November 17, 2020: The Marshall Project
Joe Biden’s winning of the 2020 presidential election sent stock prices for private prison companies plummeting. By November 9th, stock prices for one of the private prison giants, GEO Group, fell 14 percent, and another, CoreCivic, fell 19 percent. However, those same stocks rebounded significantly over the following few days. Why?
One of Biden’s campaign promises was to end federal prison contracts, stating that he will end “the federal government’s use of private prisons, building off an Obama-Biden administration’s policy rescinded by the Trump administration. And he will make clear that the federal government should not use private facilities for any detention, including detention of undocumented immigrants.”
It’s no secret that private prison companies prefer Republican administrations. A Newsweek analysis of political contributions recently looked at those made by GEO Group and CoreCivic during the 2020 election cycle, finding that approximately 95 percent of GEO Group’s nearly $1 million in political donations went to Republican candidates and more than 87 percent of CoreCivic’s went to Republican candidates. The Associated Press reports that the CEO for GEO Group, George Zoley himself, “gave $514,800 to Republicans and just $10,000 to Democrats. Politics, people, and groups linked to GEO [Group] have given more than $1.7 million, mostly to Republicans.”
Obama prohibited the use of private prisons for the federal system, and Biden has promised to do the same, so why aren’t stocks reacting any longer to the upcoming Biden-Harris administration? Why aren’t GEO Group and CoreCivic panicking?
The lack of panic may derive from various protective measures the two companies have been making prior to the election, such as rebranding, focusing on reentry rather than incarceration, diversifying their streams of revenue, and shoring up their contracts with US Immigration and Customs Enforcement (ICE)—which prompts the question of how fully the Biden-Harris Administration will be able to fulfill their campaign promises.
As jointly reported by the Marshall Project and Slate, GEO Group and CoreCivic “have been steadily diversifying, placing their bets on a future that includes revenue from commercial real estate, electronic monitoring, and halfway houses,” offering the government more diversified and less controversial services. Mass incarceration has become increasingly unpopular in current cultural consciousness, evident in a newly developed online tool that enables people to check if their investments include private prisons. Created by As You Sow, a nonprofit promoting shareholder advocacy, the CEO Andrew Behar recently noted the site is getting an extraordinary amount of traffic these days.
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On account of the growing unpopularity of mass incarceration, rebranding has become a core marketing strategy for both companies in recent years. Both have eliminated “corrections” from their names—GEO Group in 2003 and CoreCivic in 2016. GEO Group has also actively been changing the wording it uses in reference to the people held in its facilities: In 2010, they were “offenders tracked”; in 2014, they were “individuals supervised”; and most recently, they became “individuals under community supervision.”
Reentry facilities and programs have also become a significant focus of their rebranding efforts in order to alter their public image and distance themselves from associations with mass incarceration. Reentry facilities, often called “halfway houses,” are group residences that allow federal prisoners to spend the final part of their sentences reconnecting to the community, looking for work, and generally reacclimating, in hopes they don’t repeat the offenses that led to their imprisonment. A CoreCivic spokesperson, Steve Owen, stated recently that they see themselves as part of the solution to reduce the recidivism crisis in this country. In 2014 CoreCivic only had two reentry centers, but it now runs 29. Similarly, GEO Group has more than tripled its reentry facilities of late, establishing programs such as Reentry Success D.C. in collaboration with the National Federation of Federal Employees to help Washington, DC citizens obtain employment upon their release.
Both companies have also been diversifying their streams of revenue beyond corrections and detention. In 2010 GEO Group “became the nation’s largest electronic monitoring company, buying the ankle monitor company B.I. Incorporated for almost a half-billion dollars…[since then] more than [doubling] the number of people it tracks to nearly 150,000, according to GEO’s 2018 annual report, the most recent available.”
The rise in electronic monitoring has also increased due to the increased number of people detained by ICE, which has used ankle monitors at times in lieu of holding people in a facility. Since 2016, CoreCivic has been buying and leasing office space to federal agencies like the Social Security Administration and the Department of Homeland Security, amassing 56 office properties in comparison to only 50 correctional and detention centers, totaling “more than 2.9 million square feet of office space. By the company’s own estimation, as of January of this year, CoreCivic was ‘the largest private owner of real estate used by U.S. government agencies.’”
As about half of GEO Group’s and CoreCivic’s revenue stems from contracts with ICE for immigration detention centers, CoreCivic secured three 10-year contracts with ICE facilities in Texas earlier this year “that experts say would be difficult to suspend, and would theoretically extend past the end of even a two-term Biden presidency.” One such facility is the T. Don Hutto Residential Center detention facility in Taylor, Texas, which detains “immigrant women seeking asylum and has faced controversy in recent years with accusations of sexual abuse and medical neglect. It also faces a class-action lawsuit alleging forced labor at the facility.” The contract was worth $264.6 million for ten years, allowing them “to lock in Trump-era immigration policies should he lose the election.”
Despite these efforts, the two companies are facing some recent setbacks. Both are facing the decisions of several major banks—including Chase, Bank of America, and Wells Fargo—to forgo lending them money, as well as the increasing public pressure for investors to divest from companies who profit from corrections and detention. On Monday, November 23rd, GEO Group announced the decision by the Federal Bureau of Prisons that they were not renewing their “contract for the company-owned, 1,450-bed Rivers Correctional Facility in North Carolina, which is set to expire on March 31, 2021. The contract for the Rivers Correctional Facility generated approximately $43 million in annualized revenues for GEO.” But GEO Group “expects to market the Rivers Correctional Facility to other federal and state agencies.”
Even with changing public sentiment towards mass incarceration and public pressure to divest from private prison companies, what can a Biden-Harris Administration really do? If their rebounding stocks are any indication, private prison companies are not too worried about the next administration. Investors are continuing to invest in private prison companies, intimating that profiting off the incarceration and detention of human beings, regardless of the words used to designate it, continue to underpin the American economy.—Beth Couch