
States With Lower Reliance on Private Prisons
- In the remaining 23 states that use private prisons, the percentage of inmates housed in for-profit facilities ranges from 0.1% to 18.7%.
- For example, Illinois technically banned private prisons in 1990 but still housed 1.1% of its prisoners in privately-run facilities as recently as 2022.
States With No Private Prisons
As of year-end 2022, 22 states do not use private prisons, including:
- Arkansas
- California
- Delaware
- Iowa
- Kansas
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Missouri
- Nebraska
- Nevada
- New Hampshire
- New York
- Oregon
- Rhode Island
- Utah
- Washington
- West Virginia
- Wisconsin
Trends in Private Prison Usage
Since 2000, the number of people housed in private prisons has increased by 5%.On average, 87.2% of prisoners in the U.S. are held in state-run facilities.
- Key states that rely heavily on private prisons: Alaska, Arizona, Hawaii, New Mexico, and Tennessee have significant reliance on private prisons, housing 20% to 39% of their prison populations in for-profit facilities.
This landscape highlights the uneven reliance on private prisons in the United States. Some states fully reject them while others continue to expand their use.
Policy and Legislation Regarding Private Prisons
On January 20, 2025, his first day in office, President Trump reversed Biden’s ban on federal contracts with private prisons through an executive order titled “Initial Rescissions of Harmful Executive Orders and Actions.”
- This decision reopened the private prison industry for federal contracts after Biden’s 2021 executive order had phased them out.
- As of February 20, 2025, there were zero federal inmates in private prisons, despite 155,022 total federal inmates. Trump’s reversal allows private prisons to expand again to house federal prisoners.
How Private Prisons Rig the System: The Secret Influence of Corporate Lobbying
- Private prison companies spend over $1 million annually lobbying for harsher sentencing policies, such as mandatory minimums and three–strike laws, which increase prison populations and their profits.
- Financial incentives encourage private prisons to push for policies that maintain high occupancy rates, creating a cycle that prioritizes profit over justice.
Violent Incidents in Private Prisons
- Private prisons experience 65% more violent incidents compared to state-run facilities, primarily due to inadequate staffing, lower wages for correctional officers, and a lack of effective rehabilitation programs.
- Cost-cutting measures, such as reducing staff pay and benefits, result in unsafe environments for both inmates and correctional officers.
Public Policy and Recidivism in Private Prisons
- Private prisons have been criticized for higher rates of violence, worse healthcare, and increased recidivism, suggesting they may be a failed public policy experiment.
- Cost-cutting practices, which prioritize profit over inmate welfare, contribute to poor outcomes in rehabilitation and public safety.
- Experts argue that the for-profit model incentivizes incarceration rather than addressing root causes of crime or reducing recidivism.
Health and Medical Care in Private Prisons
Prisoners in private facilities face more infectious disease outbreaks. For example:
- In 2021, private prisons reported three times more tuberculosis outbreaks than state-run facilities, attributed to poor sanitation and overcrowding.
- Cost-saving measures, such as neglecting sanitation and healthcare infrastructure, make private prisons more vulnerable to infectious disease outbreaks.
- Overcrowding in private prisons, driven by financial incentives to fill beds, exacerbates health risks for inmates.
Financial Incentives in Private Prisons
- Private prisons operate on a for–profit model, creating strong financial incentives to maintain high occupancy rates.
- Cost-cutting measures, such as reducing staff pay and benefits, lead to poorer living conditions for inmates and greater safety risks for correctional officers.
- Inmate labor is paid extremely low wages, between 13 and 52 cents per hour, which saves money and increases profits for private prison companies.
Impact on Local Jails
- Private prisons can distort local incarceration systems by creating financial incentives for local jails to rent space to state and federal authorities.
- This practice encourages jail expansion and skews local population data, further entangling public institutions in the private prison business model.
Demographic Disparities
- Private prisons disproportionately house marginalized individuals, including those with low incomes, mental health issues, and chronic illnesses, perpetuating systemic inequalities.
By combining profit motives with lobbying efforts and cost-cutting practices, private prisons not only impact the justice system but also raise broader concerns about public policy, inmate welfare, and societal equity.
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