FARAI CHIDEYA, HOST:
The Justice Department says it's going to start phasing out private prisons. The decision announced on Thursday affects little more than a dozen prisons in the federal system, but the vast majority of people held in private prisons nationwide aren't affected since they're being held at local levels. Several investigations have found that private prisons both at the federal and state level tend to be less safe and less effective than government-run prisons. Writer David Dayen has been looking at the history of private prisons and how they came to be. Welcome, David.
DAVID DAYEN: Thanks for having me on the show.
CHIDEYA: So when did the government start moving towards the idea of contracting out the housing of prisoners?
DAYEN: Really in the 1980s. It sort of corresponds to the increase in the prison population. And this created a lot of demand for both the construction of private prisons, or construction of prisons in general, and the management of them and the oversight. And so private prisons represented an opportunity to get that construction done and to offer a ready-made service to do this management, which they said would be more efficient and cost-effective for both state and local and federal governments.
CHIDEYA: So let's fast-forward to today. And this decision only affects 13 private prisons in the country that are under the federal umbrella. And you've got state prisons, local incarceration facilities - so overall, the federal population in private prisons is a drop in the bucket when you look at this issue across the country. Is that correct?
DAYEN: That's correct. And, you know, even prisons themselves is a smallish part of a much larger business for the two main private prison companies in America, which is the Corrections Corporation of America and the GEO Group. They have been diversifying, recognizing that there's been some negative publicity towards them and also bipartisan support for criminal justice reform, which will reduce the prison population.
So they have been getting into parole. They've been getting into halfway houses. They've been getting into transportation. And actually, their largest source of revenue really comes from immigrant detention, which is not done under the auspices of the Department of Justice but is done through the Department of Homeland Security. So even though federal contracts are being cut here or at least not renewed, all federal contracts are not being taken away from these private prison operators because DHS manages a large segment of them.
CHIDEYA: Nonetheless, these companies took a little bit of a hit in their stock prices. Is that correct?
DAYEN: They took a major hit. And it's unclear whether investors just were unaware that this wasn't a large part of their business or whether they saw it as a sign of things to come because obviously, when you have a high-profile situation like this and the Department of Justice says that, you know, these are unsafe and unstable operations, that can't help but have an effect.
And indeed, certain groups, organizations, whether it's immigrant rights organizations or progressive groups, are going to petition the Department of Homeland Security to follow up - follow the lead of the Department of Justice. And I expect we'll see some similar initiatives at the state level, too. So certainly CCA and GEO Group are kind of under siege right now.
CHIDEYA: David Dayen's profile is part of a series called The Hidden History of Privatization of Everything. It's featured in the online news magazine Talking Points Memo. David, thanks so much.
DAYEN: Thank you.
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