Financial Drawbacks of The U.S. Penitentiary System

Financial Drawbacks of The U.S. Penitentiary System

The legal system of the United States can raise many questions. Some find it just and fair, while others don’t. This paper reviews something that might be called the “final stop” of the legal system: prisons and the penitentiary system. Penitentiary system and its’ effectiveness is commonly questioned nut only on the basis of fairness of sentencing or the negative influence of prisons on people, but also in terms of financial justification of the system’s operation. People who committed crimes spend time in prisons that are financed by the state, while the state, among others, receives money of taxpayers. Therefore, there is a question if people really should be supporting those who committed crimes. This paper overviews the U.S. penitentiary systems and shows that, despite some arguments on its’ benefits, the system is not economically justified.


One should understand what is a prison, how it functions and what are the requirements for prison facilities. In different times people thought of prison in different ways. For example, a prison can serve for punishment, isolation of people who are dangerous for society, rehabilitation. The type of crime committed by a person also plays an important role in allocation people in different prisons. Prisoners whose crimes are not heavy will be assigned in prisons with low level of custody, where they will have some freedom of movement, ability to communicate and socialize with other prisoners, a right for visitors. Such prisons must have places for workshops and recreation, rooms for visitors where “prisoners may be given a certain amount of conversational and social privacy” (Fairweather & McConville, 2000, p. 12). On the other hand, the prisons with high security (maximum or super-maximum) will not have much free space outside of cells, there will be no places for prisoners’ socialization and communication, all food has to be delivered to cells, all communication between staff and prisoners will be remote, a high level of electronic security will be provided (Fairweather & McConville, 2000). Therefore, depending on the type of prisons, their construction and full equipment require significant expenditures. These expenditures are related either to the provision of additional facilities to prisons (like in prisons with low level of security, which give inmates space for personal and professional development), or equipment to keep inmates under control in high-security prisons.

U.S. penitentiary system

Over the past decades the expenses on penitentiary system have increased dramatically, which was a result of the constantly increasing number of criminals that require isolation. The prison population has increased by 400% over the last decades (Kirchhoff, 2010). If in 1970 less than 200,000 Americans were imprisoned, currently there are more than 2 million people spending time in prisons and jails throughout the U.S. (Kincade, 2013). These statistics show that, along with spending money on inmates, the country requires more money spent on the construction of new prisons. Consequently, each year the budget of the U.S. penitentiary system increases.

It might seem that the growth of the U.S. penitentiary system budget represents the global tendency, but that is not true. While the U.S. population represents only 5% of the world population, the country is responsible for the 25% of the world’s inmates (Kirchhoff, 2010). For each 100000 of citizens there are more than 700 inmates, which means the highest incarceration level in the world (Kincade, 2013). These numbers are truly dramatic, as they show, how much of the country’s finances is spent on the penitentiary system. Moreover, these numbers indicate that there is something very wrong with the U.S. legal system, if the country imprisons more people than any other in the civilized world (Chazelle, 2011).

It was already stated that the budget of the U.S. penitentiary system is massive, but it might not be clear, how significant it is. Its’ turnover is around $74 billion, which is more than the GDP of 2/3 nations of the world. And the responsibility of the system financing lies on the U.S. taxpayers. It should be noted that each year he number of people held in prisons and jails increases, which becomes a heavier burden for the American taxpayers. An average person, who owns $75000 a year pays annually $2,309 in state taxes, and around of 10% goes for the financing of prisons (Kincade, 2013). This statistics is far from being satisfactory for an average citizen.

While currently the U.S. legal system incarcerates more people than any other legal system in the world, it wasn’t always like this. Before the 1970s the penitentiary system of the U.S. did not show any significant statistical changes, as in the period between 1930s and 1970s there were around 100000 inmates (Chazelle, 2011). But, with the President Nixon’s war on drugs the system has changed dramatically, as it began the age of prison boom. Instead of being an additional option, imprisonment became the main option in the majority of court cases. Nixon’s initiative was supported by many other officials, such as New York governor Nelson Rockefeller, who introduces 15 years to life sentencing for drug users and dealers (Kincade, 2013). The severity of sentencing was backed up with massive civil unrests in the society and the civil rights movement, which both stimulated the toughening of laws and introduction of new penalties.

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The massive percent of prison sentencing over past decades made a significant impact on the society. Since the beginning of the war on drugs low-income males without higher education were the main target of the hardened legal system. This was especially true for African-American population.  While African-Americans comprise a bit more than 10% of the U.S. population, almost half of prisoners sentenced for more than one year are black (Chazelle, 2011). It means that a huge amount of African-American households are one-parent, which is a significant precedent in the American history.

The growing percent of incarcerated citizens impacts the society in numerous ways, including the economic one. One-parent households cannot contribute to the state budget the dame way as two-parent can. Children growing in such households are more vulnerable to the dangerous influences of the society thus, instead of becoming respected members of the community many join their parents behind bars. Many people after serving a sentence are not able to reintegrate in the society, and it takes additional time and expenses to return ex-cons to the community. Lastly, many people spending time in prison could be working for the benefit of the community and paying taxes, instead of living on the taxpayers’ money.

Each of the U. S. states pays different price for the life of their inmates. While such states as Indiana manage to keep people in prison for only $14000 per year, the State of New York spends on its’ inmates almost five times more each year (Kincade, 2013). In different states these costs include medical care, as well as educational and training facilities. Even if one takes the smallest rate of keeping an inmate and multiplies it by more than 2 million people currently spending time in prisons and jails, the amount becomes very substantial. 

Along with spending money on prisoners, there are other cost lines, which contribute to the overall penitentiary system budget. There is a constant need for new prisons, as the number of incarcerations is constantly increasing. Therefore, even through private companies get contracts from state authorities, they still are financed by the state. Secondly, there are costs related to human resources. These include tax reductions, salaries, medical care for prison personnel, etc. Altogether the costs come to billions of dollars each year.

Benefits from the Penitentiary System

If the penitentiary system is so costly and its’ expenses are growing on the permanent basis, then someone should be benefiting from it. At a first glance there are two major parties interested in the growth of penitentiary system: private companies that serve the system, and local communities that, according to some sources, benefit from prison construction. Therefore, to understand the current state of the U.S. penitentiary system it is essential to look into those who get advantages from the increasing number of inmates.

Currently many prisons are owned and ran-by private entities, who compete for state contracts in the penitentiary sphere. In this way the national government expects to spend less money on prison construction and running, while private entities get their revenue. The major private entity that cooperates with the state is the Corrections Corporation of America (CCA), which is the largest prison network in the country. With the first prison built back in early 1980s, currently the CCA owns 51 facilities in 16 states, which provides it with almost 50% of $7.4 billion private corrections market yearly turnover (Kincade, 2013). Therefore, the increasing amount of inmates turn into the growth in revenues of CCA and other privately owned penitentiary facilities. 

There are people who believe that prisons are beneficial for local communities, as they provide work places for people, and thus help the communities develop and flourish. At the same time, other studies show that the presence of one or more prisons does not ensure any employment advantages for rural community members. The majority of jobs in prison are taken not by residents of a host county, but by those coming from the neighboring ones (Setti, 2001). Moreover, even if positions are open, local residents may not have enough qualification for the proposed positions. Therefore, as some studies show, local communities do not benefit from local prisons as much as they could expect.


The aim of this paper was to show that currently the U.S. penitentiary system is not only disadvantageous for the country’s economy, but also that it differs dramatically from penitentiary systems in other countries, thus requires significant changes. The United States have more inmates than any other country in the world, and the numbers are constantly increasing. Although for the first part of the 20th century U.S. prisons had small amounts of inmates, the stricter legislation of the 1970s have changed the situation, and since the beginning of the anti-drug war the number of inmates was constantly increasing. Taking into consideration the fact that financing of prisons comes from the state and national budgets (which means the money of taxpayers), now it might be the right time to take another look at the whole legal system and realize that imprisonment should not be the main form of punishment for many crimes. The drawbacks of the legal and penitentiary systems should be addressed immediately, otherwise soon taxpayers would not be able to bare the burden of millions of inmates.


Chazelle, C. (2011). How to Waste Money and Lives: The American Prison System. Fairweather.

L. and McConville, S. Prison Architecture. California:Architectural Press, 2000.

Kincade, B. (2013). The Economics of the American Prison System.

Kirchhoff, S.M. (2010). Economic Impacts of Prison Growth. Congressional Research Service.

Setti, C. (2001) Prisons and Their Effects on Local Economies: The Colorado Experience. Vol. XLVII, #3, December. CPEC Center for Tax Policy Research: University of Denver.


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