Questioning the Value of the "Prison Economy"

In light of the 2 upcoming ballot measures in November that would expand mandatory minimums, Oregon Business Magazine takes a long look at the impact of prisons on local rural economies in Oregon. Over the past two decades, the Oregon Department of Corrections has built 11 new prisons, and promised rural communities that economic growth would result from their construction:

State economic development specialists were intimately involved in DOC's selection process. A brochure sent by the DOC to Madras residents in 2002 prior to the construction of the Deer Creek prison promoted jobs, training and business opportunities. The DOC commissioned economic impact studies to win over local officials with promises of jobs and economic development. But it has not studied whether those promises have been kept.

Local business owners today still take a favorable view of the prisons' presence:

It is hard to find a business owner in Ontario or Umatilla who questions the wisdom of having a prison as the city's largest employer. In Umatilla, where the president of the Chamber of Commerce works at the Two Rivers Correctional Institution, local business owners, such as Cathy Putnam of Carlson Drug, can't find anything negative to say about the prison that dominates the local economy. "You have people with jobs that are spending their money," she says. "I don't see a downside."

However, the evidence doesn't back them up:

But recent research shows that prisons are not effective tools of rural economic development. A phalanx of researchers from the University of Colorado at Denver, Pennsylvania State University, Washington State University, Ohio State University and the Washington, D.C., nonprofit organization The Sentencing Group analyzed data from across rural America and concluded that prisons do not significantly improve employment rates, poverty rates or median incomes. No studies have focused solely on Oregon, but based on economic statistics from Umatilla and Malheur counties, the Oregon counties that rely most heavily on prisons, these conclusions hold true there as well.

The national studies cite a number of problems with using prisons to boost economies. First, prisons do not pay local taxes. Second, they rarely if ever purchase goods and services locally, and while they sometimes try to hire locally, they do not always succeed because of union requirements that promotions must be based on seniority. Third, prison employees tend not to live near their place of employment, preferring to settle in outlying areas and commute. For example, 62% of the employees from the Ontario prison don’t live in Oregon but next door in Idaho, where property taxes and home prices are lower.

Finally, prisons supply inmate laborers at low or no cost, taking jobs away from the local community.

Umatilla and Malheur counties have not benefited from prison construction:

Employment and income numbers indicate that Oregon’s massive investment in prison expansion has brought local gains that are modest at best. The rural counties that gambled biggest on large prisons after the passage of Measure 11, Malheur and Umatilla, have continued to struggle. In Malheur County, non-farming jobs have increased slightly since the completion of the Snake River prison, but wages have been sluggish. Malheur County has the state’s highest poverty rate, its lowest median income, and is 31st out of 36 Oregon counties in earnings per job.

The situation also looks grim in Umatilla, where the main street through downtown features boarded-up storefronts, vacant lots, run-down $25-a-night motels and sprawling trailer lots in varying stages of decay. In Umatilla County, state jobs grew after the Two Rivers prison opened in 2000, but private sector jobs fell and wages have held flat. The 430 employees of the Two Rivers Correctional Institution, by far the largest employer in the City of Umatilla, spend money locally, but the prison does not. Of the $56.6 million that DOC spent to purchase goods and services for its prisons in 2007, only $29,928, or .05%, went to Umatilla businesses.

Read the rest. Discuss.

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    I should also note; a big hat tip to Pete Forsyth

  • Jefferson Smith (unverified)

    This is a great post.

    We need a movement/effort/push around "doing the math" on public investments -- and focusing on those public investments with the most positive measurable ripple effects (economic and otherwise).

    Prisons (and Casinos and baseball stadiums?): not as many lasting, net positive ripple effects.

    Schools & research universities & public transit (and green tech and public parks and fitness centers?): lots of positive ripple effects.

    We should be and can be a force for economic prosperity through smarter public investment.

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    This analysis is a good reminder that prisons are not a cure-all for the problems of rural economies. And it is likely that the economic benefits of prison construction have been overstated. However, it does not follow that they provide no economic benefits to those areas at all.

    And it is not fair to contrast investments in prisons to investments in "schools & research universities & public transit (and green tech and public parks and fitness centers)" because the latter investments are generally going to be made in more populous areas while the prisons have been built in remote rural areas precisely because those areas aren't otherwise likely to receive comparable public investments.

    Overall, prison construction is not a particularly good economic development investment for the state (I'm ignoring the public safety impacts for this purpose) but it may be one of the few opportunities for significant job-creating public investments in rural Oregon.

  • petrichor (unverified)

    great, great post. the article makes it clear that whether or not prison building provides a real economic benefit, it is perceived as doing so. furthermore, at the very least there are two groups that are undeniably getting economic benefits: prison workers, and prison construction companies. combine those factors, with an often strong "law and order" sentiment among voters (not to mention our progressive attorney general candidates), and the disconnect between funding prison development and operations and the actual development and operating of prison, and you have a seemingly intractable political wedge.

    finding real alternatives for rural economic development is probably the only way forward. i disagree with jack roberts; top notch schools can be built anywhere, and if they are adequately funded can be a huge boon the their local communities, high speed rail can run through smaller rural areas bringing more tourists, and likely even commuters--plus they are likely to bring more progressive voters to the region. and obviously green tech can go anywhere--if we invested the annual amount that this mannix proposition will cost us into a southeastern oregon solar thermal electric power plant, we would create tons of jobs, export energy, and reduce co2 emissions by many tons.

    even if prisons did provide tangible economic benefits to their local communities, overall they are economic liabilities, not helping to grow the economy at large, not creating dividends far our in the future. every cent that we spend building prisons is an opportunity lost for spending on things that could actually bring about a better future. not to mention that prisons don't like to be empty--more prisons means more prisoners, and if people aren't breaking the law enough to fill them, then the laws often find a way to make more people into criminals.

  • Jefferson Smith (unverified)


    Thanks for the response. A few thoughts:

    For universities, we've got LaGrande and Klamath Falls (not counting Blue Mountain, where my several of my Hermiston co-workers went, COCC, etc.)

    And we could locate green tech stuff anywhere. Indeed, wind plants and solar cell plants, etc. don't need to be in Portland or Eugene.

    High speed rail would likely be west of the cascades, but it would make travel accessible to Grants Pass, Roseburg, Woodburn far better than a micro airport or a drive to PDX.

    I'm with you on making sure we properly address rural economies...but there's room for creativity.

    And regardless, let's do the math.

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    You are all making good points. I don't really have any expertise on this, so I'll pass on making any substantive comments. But I was happy to see the "e-sources" section on the web page. It's a significant public service for news outlets to provide such ready access to the research underlying their stories. Bravo, Oregon Business -- I hope to see other pubs following your example!

  • wharf rat (unverified)

    Great post but with a lot left unsaid.

    I worked on a number of rural development issues in the wake of mine and mill closures in the NW late 70's up through the 80's. The prison as an economic development tool was in its infancy so we [trade union researchers] looked at benefits and liabilities. What we found is that our construction members did well for as short period but our public sector folks did less well when you factored in remote locations, lack of services for families and poor health care. Prison employees have excessively high rates of injury and illness [including mental health] and families have high levels of domestic violence, alcohol and drug use, and general family strife and disfunction [Pelican Bay studies].

    More importantly for communities is the influx of families of prisoners. Let me be brutally honest....criminal behavior sufficient to warrant jail time is usually not limited to one member of a family. Ruaral communities with prisons find increased criminal activity, domestic violence, behavior problems in schools, etc. All the social pathologies that exist in a criminal culture move into town and it is often a combustible mix.

    I recently left Medford and moved to Las Vegas to take a teaching position in the LV schools. The usual reasons apply...better pay and benefits, professional development opportunities, a more diverse community, etc. Even if I had not moved to LV I would have left Medford because the JaCo commissioners appeared hell-bent to get that prison going. When a community sees a prison as its economic development salvation it is truly scraping the bottom of the barrel.

    Best Reagrds


  • Joanne Rigutto (unverified)

    Excuse me, but isn't rural Oregon supposed to be about farming? Now, as far as the energy thing goes, while I can see combining wind with ag, I don't think that solar will do as well around ag, especially cropping, I'm not sure how the equipment would handle the dust and spray from irrigation. That having been said, if you really want to increase the financial opportunities for farming communities, which let's face, it is mostly what's going on in the really rural areas, it would make sense to pay more money for the produce they make available for everyone, be it food that you will eat directly or fodder and feeds for animal agriculture. Or perhaps, pay the same as you're paying at the store but pay it to the farmer instead, which you can do for some commodities.

    As far as the high speed rail for tourism and commuters, who are you all talking about? Are you interested about continuing to develop a trendy area like Bend, increasing the population density in Pendleton, etc.? Or are you planning on developing more farm land for recreation or manufacturing? Isn't that in direct conflict with the push to keep rural farmlands as farmlands? I find it interesting that some of the very people who were probably in favor of restricting development of farmland through land use planning are now apparently of the mind that economic development in the rural areas involves paving over more farmland, developing areas for tourism and industry which will drive up ag land prices and make farming and ranching even less of a money making proposition than it is now. Which will also, by the way, drive even more of the future generation away from doing more than hobby farming or homesteading which, while going a long way to feed the homesteader or peovide a small amount of supplemental income, won't do much to feed the people in the high density urban areas who aren't allowed enough land to grow their own food. Or are you under the impression that people engaged in farming full time are only doing it because they love it, not because they need to make enough money to pay bills, provide a retirement, etc., and prefer not to live in a urban area?

    And I agree with Warf Rat : "When a community sees a prison as its economic development salvation it is truly scraping the bottom of the barrel." I can see many reasons for citing a prison in a rural area, especially somewhat of a remote one, but building a prison is the last thing I would recomend for economic development.

  • BCM (unverified)

    Sorry kids, we were going to fund your education but we were obligated to send these people to jail for 15 years each and prisoners don't pay for themselves...

  • helys (unverified)

    First, This great story was written by Ben Jacklet, formerly of the Portland Tribune, who should get credit as an excellent reporter.

    Next: Oregon's prisons are full of poor, minority young men, many of them are criminalized early on by factors such as racial profiling, disparate sentencing, an insane war on drugs. Consider: Both our current president and at least one of the candidates for president have used cocaine. If they had been unlucky enough to have been picked up by police officers while young they too could have been charged and received felony convictions. They may not have been allowed to vote never mind stand for president. Drug us, growing and selling is prevalent among all sectors of society. But it's poor, young and predominantly men of color who end up in jail -- ruining their lives and destroying their families. I believe the same thing goes for other crimes. Police pick up people from certain sectors of society and not others for all kinds of things. And if a poor Black kid does something wrong the consequences are far harsher. There is evidence out there showing this. The inequality in our justice system is shameful.

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