Tag Archives: economics

Incarceration on the Cheap in Louisiana

Yesterday I posted about the extraordinary number of people in Louisiana prisons.  The rise in imprisonment mirrors the U.S. growth that began with the so-called war on drugs, but was also triggered by a crisis in the early 1990s, after two decades of growth.  A federal court ordered Louisiana to reduce overcrowding in prisons, which had risen to an inhumane level.  They  had to either let criminals out or build more prisons.  They did the latter.

Instead of building more state-funded prisons, though, for-profit prisons were built by sheriffs and residents of local parishes.  Today there are more inmates housed in local, for-profit prisons than in state prisons (left) and Louisiana has more inmates in private prisons than any other state in the U.S. (right):

Why should we care if so many prisoners are housed in private, for-profit institutions?

The conditions in these prisons are worse than those in state prisons, especially when it comes to quality of life (like the opportunity to develop hobbies or practice their religion) and rehabilitative services (like high school equivalency classes and job training). These are desperately needed services; the average Louisiana prisoner has a 7th grade education and nearly a 3rd read below a 5th grade level:

State facilities simply spend more money, while for-profit prisons skim as much off the top as possible.  Writes reporter Cindy Chang:

An inmate at the Angola state penitentiary costs $63.15 a day, compared with the $24.39 sheriff’s per diem. State facilities house the sickest and oldest, but [Department of Corrections] Secretary Jimmy LeBlanc admits part of the differential is the lack of educational offerings.

In fact, Louisiana spends less on its prisoners (in state and private facilities combined) than any other state in the U.S.:

Law enforcement officials and parish residents may not like what’s happened in Louisiana, but many feel trapped.  For-profit prisons are sustaining local communities: they fund police departments and employ residents. Often they are the only local jobs with decent wages and benefits. Those residents support the local economies and keep small towns alive.

In this short video, an employee talks about the occupational opportunity the prison provides:

Many Louisianans, then, see the harsh sentences and high imprisonment as a price worth paying.  Says Sheriff Charles McDonald: “I know it sounds crazy and impersonal… but we’re stuck with this jail. We can’t walk away. We’ve got investors, employees.”

Lisa Wade is a professor of sociology at Occidental College and the co-author of Gender: Ideas, Interactions, Institutions. You can follow her on Twitter and Facebook.

Imprisonment in Louisiana: “First in the World”

A new 8-part Times Picayune series on the prison industry in Louisiana starts off with these foreboding sentences:

Louisiana is the world’s prison capital. The state imprisons more of its people, per head, than any of its U.S. counterparts. First among Americans means first in the world. Louisiana’s incarceration rate is nearly five times Iran’s, 13 times China’s and 20 times Germany’s.

One out of every 86 Louisianans is in prison.

The motivation is money.   Most prisoners in Louisiana are in for-profit prisons.  The state spends $663 million a year on imprisonment; $182 million of that goes to for-profit correctional companies or contracted local sheriffs.  Many small towns depend on the prisons to fund their law enforcement.

Burk Foster, a criminologist who’s been studying Louisiana prisons, explains:

They don’t want to see the prison system get smaller or the number of people in custody reduced, even though the crime rate is down, because the good old boys are all linked together in the punishment network, which is good for them financially and politically.

State Rep. Joseph Lopinto (R-Metairie) agrees:

The bottom line is, if locking everybody up and throwing away the key works, then we should have the lowest crime rate in the United States. We don’t. So then you have to really look at your policies. In my opinion, it’s strictly a fiscal issue.

Those who benefit from the prison industry have pushed through some of the severest sentencing laws in the country and aggressively resist reform.  “Few lobbies in Louisiana,” writes reporter Cindy Chang, “are as powerful as the sheriffs association.”  As a result, Louisiana’s sentencing laws are out-of-step with the rest of the country:

All life sentences are, automatically, without any chance of parole and more than one in ten Louisiana prisoners are serving life sentences (the majority of lifers were convicted before age 30):

Harsh where other states are lenient, and harsh where other states are harsh, Louisiana has “a much higher percentage behind bars for [non-violent] drug offenses.”  In 2009, 82% of the 17,223 new admissions to Louisiana prisons were convicted of non-violent felonies.

Tomorrow I’ll follow up with a post on why there are so many for-profit prisons in Louisiana and how it’s affected the lives of prisoners both during and after incarceration.

Lisa Wade is a professor of sociology at Occidental College and the co-author of Gender: Ideas, Interactions, Institutions. You can follow her on Twitter and Facebook.

Asian Americans and Unemployment

The Economic Policy Institute recently released a report looking at the impacts of the recession and its aftermath on the Asian American population. Due to the model minority stereotype, Asian Americans are often overlooked in discussions of the economic crisis or of poverty and inequality more broadly.  It is true that Asian Americans have generally had lower unemployment rates than other racial/ethnic groups, due to their overall higher educational levels. However, if we look within educational levels beyond a high school diploma, Asian Americans have higher unemployment rates than comparable Whites, with the gap widest for those with bachelor’s degrees:

The economic difficulties faced by some Asian Americans is even more noticeable when we look at long-term unemployment (joblessness that lasts 27+ weeks, or more than about half a year). The proportion of the unemployed that fall into this category has risen for every group since 2007, with African-Americans and Asian-Americans more likely than Whites or Hispanics to be unemployed for long periods:

EPI then released an update to the report, incorporating 2011 data. Long-term unemployment has inched upward for every group; half of unemployed African- and Asian-Americans have now been out of work for at least 27 weeks:

And in fact, despite their higher overall levels of education, Asian Americans now have a higher unemployment rate than Whites (though the rate for both groups is down from the peak in 2010):

For a discussion of factors that may contribute to these patterns among Asian Americans, such as their concentration in states particularly hard-hit by the recession and the proportion of the population that is foreign-born, see the full report.

The Minimum Wage and the Cost of Housing

Each year the Department of Housing and Urban Development (HUD) calculates the fair market rents for apartments throughout the U.S. in order to set standards for housing assistance payments and vouchers for Section 8. Using data from the Census and the American Community Surveys, HUD figures out the average cost for various sizes of apartments. You can easily look up data for fiscal year 2012 here.

The generally-accepted standard for affordable, sustainable housing costs is that they should be about a third of a household’s income. The National Low Income Housing Coalition recently released a report on the mismatch between minimum wage — currently set at $7.25 nationally, with some states and municipalities having higher minimum wages within their boundaries — and the standard of living. The NLIHC report included this map showing the hourly wage that would be required for the HUD-calculated fair market rent to be about 30% of a full-time worker’s income:

In no state does the minimum wage pay enough to hit the 30%-of-income standard of affordable housing costs. How many hours would a minimum-wage worker need to work per week to make enough that the fair market rent would be about a third of their income? A lot, from a low of 63 hours a week in West Virginia to a high of 175 in Hawaii:

Thanks to Dmitriy T.M. for the tip!

Housing Market Blues

Cross-posted at Reports from the Economic Front.

Economic recoveries often depend on the state of the housing market.  While an April increase in housing prices has led many analysts to talk of a housing recovery, U.S. home values still remain depressed.  According to a Zillow real estate research report, they are still some 25% below their 2007 peak.

Perhaps the most telling indicator of the state of the housing market is that, as of the first quarter 2012, 31% of all owner-occupied homeowners with a mortgage were “underwater,” which means they had a mortgage greater than the market value of their home. As the table below shows, these homeowners owed, on average, $75,644 more than what their home was worth.

To this point, the high percentage of underwater homeowners represents, in the words of Zillow, only “a potential danger.”  That is because “the majority of underwater homeowners continue to make regular payments on their mortgage, with only 10% percent of the 31% nationwide being delinquent.”  The following figure highlights the percent of delinquent/underwater homeowners in the largest metropolitan areas.

At the same time, as Zillow notes:

With nearly a third of the nation’s mortgaged homeowners in negative equity and the average underwater homeowner having a home value that is 31 percent lower than their mortgage balance, negative equity will prove both to be difficult to fully eradicate near-term and to have pernicious effects longer term as some households continue to encounter short-term financial trouble even with a slowly improving broader economy. Should economic growth slow, more homeowners will not be able to make timely mortgage payments, thereby increasing delinquency rates and eventually foreclosures.

In other words, if the economy slows, or interest rates rise, two very likely possibilities, the housing market could deteriorate quickly, intensifying economic problems.  In short, we are a long way from recovery.

The Prisoner’s Dilemma

The prisoner’s dilemma is a concept used to help explain situations in which individual actors may pursue their own self-interest even in situations where they would all be better off if they cooperated and acted for the good of the group. In this short video posted at Scientific American, Michael Moyer explains the prisoner’s dilemma puzzle and how it helps explain situations such as the global nuclear arms race:

See also: Game Theory and the Prisoner’s Dilemma.

Illustrating the Gender Pay Gap

While income inequality between the sexes has decreased in recent decades, women still only make seventy-seven cents for every dollar a man is paid. Matt Separa from the Center for American Progress illustrated what could be bought with those lost wages to help us conceptualize how wide the wage gap is.

His first chart shows how the $10,784 in underpaid wages would almost cover annual housing costs or could pay the combined costs of a year’s worth of utilities, food, transportation, and internet access with a few hundred dollars to spare. The lost wages could also almost pay all the expenses for annual in-state tuition at a public university, twelve months of contributions to Social Security, and basic medical care for a year:

His second chart illustrates how across a lifetime, the lost wages ($431,360) could buy two houses, seven degrees from public universities, fourteen cars, or pay for a family of four to eat for thirty-seven years.   Many of Spera’s examples, including real estate, tuition and retirement savings, are especially powerful because they show how the lost wages could be turned into capital and wealth that would pay even more dividends on top of the lost income:

Overall, the graphs do a nice job of making the implications of the gender wage gap concrete.

—————

Jason Eastman is an Assistant Professor of Sociology at Coastal Carolina University who researches how culture and identity influence social inequalities.

Student Loan Debt Now Exceeds 100 Billion. Why?

You’ve probably heard someone in media or politics bemoan the ballooning student debt in the U.S.  In fact, debt has been rising.  It’s more than doubled in the last ten years (that’s a more than 100% increase):
This debt, though, can’t be attributed primarily to the rising cost of education, as Planet Money explains.  The average debt load for a student graduating from a public school, for example, has risen by 20%:
The average debt load for a student coming out of a private school has gone up a bit more, but still not enough to account for the leap in overall student debt.
The increase in debt, it turns out, is largely accounted for by an increase in the number of people going to college.  In 1970, 8,500 8,500,000 people enrolled in college in the Fall; in 2009, that number exceeded 20,000 20,000,000 (source).  A more than 100% increase.

So, the story isn’t quite as dire as we might think.  This may be little consolation, though, for my students who walked across the stage yesterday.  Congrats, Seniors! :)

Lisa Wade is a professor of sociology at Occidental College and the co-author of Gender: Ideas, Interactions, Institutions. You can follow her on Twitter and Facebook.