Largest Private Prison Contractor Slashes Jobs After Losing Federal Business

The Department of Justice’s decision to phase out privatized prisons is eating away at the CCA's profits.

The country’s largest private prison contractor announced plans Tuesday to cut between 50 and 55 full-time jobs at its company headquarters in Tennessee, slashing its corporate workforce by 12 percent.  

The cuts are part of a restructuring that comes one month after the Department of Justice announced plans to phase out privatized prisons, following a blistering report by the department’s Office of the Inspector General concluding the facilities were less safe than government ones and not necessarily cheaper.

“Recognizing the continuing evolution of our core corrections and detention businesses, and our strategy to grow our reentry and real estate platforms, we conducted a thorough review of our corporate structure to optimize our support of both existing and future operations,” CCA President Damon Hininger, said in a press release.

Hininger gave up a stock grant valued when he received it last year at $2 million, as part of the efforts to save the company $9 million next year. CCA paid him $3.4 million in total compensation last year, including the stock grant.

CCA’s stock plummeted after the DOJ announced its intention to cancel the Bureau of Prisons contracts, shedding about 45 percent of its value since the Aug. 18 decision. BOP contracts accounted for about 11 percent of the CCA’s revenue last year.

At the presidential debate on Monday, Democratic candidate Hillary Clinton applauded DOJ’s decision to phase out private prisons and said she hoped that state governments would follow suit.

“I’m glad that we’re ending private prisons in the federal system; I want to see them ended in the state system,” Clinton said. “You shouldn’t have a profit motivation to fill prison cells with young Americans.

But even as prison contractors like CCA stand to lose lucrative contracts with the Bureau of Prisons, the DOJ decision leaves much of their business untouched. The U.S. Marshals Service, a division of the DOJ, still relies on private corporations to lock up about one-third of the people in its custody ― roughly 18,500 people per day, as of 2013.

Immigration and Customs Enforcement depends even more on private companies to handle detention. About two-thirds of the people in immigrant detention sleep in beds managed for profit by private corporations.

That may change. Jeh Johnson, head of the Department of Homeland Security, last month ordered ICE to review its use of privatized detention centers in light of the DOJ reform.



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