The Economic Impact of Incarceration

Explore the direct and indirect costs of incarceration on individuals in the criminal justice system,
as well as their families, communities, and the nation as a whole.

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Introduction

How much the U.S. is willing to waste on incarceration? Tens of billions of dollars were poured into the U.S prison system for locking up millions of people behind bars. While The Bureau of Justice Statistics reports approximately $80 billion were spent on the prison system, the actual cost far exceeds this number with various other underlying collateral costs.

Why should we care about the economic loss associated with incarceration? As Shelia A. Bedi put it: “Every penny our government spends on prisons and jails is a penny that does not fund schools, health care, economic development, and transportation infrastructure.”[1] In fact, many states already spend more money per inmate than per student, this difference even went as far as $27,000 in 15 states.[2] Similarly, every penny the inmates and their families lost translated to a collateral impact on labor productivity, child welfare, and self-care. Not to mention the lasting damage to mental and physical health as well as the rising criminogenic tendency associated with incarceration.

This report will discuss both the direct costs and collateral costs of incarceration from four levels: individual, family, community & state, and the U.S. as a whole.

The Cost for Individuals (in million)

1. Costs involved in going through criminal justice system ($66.7 billion)

Going through the criminal justice system can give the incarcerated people and their families significant financial burden as they have to pay not only considerable fines for their crimes but also costly court fees.

$13,607

Based on a 2015 report, on average, going through the criminal justice system costs $13,607 for each person, excluding commissary and court-related programs.

$66.7 Billion

Each year, there were at least 4.9 million arrested people.[24] By multiplying these two numbers, we could know 66.7 billion was spent each year for going through the criminal justice system.

Bail/Bond Fee

For felonies, bail can range from $500 to $1,000,000

Fines

Overall, the fine for misdemeanor is usually between $0 to $1,000. For felony crimes, the fines vary greatly depending on its classification. A fine of not more than $250,000 may apply to a felony; and a fine of no more than $100,000 may apply to a misdemeanor

Crime Lab Analysis Fees

In Washington state, a convicted adult has to pay $100 for each crime lab analysis unless the defendant can provide a verified petition confirming his/her inability to pay the fee. In the state of North Carolina, the amount for a convicted individual is $600

Diversion Program Fees

The cost for participating in a diversion program varies in each state and depends on type of crimes. In Georgia, the diversion program fee is different in each county but will not exceed $1,000.

Public Defender Costs

After the case disposition, the Public Defender’s Office will determine how much legal costs the defendant shall cover based on their financial situation.

Private Attorney Costs

The average hourly fee of a criminal defense attorney can go as low as $100 and as high as $750 depending on the type of case and the expertise of the attorney. Monthly legal bill will usually be between $10,000 and $15,000. For a felony crime, the total legal cost can go as high as $100,000.

Supervision Fees

In 2017, the annual cost to supervise a person in the community pending trial is $4026, which means $11 per day. The annual cost for supervising a person after sentencing is $4392, or 12$ per day.

Cost of Prosecution

This cost varies according to the crime. For example, homicide costs the judicial system $22,000 to $44,000 and a burglary costs between $200-$600.
  • Bail/Bond Fee

Bail is a cash payment that defendants have to make if they want to be released from jail prior to the court hearing, and this payment will be returned after the case disposition.[1] Except for capital crimes or major felony charges, bail will be allowed for defendants.[2] Instead of paying the bail by oneself, the defendant has another option: bail bond, which is a bail bondsman’s pledge to make good on the bail if the defendant does show up in the court hearing. If the defendants choose this option, they have to pay around 10% of the value of the bond.[3]

Bail amounts are influenced by many factors including age, criminal history, perceived threat to the public, etc. For misdemeanor crimes, the average bail amount ranges from as low as $200 (public intoxication) all the way up to $15,000 (violating a restraining order).[4] For Felony crime, the bail cost is between $500 (illegal possession of a loaded weapon in some states) and around $1,000,000 (1st-degree murder).[5]

The median bail amount for a felony in the U.S. is around $10,000, which means 8 months’ income for a typical detained defendant, who is likely from the low-income class.[6] As indicated by a 2018 report, half a million un-convicted people had to stay in jail because they cannot afford the bail.[7] What makes things worse is that the inability to pay bail increases the likelihood of being convicted by 13% because those who cannot afford bail will usually take a guilty plea just to end their detention as quickly as possible.[8]

  • Fines

Criminal fines have long been included as part of criminal punishment. They generally apply to less serious offenses.[9] Though it varies by state, fines are determined by statute, type of crime, and judge’s discretion.[10] For example, in the state of Connecticut, fines range between $500 (Class C misdemeanor) and $20,000 (Class A felony).[11] Overall, the fine for a misdemeanor is usually between $0 to $1,000 (Misdemeanors of the First Degree).[12] For felony crimes, the fines vary greatly depending on their classification. As indicated by the U.S. code, a fine of not more than $250,000 may apply to a felony; and a fine of no more than $100,000 may apply to a misdemeanor.[13]

  • Crime Lab Analysis Fees

Even though a comprehensive study of crime lab analysis fees in the U.S. cannot be found, some state examples can provide a glimpse for us about how much this procedure costs. In Washington state, a convicted adult has to pay $100 for each crime lab analysis unless the defendant can provide a verified petition confirming his/her inability to pay the fee.[14] In the state of North Carolina, the amount for a convicted individual is $600.[15]

  • Diversion Program Fees

A diversion program is a type of pretrial sentencing, in which the offender receives a rehabilitative sentence (such as joining a rehabilitation program) instead of receiving a conviction and criminal record.[16] The diversion program is usually only available for defendants who committed minor crimes.[17] The cost for participating in a diversion program varies in each state and depends on the type of crimes. In Georgia, the diversion program fee is different in each county but will not exceed $1,000.[18]

  • Registration or application costs associated with obtaining a public defender

According to sixth amendment of United States in 1971, “in all criminal prosecutions, the accused shall … have the Assistance of Counsel for his defense.”[19] In 1990s the state and local government began to charge the accused public defender fee as a form of cost-recovery for providing counsel.[20] While some states use a capped fee, other states choose to bill the public defender by hour.[21] In the United States, every defendant will be required to pay $50 registration fee before the trial in order to use public defender service, however, the defendant still has the right to have a public defender if they cannot afford this fee.[22] After the case disposition, the Public Defender’s Office will determine how much legal costs the defendant shall cover based on their financial situation.[23]

  • Hire a private defense attorney

Similar to public defender, private defense attorney typically bills by hour or charges a capped fee. The average hourly fee of a criminal defense attorney can go as low as $100 and as high as $750 depending on the type of case and the expertise of the attorney.[24] Monthly legal bills will usually be between $10,000 and $15,000.[25] For a felony crime, the total legal cost can go as high as $100,000.[26] In addition to these legal costs, private defense attorney may need to hire expert witnesses and investigators for additional support, and their average retainer fee is $2,500.[27]

  • Pretrial and Post-conviction supervision fee

Pretrial supervision is used for monitoring defendants before their trials in order to maximize the likelihood they will attend their trial and not re-offending.[28] Pretrial supervision is significantly less costly than detention. For example, just by increasing the pretrial release rate by 5% saved Kentucky $25 million jail cost.[29] In 2017, the annual cost to supervise a person in the community pending trial is $4026, which means $11 per day.[30] The annual cost for supervising a person after sentencing is $4392, or 12$ per day.[31]

Sometimes, court may order the defendant to wear an ankle monitoring device before the trial or after the conviction; it is noteworthy to mention that wearing an ankle monitoring device increases the likelihood of more lenient sentence.[32] However, an ankle monitor can be very costly: except for Hawaii, defendants in all states have to pay $5 to $35 per day for the ankle monitor, and it is more common that a defendant is required to cover the entire cost.[33]

  • Cost of prosecution

As its name suggests, the cost of prosecution refers to the costs incurred during the investigation of the case; this cost is typically billed to the convicted defendant because there is generally no law against transferring this cost to them.[34] This cost varies according to the crime. Even though we could not know the cost of prosecution a defendant has to pay, we could get a sense of how much it costs by looking at judicial cost. For example, homicide costs the judicial system $22,000 to $44,000 and a burglary costs between $200-$600.[35]

2. Loss of Government Benefits

Social security benefits, SSDI (Social Security Disability Insurance), and SSI (Supplemental Security Income) will be suspended if the receiver is sent to jail/prison but will be reinstated after their release.[36] As for SSDI, an individual who is a recent parolee or who is unemployed is ineligible for it. However, a confinement period for more than 12 consecutive months will automatically terminate the eligibility for SSI and the receiver needs to file a new application after being released.[37]

What is SSI?

Supplemental Security Income (SSI) provides minimum basic financial assistance to older adults and persons with disabilities (regardless of age) with very limited income and resources
Apply SSI here

What is SSDI?

Social Security Disability Insurance (SSDI) supports individuals who are disabled and have a qualifying work history, either through their own employment or a family member (spouse/parent)
Apply SSDI here

Social security benefit depends on age and earnings history. For an estimation of your social security benefit, please refer to the Social Security Calculator linked below. Since January 1, 2020, SSI is $783 for an individual and $1175 for a couple.[38] SSDI is determined by the average lifetime earnings before the disability began. On average, SSDI recipients receive $800-$1,800 per month with an average of $1277.[39]

Calculate your Social Security Benefit

3. The Cost of Fatal Injuries while incarcerated ($6.2 billion in 2019)

Suicide has long been the most prominent cause of death in U.S. prisons. In 2014, per 100,000 inmates, 45 committed suicide; this rate is 3 times compared to the average suicide rate of the U.S. general population in 2018[40],[41]. Multiplying the number of incarcerated people who committed suicide with the value of a person’s life results in the estimated economic cost of fatal injuries in prison, which is 6.2 billion in 2019. Since the higher limit of these estimates results from the loss of life due to suicide, this study will only use lower limit to avoid double-counting suicides, which will be covered in the following section (“Fatal injuries to incarcerated persons”)

Total incarcerated population in 2019 is 1,430,805

The incidence rate is 0.045%

$6.2 billion

Total Cost of Fatal injuries = Total incarcerated population in 2019 x Incidence rate x Value of a person's life = 1430805 x 0.045% x $9643225

4. The Cost of Lost Wages (123.7 billion + 332.4 billion in 2019)

The lost wages of the incarcerated population involve two components: the lost wages while incarcerated and the reduction in lifetime earnings. 

Wage depends largely on educational level. According to a report by Bureau of Justice Statistics, among the total incarcerated population, 41.3% do not have a high school diploma, 23.4% are high school graduate, and 12.7% had obtained some postsecondary education.[42] The median lifetime earnings for these three educational levels are $973,000, $1,304,000, and $1,727,000 respectively[43]. Therefore, the weighted average yearly income (assuming a 40-year working lifespan) is $23200 ((41.7% * $973,000 + 23.4% * $1,304,000 + 12.7% * $1,727,000)/40). The total loss can be obtained by multiplying the average time in state/federal prison, the number of people in state/federal prison, and the average yearly income.

Due to occupational restrictions, discriminations, weaker social network, and reduced human capital, formerly incarcerated people suffer from reduced lifetime earnings when they are released; and research indicates this reduction ranges between 10% and 40%[44]; In the following calculation, we will use the median reduction percentage: 25%. Using the same calculation method as above with a consideration of educational level parameter, the average loss in lifetime earnings for an incarcerated individual is $232000 ($274000 in 2020 dollars[45]). The loss of total incarcerated population in 2019 is 332.4 billion.

5. The Cost of Nonfatal Injuries while incarcerated ($10.89 billion in 2019)

Violence and abuse are not uncommon in the prison. From a 2005 report, 31.6% of male inmates have reported physical assault during a 6-month period.[46] This implies in 2019, there were more than 4 million physical assaults occurred in prison (1,322,850*31.6%). The most common physical assaults are being slapped, hit, kicked, bit, as well as being threatened or harmed by a knife or shank.[47] Due to the lack of statistics of female inmates experiencing physical assault and the fact that only 8% of U.S. inmates in 2019 are female, the following calculation will only include the cost of physical assault among male inmates.[48]

Unfortunately, physical assault is only part of the picture as 13.7% of female inmates and 4.2% of male inmates are also victims of sexual assault.[49] The cost for each rape is $47,000 in 1989 dollar (101,092 in 2020 dollar[50]) and the cost for each assault is $15,000 (32,263 in 2020 dollar[51]).[52] Since sexual assault includes rape, we will use the average cost of rape and assault in our calculation, which is $66677 in 2020 dollar ((101,092+15,000)/2). Combining the economic cost of physical assaults and sexual assaults generates a total cost of 10.89 billion for nonfatal injuries in prison for 2019.

6. The Cost of Mental Illness ($10.6 billion)

Types of Mental Illness Cost
PTSD
$5,900 - $10,300
Major Depression
$15,460 - $25,760
PTSD with major depression
$12,430 - $16,890

The total incarcerated population in 2019 is 1,430,805

The incidence rate of mental illness is 66%

The incidence cost (average from three low estimates) is $11,263

Prison imposes serious mental health risks for incarcerated people and their family members. In fact, 66% of them have experienced mental health issues ranging from depression, anxiety, and post-traumatic stress disorder (PTSD)[53]. One major reason for this higher risk is the extended period of isolated confinement which, for some inmates, can last 23 hours a day. During this period of time, the inmate does not have access to programming or meaningful social interaction[54].The costs for three aforementioned mental illness are as follows[55]:

$10.6 billion

Total cost of mental Illness= Incarcerated population in 2019 x Incidence rate x Incidence cost= 1,430,805 x 66% x $11,263

7. Higher Mortality Rate of Formerly Incarcerated ($3.3 billion in 2019)

In a 2007 report studying the risk of death after incarceration with a sample size of 30237, 443 of the subjects died within 2 years after being released. This means in every 100,000 freed formal inmates, 777 of them die every year, a mortality rate that is 3.5 times of average state residents’ mortality rate.[56] The most common causes for such high mortality rate are drug overdoes, cardiovascular disease, homicide, and suicide.[57] Taking 2019 as an example, a total of 45,075 inmates were released.[58] Within 2 years, approximately 350 of them will die. Multiplying this number by the value of a person’s life, we can arrive at the conclusion that in a single year, the increased mortality rate of formerly incarcerated people incurred a cost of $3.3 billion in 2020 dollars.

$3.3 billion

The costs of higher mortality = released inmate x the percentage of the released inmate that will die in 2 years x value of a person's life

8. Loss of Voting Rights

Felon disenfranchisement is a common practice in most states. Among the 51 states and federal districts, only 3 of them (District of Columbia, Maine, and Vermont) do not deprive felon’s right to vote. 

37 states deprive the felon’s voting right until the completion of their incarceration or parole/probation.[59] In the rest of the 11 states, released felon have to wait an extra period of time after their sentence or take additional actions in order to restore their voting rights.[60] Though it does not impose any economic cost on taxpayers, the loss of voting right is a heavy cost for former prisoners as the deprivation of part of their civil right prevent restoring them to responsible, contributing citizen, creating additional barriers for their reentry to society.[61]

How to restore voting rights in different states

9. Travel Restrictions

People who have convicted certain types of felony crime face domestic travel restriction. For example, sex offenders face certain restrictions on visiting other states. For more information on state visitation limits as well as Registry Websites by State, please visit here

 

What if I'm under supervised release or probation?

Individuals under supervised release or probation also face travel restrictions. For the first 60 days of supervised release, they are not allowed to leave the judicial district except for traveling for employment purposes.Otherwise, individuals under supervised release or probation can only travel with permission by the court or a Probation Officer. Specific travel restrictions usually depend on the circumstances of the case, the defendant’s habits, the defendant’s employment, and other factors.
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Can former inmates travel internationally?

A conviction can also impact a U.S. citizen’s eligibility to travel internationally. First, the passports of people who have been convicted of certain crimes will be revoked by domestic laws, such as felony drug charges that involved crossing international boundaries. Secondly, many countries require individuals who have a criminal history to complete extra steps for pre-clearance before entering or prohibit them from entering completely.
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Even though travel restriction does not directly impose an economic cost on individuals, it can create significant barriers and bring financial costs. For example, being unable to travel may cause the released individual to lose precious business and work opportunities.

The Cost for Families (in million)

The money families spend supporting their imprisoned love one is money that doesn’t go towards health care, to a savings account or to a college fund.

Sheila A. Bedi in “The Costs Of Imprisonment Are Too High For Everyone”

1. Visitation & Communication cost (417 + 4.8 million)

Maintaining contact with family members who are in jail/prison is costly. In fact, the cost associated with making phone calls and visiting incarcerated family members is so high that it had put 34% of families into debt.[1]

Screen Shot 2021-05-03 at 10.25.51 AM

A Family can spend $295 on visitation per year

Cost per Family = average travel time x number of visits x per hour opportunity cost =1430805 x 4.78 x 3 x $20.58

Families need to spend $417 million on visitation per year

Total Cost = Total incarcerated population x Cost per Family =1430805 x 4.78 x 3 x $20.58

Most incarceration facilities are located in rural areas beyond the reach of public transportation system. [2] From a 2014 survey, the weighted average travel time for families to visit their incarcerated family member is 4.72 hours.[3]

The per hour opportunity cost for each person is $18.66 in 2014 dollars ($20.58 in 2020 dollars[4])[5]. Therefore, if we assume the inmate received 3 visits from one family member in 2019, each family have to spend $264 per year for visiting, excluding the transportation cost. The total opportunity cost will be 417 million (1,430,805*4.72*3*20.58). In addition to the transportation cost and opportunity cost of time, some states even charge a background check fee for each visiting family member. For example, Arizona charges $25 background check fee per visitor.[6] These practices further render the prison visits unaffordable.

“Families and their advocates have cribbed together innovative solutions to this—ride sharing, bus rentals. But often families must save up for gas, hotel stays, take time off work and give up wages in order to maintain their connections with those behind bars.”

Sheila A. Bedi in “The Costs Of Imprisonment Are Too High For Everyone

Each month, families with an incarcerated loved one spend $103 on jail phone calls alone.

Besides visitation cost, the communication cost is so exorbitant that it makes phone calls with incarcerated people a luxury. In fact, Incarcerated people and their families are charged more than 2.5 times as much for phone calls as non-incarcerated people because prison telecom is usually controlled by a single provider, who maintains their monopoly status by giving kickback to governments. [7] In fact, a minute on phone with an inmate can cost as high as $3.[8] Each month, families with an incarcerated loved one spend $103 on jail phone calls alone. [9] Due to the incredibly low wage level in the prison, families with incarcerated members usually bear the communication cost. In 2017, over 4.8 million dollars were spent on phone calls in total.[10]

2. Moving & Eviction Cost ($1.66 billion + $0.5 billion)

The average cost of an intrastate and an interstate move is $1,170 and $5,630 respectively.[11] In 2019, the approximate moving rate is 10% according to United States Census Bureau, which means one in every ten families relocated.[12]If we assume the same relocation rate applies to new admissions to prison/jail, the 4,889,000 unique jail admission in 2019 translates to 488,900 relocation.[13] Considering the weighted average cost of a move, $3400 ((1170+5630)/2), the total cost associated with relocation is 1.66 billion.

Why inmates' families move?

One family member’s incarceration increases the chance that other family members will relocate. For example, the family may move closer to the incarceration facility or live with other relatives. Similarly, when a former inmate returns, the family is more likely to change their residence again.
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Why is it hard for released individual and their family to find a home?

The released individual and their family face enormous barriers to find a place to stay and continue their lives. In a 2015 survey, 79% of participants were either ineligible for or denied housing because of their own or their family member’s conviction history. Almost one in every five families with a former inmate reported being evicted or denied housing. Part of the reason for it is that to apply for public housing, the former inmate and their family have to undergo a criminal background check and are likely to be rejected due to a conviction history. Financial reason also contributes to the higher eviction rate for families with incarcerated members because they lost one source of income
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Each move costs a family $3,400

with an intrastate move cost $1,170 and an interstate move costs $5,630

Therefore, considering the average cost of an eviction is $1635 in 2014 dollars ($1803 in 2020 dollars[14]), the total cost of eviction is 515 million in 2019 (1,430,805 * 0.2*1803).[15]

3. Expenditures in Prison ($1.35 billion)

…prisons and jails across the country increasingly outsource many of the basic functions of running a correctional facility to private companies

The Marshall Project

Based on a report investigating the prison system in Illinois, Massachusetts, and Washington, each incarcerated individual has to spent $947 per year, for purchasing mostly life necessities.[16] 

In 2019, incarcerated population and their families spent 1.35 billion (1,430,805*947) in prison, for purchasing mostly life necessities at an inflated price. 

$947

is the cost each incarcerated individual has to spent per year in prison

What's the price level in prison?

A former inmate reported that in prison, a 13’’ TV costs $200, a bag of popcorn costs $1.65, and a pack of Ramen noodle costs $1.09; these things typically cost $60, ¢72, and ¢10 outside.[2],[3],[4] The reason is that these goods were also sold by a few private vendors who form a monopoly and whose only goal is profit maximization.[5]
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Cost in prison breakdown

On average, 75% of their total spending is on food, and this might be due to the small amount and bad quality of prison cafeteria food as prisons spend only $2.32 per inmate on food. This yearly spending looks more dire when taking the prisoners’ wage level into consideration: the hourly wage for incarcerated people in federal prison is ¢12-¢40 for jobs serving the prison and is ¢23 -$1.15 for outside factories. Usually, a prisoner’s yearly wage ranges between $180 and $660.  Furthermore, due to the overpopulation of prisons, many incarcerated people could only get a prison job nominally. Therefore, most prisoner will still rely on their families to get financial support.
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4. Children's Academic Problem and Economic Mobility ($219.5 billion)

The impact of incarceration is intergenerational and extremely harmful to the younger generation. High school diploma brings an additional $331,000 lifetime earnings on average while a college degree brings an additional $1,295,000. [17]Using their weighted average $813,000 ((331,000+1,295,000)/2), we could know the total cost of children unable to finish their school is 219.5 billion (2,700,000*10%*813,000).

In every 28 children

one has a parent behind bars in 2019

10%

of incarcerated population's children did not finish their education

$153,410

is the cost associated with children's academic problem and economic mobility for each incarcerated family

What happens if a father goes to jail?

When a father goes to jail, the family income drops by 22%. Even after the father is released, the family income fell by 15%. Nowadays, there are more than 1.1 million fathers in jail.[9]
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42%

of children whose family are in the bottom fifth of the income distribution will remain in that income bracket when they grow up. However, if they have a degree, their chance of staying the same bottom income bracket is reduced to 16%.

For 6-11 year old children and 12-17 year old children who have an incarcerated parent, their chance of having school problems is 9% and 8% higher than those who do not respectively.[18] Furthermore, while the average school expulsion and suspension rate is 4%, this rate is 23% for those children who have an incarcerated father.[19] As indicated by a 2015 report, 10% of incarcerated population’s children did not finish their education due to their parents’ incarceration, bringing huge cost to society as a whole because it incurs loss in human capital and productivity.[20] 

Both educational level and parental income are critical factors determining a child’s future wage and upward economic mobility.[21] About half of parents behind bars were also principal source of income for their family.[22] ,[23] Research has found 42% of children whose family are in the bottom fifth of the income distribution will remain in that income bracket when they grow up.[24] 

With impact on both academic performance and financial support, incarceration significantly dims a child’s economic prospects. The negative impact on academic success alone accounts for $219.5 billion of loss.

With impact on both academic performance and financial support, incarceration significantly dims a child’s economic prospects. The negative impact on academic success alone accounts for $219.5 billion of loss.

5. Children's future Criminality ($20.5 billion)

With appalling regularity, young people describe being left to fend for themselves in empty apartments for weeks or even months in the wake of a parent’s arrest. In most cases, these children were not present when their parent was arrested; they simply came home from school to find their parent gone and were left to draw their own conclusions – not to mention cook their own dinner. But some told of watching police handcuff and remove a parent—the only adult in the house—and simply leave them behind

Nell Bernstein in “All Alone in the World: Children of the Incarcerated” p14

Due to the higher school dropout rates, impaired parent-children bond, increased risk of depression, raised likelihood of suffering aggression as well as discrimination, children whose parent is incarcerated has 25.5% of chance to commit a crime, which is five times the average rate of committing a crime.[25],[26]

Considering the average cost of housing an inmate is $31,286 in 2010 dollars[27] (37,246 in 2020 dollars[28]), the increased predisposition to criminal activities (25.5*4/5=20.4) brings an additional cost of 20.5 billion dollars (2,700,000*20.4%*37,246).

$31,286

is the average cost of housing an inmate

The Cost for Communities and States

1. Decreased property value in the area where formal inmates are released (25.3 billion)

In response to crime risk, residents generally have two options: they can vote for anti-crime policies, or they can vote with their feet. When individuals exercise the latter option, local response to crime will be observed in the housing market

Leigh Linden and Jonan E.Rockoff in “Estimates of the Impact of Crime Risk on Property Values from Megan's Laws"

Released inmates negatively impact property value as people are reluctant to live near former inmate and are willing to move at their own costs[1]. As a result, the reentry of former inmates into community reduces the demand of local property and thus depresses the average home value in that area. In a 2014 report, it is estimated that as the incidence of property crime increases for one standard-deviation, the property value decreases by 10%.[2] A single sex offender’s reentry will cause the housing price in proximity to decline between $3,500 and $5,500 (which is approximately 2.3% to 4%).[3] Multiplying the average depreciation rate and the average home value in 2019, we can know the average depreciation value is $17,702 (6.58%*269039).[4] Therefore, the total incarcerated population will incur $25.3 billion dollars (1,430,805*17,702) loss in property value when they are released (assuming each released inmate impacts 2 households).[5]

Prevention cost vs. incarceration cost

According to a 2017 report by the Prison Policy Initiative, $80.7 billion, $63.2 billion, and $29 billion were spent on public corrections agencies, policing, and judicial & legal system respectively.[6] Within the cost of running the correctional system, half was spent on corrections employees.[7] The average annual cost per inmate in each state was $31,286 in 2012 dollars ($35,607 in 2020 dollar) and 91.5% of the money came from states’ general funds instead of federal government.[8] For the state prisons, the annual cost per inmate ranges between $14,780 (Alabama) and $38,644 (Wisconsin), which indicates a range of $16,314 – $42,656 in 2020 dollar.[9],[10] For federal prison, the average annual cost per inmate is $36,299 in 2017 dollar[11] ($38,560 in 2020 dollar)

For a full list of average annual cost per inmate for each state, click here.

if just 10 percent of eligible offenders were sent to community-based treatment programs rather than prison, the criminal justice system would save $4.8 billion when compared to current practices. Diverting 40 percent of eligible offenders would save $12.9 billion.

RTI International website

Prevention includes both proactive early prevention programs as well as prevention programs in prison (such as prison university project) to prevent recidivism.

Early prevention program save money by lowering both the crime rate and the net costs of criminal activities.[12] From a 2001 cost-benefit quantitative analysis reviewing more than 400 programs, the net direct cost of prevention programs, which includes programs for age groups spanning from early childhood to adult, can save up to $18,478 per participant.[13] 

How much can prevention programs save?

each program can save up tp $18,478 per participant
Click Here

How much can juvenile boot camps save?

each participant can save $15,424
Click Here

What can the educational programs in prison do?

They can lower the re-arrest rate by 22%
Click Here

Is education expansive in prison?

providing higher education in correctional facilities is not costly. In the state of New York, while the average cost of incarceration per inmate per year is $25,000 in 1997 dollar, the cost for providing higher education is only one tenth of this number: $2,500 annually in 1997 dollar
Click Here

Weighing its benefit, it is evident that educational programs in prison is economically efficient. Apart from education, jail diversion programs is also popular in treating people who suffer from alcohol and substance abuse.[14] In such program, instead of serving time in jail, people would get help from counselors and learn strategies to deal with alcohol and/or substance abuse.[15]

Debunking the Myth: Are prisons economic catalysts?

Though the released inmate tends to bring negative impact to local property value, the presence of prison was generally not considered to have such an undesirable connotation. Instead, correction facilities were regarded as an economic boost, a “recession-proof form of economic development.” [16]This misconception became prevalent in 1980s, a period when the prison population exploded. At that time, every additional 100 inmates generated 35 jobs.[17] Furthermore, the influx of both inmates and their families into the community created a larger demand to local consumer service.[18]

However, despite the gain in government employment and a short-term boost to construction industry, counties that host a prison compared to those without a prison show no significant difference in their long-term economic performance, according to a report from 1976 to 2001.[19] What is worse is that the presence of prison can bring substantial collateral cost. For example, prison reduces the potential of other private businesses investing in the local area and produces environmental issues.[20],[21]

The Cost for the U.S. as a Whole

1. Cost of Incarceration ($80.7 billion)

From a report by The Bureau of Justice Statistics, the cost of incarceration in 2012 was $80.7 billion.[1] Considering the prison population decreased by 9.76% and assuming the cost per inmate does not change, in 2019, the U.S. spent $83.1 billion in 2020 dollar.[2] Unfortunately, this number is an underestimation as it excludes policing costs, court costs and every collateral cost mentioned above.[3] If we consider the cost incarcerated individuals, their families, and their communities must bear, the cost exceeds $1 trillion.[4]

Where did the documented $83.1 billion funds go?

The majority of them went to security. In a report from Los Angeles Times, of the $43,287 the state spent per inmate annually, 50% was spent on security while only 5% was reserved for education and job training.[5] However, it is this 5% that is most economically efficient as they significantly reduce the recidivism rate. In addition, considering 90% of the inmate will be eventually released and re-enter the community, providing them with such rehabilitation programs to aid their successful reintegration appears even more critical.[6]

2. Hinder Labor Participation ($113 billion)

Removing able-bodied working-age people from the labor market lowers the quality of our work force and permanently damages their employment and educational opportunities

Julia Bowling “Mass Incarceration Gets Attention as an Economic Issue (Finally)” published in Brennan Center for Justice

Incarceration creates consequential loss in the U.S. labor market as 61% of the inmates are in their prime working age (18-39 years old).[5] This vast exclusion of able-bodied workers detracts from the quality of the general U.S. labor force.In 2019, the loss of output brought by incarceration was equivalent to 113 billion.

Furthermore, this profound loss was hidden from the public as inmates are not included in civilian labor force or “not in the labor force” category. [6] In a 2007 report, each U.S. worker generated $63.885 worth of wealth annually ($81,641 in 2020 dollars).[7] In 2019, 56.2% of the inmates were in their prime working age while 96.8% of them were in the working age (15-64 years old).[8] Therefore, in 2019 alone, the loss of output brought by incarceration was equivalent to 113 billion.

The pernicious impact of incarceration sustains after the release of inmates as they can hardly find a job due to stigma, further creating a sizable loss in U.S annual output which is estimated to be between $57 billion and $ 65 billion.[9] In 2008, there was one ex-offender in every 17 working-age men.[10] It is estimated that former inmates reduced employment by about 1.5-1.7 million workers.[11] 

3. Increased Government Assistance Payout ($3.9 billion)

This year, some 600,000 inmates will be released from prison back into society. We know from long experience that if they can’t find work, or a home, or help, they are much more likely to commit more crimes and return to prison…. America is the land of the second chance, and when the gates of the prison open, the path ahead should lead to a better life.”

President George W. Bush, 2004 State of the Union Address

Reentry programs are designed to help former inmates re-integrate into society because unsuccessful integration often leads to recidivism. Reentry issues of top priority include improving public safety, employability, health, and acquiring education as well as stable housing.[1] 

Cost for reentry programs

In 2015, with 1400 federally-funded reentry programs and $2,093,772 average cost, these reentry programs cost 2.9 billion dollar (3.2 billion in 2020 dollar). In 2010, another $110 million was poured into the reentry programs, which include job training, education, mentoring, substance abuse and mental health treatment, family-based services, literacy classes, housing and employment assistance. 
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Cost for providing housing

Apart from the difficulties of finding a job, released inmates frequently face the problem of gaining stable housing. It is estimated that 25% to 50% of the homeless people are former inmates. Based on a report by U.S. department of Housing and Urban Development, the homeless population in 2019 was 567,715, meaning approximately 212,893 of them are former inmates. Considering each supportive housing costs $4,800 per year, government must spend $1 billion for finding a shelter for released inmates who have no place to live. Unfortunately, this number is a significant underestimate since many homeless people cannot get this support. When they are not getting such support, the cost increases eightfold from the supportive housing cost ($4,800) to $35,578 per person annually.
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4. Child Welfare Costs ($21 billion)

The surge in prison population in 1980s include many female inmates, in fact, female population has increased more than 750%.[1] The rising female inmate population led to more minors unattended who consequently need a foster care.In 2019, approximately $21 billion cost on child welfare was brought by parental incarceration

In Texas, the state with the most female prisoners since 2017, approximately 20,000 children were taken by foster care system annually due to parental incarceration since 2016.[2],[3]

From 1985 to 2000, the national foster care caseloads doubled.[4] In 2019, more than 80% of the 107,955 females behind the bar were primary caretakers of minors. [5],[6] Though we do not know the exact number of children entering foster care, we can estimate this number based on a report by U.S. Department of Health & Human Services. In 2019, Child Protective services (CPS) received 4.4 million referrals alleging maltreatment of about 7.9 million children and 54.5% of referrals triggered an investigation by CPS.[7] Suppose one third of these referrals with an investigation resulted from parental incarceration and considering each child entering welfare system costs $7,726 in 2012 ($8817 in 2020 dollars), parental incarceration incurred $21 billion cost in child welfare in 2019. [8]

5. Divorce, Separation of Couples, and Reduced Marriage ($14.1 billion)

Divorce and separation of couples hinder the economic development as they disrupt economies of scale and diminish human capital, the principal momentum for economic growth.[9] Collectively, they incur a loss of $14.1 billion.

Considering human capital contributes to at least 22% of the economic growth and divorce decreases 25% of human capital, annual GDP could be 0.118% higher (2.161%*22%*25%) if no divorce happened in 2019.[10],[11] Since 47% of the inmate experienced divorce or separation from their partner due to incarceration, the 576,956 new admissions in 2019 translates to about 271,169 divorce or separation, which is 36.2% of the total divorce.[12],[13],[14] Therefore, the divorce and separation of couples caused by incarceration incurred a cost of  $9.2 billion (21,433,226 million * 0.118% * 36.2%) because the U.S GDP in 2019 is $21,433,226 million according to the World Bank[15].

Apart from divorce and the separation of couples, incarceration decreases a person’s likelihood to get married by 25%.[16] Since reduced marriage has the same economic effect as a divorce, which is $33761, nearly $ 4.9 billion was lost due to the lack of marriages in 2019 (576,956*25%*33761).

6. Criminogenic Nature of Prison ($40 billion)

Recidivism has come to be known as “the revolving door” in and out of prisons. 67.8% of all released prisoners are re-arrested within three years of release

The Problem: Recividism & Mass Incarceration in Prison Scholar Fund website

4-23%

is the estimated criminogenic effect of prison

Prison is criminogenic for several reasons. First, it gives people who committed misdemeanors or who are amateur criminals a chance to meet more seasoned career criminals, increasing their criminal prowess.[17] Second, a released inmate can feel anxious when being released due to not being able to adapt to new life, which could lead to substance abuse.[18] Thirdly, toxic prison culture and the lack of contact with prosocial people could foster anti-social behaviors and eventually cause the released inmates to turn back to crimes.[19] Apart from the above reasons, prison regime, damaged social relationship, lowered employability can also lead to recidivism. What makes thing more dire is that when former inmates commit new crimes, they often commit new types of offenses that are more serious. [20] From three previous publications, the estimated criminogenic effect of prison is between 4% and 23%, therefore, we will use the midpoint of 13.5%.[21] Considering the $295.6 billion was spent on the criminal justice system in the U.S according to the Bureau of Justice Statistics, the estimated cost of the criminogenic nature of prison is about $40 billion (13.5%*295.6 billion)

Cost Comparison

 

With less than 5% of the world population but 20% of the world’s prisoners, the mass incarceration in the U.S. creates huge economic toll for not only the inmates and their families, but also all taxpayers in the U.S. Below is a chart comparing the relative cost of prison as well as the percentage cost of incarceration in GDP per country.

Can we reduce the cost without sacrificing public safety?

Reduction in cost without sacrificing public safety is not improbable. Nowadays, almost half of prisoners (46%) are behind bars due to drug offense, the leading type of crime committed. [7] This number far exceeds the crimes committed in the second leading category “Weapon, explosive, Arson” by 26%.[8] “If only 10 percent of drug-addicted offenders received drug rehabilitation instead of jail time, the criminal justice system would save $4.8 billion compared to current costs. If 40 percent of addicted offenders received treatment instead of jail, those savings would rise to $12.9 billion.”[9]

Within the daily cost of $368.2, $177.5 (48.2%) goes to police protection. $110.2 (29.9%) is the operation cost of prisons, jails, and parole as well as probation systems. The rest $80.5 (21.9%) is reserved for the judicial and legal system.[22] However, this number is just a fraction of how much prison system costs the U.S as it does not include all the collateral costs mentioned above. The following chart shows such cost:

Country Number of inmates per 100,000 habitants Cost per inmate per day Cost per inmate per year Total cost of incarceration per year Percentage cost of incarceration in GDP
Norway
60.6
396.4
144,671
471,581,601.1
0.117
Bulgaria
106.7
6.7
2460
18,374,486.9
0.027
Sweden
59.7
733.1
267,589
1,603,256,154
0.303
Germany
76.7
161.4
58,911
3,773,693,680
0.098
Italy
89
312.2
113,953
21,541,344,656
1.075
UK
130
138.9
50,711
4,757,759,941
0.168
Spain
122
103.2
37,668
1,816,824,974
0.130
France
104.5
122.9
44,844
3,052,113,951
0.112
Russia
386.1
2.8
1037
583,825,343.6
0.034
Japan
38
16.6
6,070
1,790,000,000
0.035
U.S.
639
368.2
134,393
282,592,000,000
1.318
Canada
104
314
114,610
4,459,181,698
0.257
South Africa
248
164
59,860
23,848,973
0.007
Australia
160
292
106,580
4,297,817,184
0.308
India
35
4.1
1483
709,087,476
0.025
Brazil
357
2.4
870
655,123,470.8
0.036
Mexico
166
136.6
49,864
105,600,000,000
0.833
  1. For all European countries, the cost per inmate per day refers to the cost spent by penal institutions, which includes cost of security, health care, services (such as maintenance), administration, support (such as food and inmate employment), and rehabilitation programs[1]
  2. For Canada, the cost per inmate per day includes the operation of penal institutions, services, and support. It is noteworthy that three quarters of operation costs are staff salaries and benefits. The cost does not include correctional intervention and internal services.[2]
  3. For South Africa, the cost includes administration, incarceration, rehabilitation, care and social reintegration[3]
  4. For Australia, the cost includes operating cost and capital costs, net of operating revenues and excluding payroll tax.[4]
  5. For India, the cost includes operating cost (food, vocational education, medical, welfare activities, clothing) and maintenance costs.[5]
  6. For Japan, the cost includes clothing, food (29%), medical care, education, transportation (for working outside), incentive remuneration ($ 0.85) and housing for inmates’ daily lives[6]