The New Political Economy of Immigration

By Tom Barry, Dollars and Sense. Posted February 18, 2009.

Depending on Immigrants

The uptick in immigrant detention that saved the industry in 2000 (see sidebar) turned into a mighty upswing in demand for immigrant prison beds after Sept. 11 and the ensuing immigrant crackdown. The Corrections Corporation of America (CCA) has reported record profits for the last few years, largely on the strength of increasing demand from its ICE and USMS "customers."

Forty percent of total CCA revenue comes from three federal contractors: Bureau of Prisons, U.S. Marshals Service, and ICE. In its 2007 Security and Exchange Commission filing, CCA stated: "We are dependent on government appropriations." CCA Chairman William Andrews warned investors that the company's high returns could be threatened by a change in the policy environment: "The demand for our facilities and services could be adversely affected by the relaxation of enforcement efforts…or through the decriminalization of certain activities that are currently proscribed by our criminal laws."

But to understand just how well the prison business is faring and how immigrants are key to prison profits, you can listen in on the prison firms' quarterly conference call with major Wall Street investment firms of November 2008.

Corrections Corporation of America boasted that it enjoyed a $33.6 million increase in the third quarter over last year, while earnings rose 15% during the same period. Formerly known as Wackenhut, GEO Group, the nation's second largest prison company, saw its earnings jump 29% over 2007. Cornell Companies, another private prison firm that imprisons immigrants, reported a 9% increase in net revenues in the third quarter.

Private prison companies aren't worried that the Democratic Party sweep will mean fewer beds. GEO Group's chairman George Zoley on Nov. 3 assured investors: "These federal initiatives to target, detain and deport criminal aliens throughout the country will continue to drive the need for immigration detention beds over the next several years and these initiatives have been fully funded by Congress on a bipartisan basis."

Addressing investor fears that recent decreases in undocumented immigration inflows might dampen company returns, CCA CEO and board chairman John Ferguson said, "So even though we have seen the border crossings and apprehensions decline in the last couple of years, we are really talking about dealing with a population well north of 12 million illegal immigrants residing in the United States."

The CCA chief assured investors that the company's dependence on detained immigrants is not a factor of policy but rather of law enforcement. "The Federal Bureau of Prisons, U.S. Marshals Service, Immigration and Custom Enforcement are carrying out statutory obligations for their responsibility ... We should continue to see their utilization of the private sector to meet their statutory obligations and requirements."

The prison executives even intimate that the economic crisis will fatten their business. When asked by an investment company representative about a Ü possible downturn in detained immigrants, James Hyman, president of Cornell Companies, said, "We do not believe we will see a decline in the need for detention beds particularly in an economy with rising unemployment among American workers."

Immigrant Prisons as Economic Development

Hundreds of local governments are also attempting to take advantage of this rising demand for immigrant prison beds by opening their jails to immigrants under ICE and DOJ custody and by building new jails to meet the anticipated increased demand.

Financial considerations weigh heavily for cash-strapped county commissions and sheriff departments. As Sheriff Roger Mulch told Jefferson County (Illinois) commissioners in late February 2008, "ICE, during the last three months, has been hot to do business with us." Each locality negotiates independently with ICE and USMS to set the per diem rates, and as the demand from the feds for local jail beds increases, county sheriff departments are negotiating ever-higher rates.

Along the U.S.-Mexico border, particularly in Texas, prisons are a booming industry. Near the border town of Del Rio, the county's Val Verde Correctional Facility, which is owned and run by GEO Group, had only 180 beds eight years ago. Today, after undergoing its second 600-bed expansion, the maximum-security jail can fit 1,425 prisoners.

In Texas' Willacy County, the county government opened the country's largest immigrant detention center in 2006, and is currently pursuing a federal contract to host one of three new family detention centers for immigrants.

See more stories tagged with: immigration, economy, prison, profit, nativism, immigration policy, politics of fear

Tom Barry directs the TransBorder Project of the Americas Program (www.americaspolicy.org) at the Center for International Policy in Washington, DC. He blogs at http://borderlinesblog.blogspot.com.

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