Economics of Prison Reform

Scott Zuke

(June, 2011)  The US debt ceiling debate appears poised to be the least exiting blockbuster even of the summer—or most exiting, if you’re a policy junky. To little fanfare, the US passed its statutory limit of $14.29 trillion of debt on May 16, forcing the Treasury to take emergency measures to give Congress time to negotiate whether to increase the debt ceiling or drastically change the government balance sheet either by cutting spending, increasing taxes, or both.

Congress’s reaction so far has been a reverse how-to manual in negotiation tactics. Both sides have tried to reassure a wary public that negotiations are on track and that all options are "on the table." However, Republicans then add, "Except tax hikes," and democrats add, "except cuts to entitlements." A government impasse could have severe "recovery-ending" consequences (if you believe we are in recovery), or it might be more of a temporary "inconvenience" and minor disruption. We’ll know soon enough. Like failed Rapture prophecies, the date of the real fiscal disaster has been revised forward to August 2, when, according Treasury Secretary Timothy Geithner, the US will run out of options to avoid defaulting on its loan payments.

Whatever happens in the next couple months, it’s clear that pressing economic stress is forcing us to reevaluate our priorities from more (apparently) prosperous times. We do need to give fresh consideration to the long-term viability of major entitlements, and virtually everyone can agree that the tax system needs an overhaul. But until things change enough to allow such contentious issues to be deliberated openly, are there other financial drains we might work to reform in the meantime?

Consider this curiosity: According to DOJ statistics, the average dollar loss per burglary offense is around $2,096. However, the average prison sentence for burglary is more than two and a half years, and the average per inmate cost of incarceration is $29,000 a year. I don’t mean to suggest that burglars shouldn’t face prison time, just to demonstrate that US crime policy is a surprisingly large and yet underreported drain on public resources, and that our penal system is, in some ways, just another kind of government service that we can’t afford to maintain in its current state.

The US has the world’s highest incarceration rate and the largest prison population. The number of state and federal inmates, adjusted for population growth, more than tripled between 1980 and 2009, a result of the War on Drugs and various "tough on crime" policies like mandatory minimum or "truth in sentencing" requirements, and the famous three strikes law.

The latter, a signature policy in California, has helped lead the state into a crisis of prison overcrowding and overextended resources for such things as inmate medical services. As a result, last month the Supreme Court upheld a controversial ruling that California’s prisons are so overcrowded that they must significantly reduce their population in the next two years, even if that means releasing convicted criminals before serving out their terms.

Justice Scalia sharply dissented, arguing that many of the inmates who could be released "will undoubtedly be fine physical specimens who have developed intimidating muscles pumping iron in the prison gym." While he wrote this in reference to the fact that the inmates who may be set free might not even be those who have suffered from inadequate access to needed healthcare, the statement is revealing as far as how many Americans view prisons.

In the most general terms, would we say that people are made better or worse by serving time in US prisons? Do felons emerge as citizens ready to rejoin the community and workforce, or are they hardened, muscle-bound, threatening individuals likely to commit crime again in the near future?

This is a different question from whether or not justice for the original crime is served, and it’s worth asking for reasons extending beyond just moral considerations. After all, not only are inmates expensive during incarceration, they also create a drag on the economy after release, often forced to join the ranks of the chronically unemployed. If a Supreme Court Justice has such a negative view of the products of the penal system, imagine what potential employers think, regardless of whether the ex-convicts received job training or even higher education degrees during their imprisonment.

As The Economist recently reported, America’s unemployment problem is disproportionately impacting the young male workforce, and within that group especially the less educated and blacks: "...Around 35% of 25- to 54-year-old men with no high-school diploma have no job, up from around 10% in the 1960s," and, "Among blacks, more than 30% overall and almost 70% of high-school dropouts have no job." The socioeconomic problem has fueled the prison problem, but it works in reverse as well—more convicts creates more unproductive members of society, fueling a vicious circle.

The common response from social activists has been to encourage prison reform to feature more rehabilitation programs in order to reduce recidivism and increase employment prospects after release. In tight financial times, though, such programs are likely to be first on the budget chopping block. Instead, it might be time to consider changes to the justice system designed to keep more non-violent criminals out of prison in the first place, emphasizing cheaper alternatives like supervised probation, the cost of which a Pew study found to be a mere $1,250 annually.

The challenges facing the US budget deficit and debt are too great for any single policy to work as a panacea, and some of the adjustments that will need to be made will be more painful than others. Prison reform is simply one issue that has long been in dire need of attention anyway. As with the broader debt ceiling debate, solutions will require moving past tired partisan rhetoric like the dreaded "soft on crime" brand. Other Constitutional and legal issues aside, hopefully the Supreme Court’s recent decision will at least spur more realistic discussion on how to regain control of the ballooning prison population and address both short and long-term economic and social costs.