Private Prisons Profit from Immigration

While Colorado’s recent special session focused on cutting the cost of undocumented immigrants to the state, investors on Wall Street have been eyeing the potential profit from all the “tough talk” rhetoric.

The Bush Administration estimates there will be a 32% increase in the number of undocumented immigrants being held in federal detention centers by the fall of 2007.  At a price of $95 a night per detention, this estimated increase will create nearly $1 billion more in annual costs.

But one man’s costs are another man’s profit-especially when it comes to the two largest private prison firms in America: Geo Group Inc. and Corrections Corporation of America.

The companies have seen their stock prices soar since February, when the Bush Administration first announced their “crack down” on immigrants.  Corrections Corporation of America (CXW) has seen their stock price rise 51% over the past year, while Geo Group Inc. (GGI) stock price has nearly doubled.

The companies currently hold 20% of the undocumented workers in their detention centers, a percentage that is poised to increase dramatically since the federal government has no plans to build new facilities. 

Profit margins on detention centers, as opposed to full-fledged prisons, are much higher.  This lead Anton High, analyst with brokerage firm Jefferies & Company, to say in today’s New York Times, “Private companies are positioning themselves as suppliers, and are positioned to take the majority of new beds available.”

Both Corrections Corp and Geo Group Inc. operate private prisons in Colorado.

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