On April 6, 2018, the administration announced a "zero tolerance" immigration policy that requires every undocumented adult immigrant and asylum seeker in the U.S. to be criminally prosecuted under federal law. As a result, over 2,000 children were forcibly separated from their families, labeled "unaccompanied," and transported to remote shelters around the country. After intense political backlash, on June 20, 2018, an executive order ended family separation by requiring that children be detained with their parents in family detention centers instead. The reunification plan for families already separated remains unclear.

The "zero tolerance" immigration policy and the executive order ending family separation have created windfalls for some. Let us help you understand exactly how, for whom, and how much.

How do for-profit companies get involved?

For-profit companies contract with the various government agencies that manage the apprehension, detention, and deportation of undocumented immigrants. It is important to understand the system within which they function to understand just how they generate profits. 

Learn more about the detention of children in the U.S.

Customs and Border Protection

Immigration and Customs Enforcement

According to the most recent Immigration and Customs Enforcement (ICE) data, the average daily population of immigrant detainees in the agency's custody is 41,134, up 8% since 2017 due largely to the increased detention of asylum seekers, who had previously been released while their cases were pending. The administration is looking to increase that figure to 52,000 in the next year, which it claims will call for a budget increase of almost $1 billion across the agency, bringing the budget for detention alone to $3.3 billion in fiscal year 2019. 
 

While the recent data did not provide additional information about the distribution of detained immigrants between privately and publicly-operated facilities, data provided by the agency in November 2017 in response to a Freedom of Information Act request by Immigrant Legal Resource Center sheds some light. Immigrant detainees in ICE custody are typically held in one of three types of facilities: ICE-dedicated immigration detention facilities, contracted facilities (including federal prisons, local jails, and hotels), and family detention centers. 
 

Immigration Detention Facilities

Contracted Facilities

Family Detention Centers

Immigrants in Privatized Detention Beds: 72%

Note: At the time of the data release, the average daily population in ICE custody was 39,320 across its three facility types: ICE-dedicated immigration detention facility (20,334; 52%), ICE-contracted facilities (16,332; 41%), and family detention centers (2,654; 7%). These figures have all likely increased since.

Office of Refugee Resettlement

Information regarding the location of these shelters is rarely shared, though some have become quite notorious in recent weeks. For example, Casa Padre in Brownsville, Texas holds nearly 1,500 children and is run by the non-profit Southwest Key, which is slated to receive $458 million of the nearly billion dollars ORR expects to spend on these shelters in 2018 despite past violations. In fact, between 2014 and 2018, ORR awarded $1.5 billion to contractors with serious allegations of child abuse and neglect. Southwest Key has also come under fire in recent weeks for dramatically increasing its CEO's compensation from roughly $786,000 in 2015 to $1.5 million in 2016 as it brings in revenue from the government in the current climate.  

Who are the largest for-profit contractors?

The largest financial winners at the border are, as many expect, the private prison companies that operate immigration detention centers, the most prominent of which are The GEO Group and CoreCivic. With more than 40% of their respective revenues stemming from federal contracts, these companies invested heavily in the outspoken federal, state, and local candidates interested in advancing harsh immigration policies like "zero tolerance" during the 2016 election cycle. 
 

Source: The GEO Group 2016 Political Engagement; CoreCivic 2016 Political & Lobbying Activity 
 

Ultimately, The GEO Group generated $541 million, or 24% of its total revenue, from ICE contracts in 2017, representing 105% growth over three years. Remarkably similar, over the same period, CoreCivic enjoyed 107% growth in its ICE-related revenues, earning $444 million, or 25% of its total revenue, from these contracts in 2017. 
 

CoreCivic and The GEO Group ICE Revenues

Reviewing the history of their ICE-related revenues reveals just how effective political contributions and lobbying are in not only generally expanding private outsourcing, but also in establishing a competitive advantage. The GEO Group, which trailed CoreCivic in the past two years in ICE-related revenues but outspent them at a two to one ratio in both political contributions and lobbying in 2016, came out significantly ahead by the end of 2017. Still, in the end, both raked in millions on the thousands of immigrant adults and children imprisoned in their facilities. 
 

With a 19% increase in the detained immigrant population since the 2016 election and the administration projecting a another increase of more than a quarter over the next year, the financial forecasts for The GEO Group and CoreCivic appear positive. The market is responding accordingly. Not only did The GEO Group and CoreCivic enjoy some of the largest single-day gains in the market on November 9, 2016, the day after the presidential election, but after a brief decline due to the delay in promised immigration policy change, their stock prices are back on the rise. 
 

Their most significant recent stock growth came right after the "zero tolerance" immigration policy was announced on April 6, 2018. It was the news that private prison operators and their investors had been waiting on for nearly a year. In the time since its announcement, The GEO Group's and CoreCivic's stock prices have both dramatically outperformed the market.
 

Stock Price Growth Since "Zero Tolerance" Policy Announced 

Source: NYSE, as of July 25, 2018

The growth is likely to continue as the new executive order aimed at ending family separation reroutes children previously destined for ORR shelters to family detention centers operated by The GEO Group and CoreCivic. And all that is likely to be bolstered by the buy ratings being released by financial research analysts at JP Morgan Chase and SunTrust. 
 

Providing research coverage is not the only way that Wall Street firms are contributing to the growth of these for-profit immigration detention companies. These banks also provide credit financing, or loans, to The GEO Group and CoreCivic for the construction of new facilities and expansion of existing facilities, also known as capital expenditures, without which they could not pursue such projects.  

Finally, as publicly-traded companies, The GEO Group and CoreCivic are also dependent on their institutional investors, which make up over 90% and 80%, respectively, of their investor base.
 

Who else is profiting off of immigration detention?

For-profit immigration detention operators are far from the only profiteers in the business of apprehending, detaining, and deporting immigrants looking for a better and safer future for themselves and their loved ones. There is a deep network of companies that contract with CBP, ICE, and ORR to provide ancillary facility services and daily infrastructure support.

Telephone

In each facility where immigrants are detained there is a for-profit company that enjoys a monopoly over the provision of telephone services for that site. The largest telephone provider in immigration detention is Talton, which offers its full range of services at immigration detention centers and limited pro bono services at some contracted facilities that hold immigrant detainees. Talton provides legal calls at no cost to immigrant detainees or the government in exchange for the opportunity to charge detainees to make calls to loved ones using collect calling or pre-paid debit cards. However, time and time again, there have been reports about the inadequacy of the Talton's pro bono legal call service, which has forced many to pay hundreds, even thousands, to connect with counsel. Furthermore, in contracted prisons or jails, immigrant detainees are often subjected to the same exploitative telephone companies that operate in the U.S. prison system, whose abuses have been long documented.  

Transportation

Medical

Immigration detention facilities must provide medical services. In some cases, the facility operator, whether it be public or private, provides the medical services, but in many cases, this service is outsourced to specialized for-profit medical and mental health providers that serve incarcerated and detained populations. Like others in the space, these companies cut corners, but their effort to pad their bottom lines come at a deadly cost for immigrants in detention.
 

Others

And still there are more companies that have found ways to profit off of immigration detention by supporting the physical or IT infrastructure required to run any of the agencies that apprehend, detain, or deport immigrants. Thanks to their significant consumer exposure, the large retail technology companies that support ICE have recently come under fire. 
 

Who else matters?

It is also important to note that several of the largest privately-held detention service providers are owned by private equity firms that are complicit in their exploitative business models and have facilitated their growth. While neither the companies nor their private equity owners are publicly-traded, and thus not generally vulnerable to individual investors, they are exposed to institutional investors like endowments and pensions, which invest substantially in private equity funds.

Now that you know, what are you going to do?

The problem is daunting, perhaps overwhelming, but there are steps that each of us can take to do our part in addressing the immigration crisis in our nation. 

More Resources

• Defense Contractors Cashing In on Immigrant Kids’ Detention, The Daily Beast

• Detention by the Numbers, Freedom for Immigrants

• ETFs Holding Guns, Opioids & Prisons, Yahoo Finance

• How US Private Prisons Profit from Immigrant Detention, COHA

• How Private Contractors Enable Trump’s Cruelties at the Border, The Nation

• ICE Lies: Public Deception, Private Profit, National Immigrant Justice Center

• It’s Not Just Microsoft: Lots of Tech Companies are Quietly Helping ICE, The Verge

• Profiting from Enforcement: The Role of Private Prisons in U.S. Immigration Detention, Migration Policy Institute

• Report: Private Prison Corporations Primed to Cash In on Trump’s Immigration Executive Order, In The Public Interest

• Shutting Down the Profiteers, ACLU

• The Billion-Dollar Business of Operating Shelters for Migrant Children, New York Times

• The Math of Immigration Detention, 2018 Update: Costs Continue to Multiply, National Immigration Forum

• The Private Prison Industry is Licking its Chops Over Trump’s Deportation Plans, Mother Jones

• Who is Profiting from Incarcerating Immigrant Families?, Little Sis