Over the past decade, there have been several efforts to phase out U.S. federal and state use of private criminal detention facilities. But today, the federal government is using emergency powers to sign no-bid contracts with private prison operators. Immigration and Customs Enforcement (ICE) is rapidly expanding operations and now detains nearly 60,000 people in immigration detention centers. Previously closed detention centers are reopening, including prisons where children are separated from their family members.
Nearly 90% of people in ICE custody are held in facilities run by private companies like CoreCivic and GEO Group. Private prison companies make more money the more people they detain, creating a built-in incentive to keep facilities full. But maximizing profits often means minimizing expenses. That can translate into fewer medical staff, inadequate food and sanitation, and weaker oversight. Watchdogs have repeatedly linked these poor conditions to harm and even deaths inside detention centers.
Here’s what people don’t realize: If you have a 401(k) from your employer, it’s likely investing your savings in these private prison operators.
Private prisons in your portfolio
As publicly-traded companies, CoreCivic and GEO Group issue stocks and bonds that investors and fund managers purchase for their portfolios. Stocks represent ownership stakes in these companies; bonds represent loans that allow the companies to expand operations. If your 401(k) funds invest in CoreCivic or GEO Group stock, you’re effectively a part owner of a whole network of immigration detention centers. If your 401(k) owns their bonds, you’re effectively lending them money to build more detention centers.
When ICE raids are filling detention centers – where over 70% of people held have no prior criminal convictions – it could be your 401(k) that helped finance that facility.
These investment decisions are being made by major fund managers like Vanguard, BlackRock, State Street, and Fidelity. Much of this is happening passively, through index funds that deliberately refuse to consider social impacts, ethical concerns, or corporate responsibility risks when selecting investments. For example, the Vanguard Target Retirement series – built from index funds and one of the most popular “default options” in 401(k) retirement plans – holds shares of CoreCivic and GEO Group stock worth tens of millions of dollars. Most of that money came from the paycheck contributions of U.S. workers saving for retirement.
While the private prison industry is currently experiencing a boom, history shows private prison companies are highly vulnerable to political shifts, lawsuits, and reputational damage. The industry’s short-term growth often comes with long-term volatility, ultimately making it a risky long-term bet for retirement investors.
How you can invest in a future without private prisons
It doesn’t take much work to make sure your savings are prison free. The key thing is that if they’re your savings, it should ultimately be your decision where it’s invested – and where it’s not.
If your employer-offered 401(k) plan already offers a socially responsible fund, use our Prison Free Funds database to find out if it’s fully prison-free. Some funds avoid fossil fuels but not prisons, for example. It’s important to have transparency on what’s actually in the fund.
If your 401(k) doesn’t yet have a prison-free option, don’t give up. You can use our action toolkit to learn how to work with your colleagues to ask your plan administrators to offer investment options that avoid profiting from immigration detention centers. We have power when we come together to form a united front in the fight for justice and equality for all.
