By Chuck Gallagher — Business Ethics Keynote Speaker and Trainer
TL;DR: Chuck Gallagher, business ethics keynote speaker and AI speaker and author, argues that America’s prison system runs on a broken incentive: empty beds are treated as lost revenue instead of proof that something is working. When private operators sign occupancy guarantees and recidivism still sits near 40 percent, the institution is quietly rewarded for failure. Real reform starts by paying for outcomes — people who stay out — not for filled cells.
There’s a clause buried in many private prison contracts that should stop you cold. It guarantees the operator a minimum payment whether the beds are full or not. In some states, taxpayers are on the hook for roughly 90 percent occupancy even when crime drops and the cells sit empty. Read that again. We built a system where bringing fewer people to prison can cost a company money.
I took twenty-three steps into a federal prison after I stole from the people who trusted me as their CPA. I know what the inside of that system looks like, and I know what it costs a human being. As a business ethics keynote speaker, I spend my days helping organizations see how incentives quietly shape behavior. So when I read that empty beds get counted as lost revenue, I don’t see a policy quirk. I see a moral hazard dressed up as a contract.
The numbers tell the story. More than half of all private prison beds in this country are owned by a single company, CoreCivic, according to reporting from the Brennan Center for Justice. The Government Accountability Office has concluded, more than once, that there is no clear evidence private prisons save money. And recidivism in private facilities runs near 40 percent — essentially the same as the public prisons they were supposed to improve on. If a business posted those results in any other industry, its customers would walk. Here the customer is the state, and the product is human beings who keep coming back.
What happens when an empty bed counts as a loss?
Incentives are not opinions. They are gravity. When a contract pays for occupancy instead of outcomes, the organization will, over time, behave in ways that protect occupancy. That doesn’t require a villain in a back room. It requires ordinary people responding to the scoreboard they were handed. The Hamilton Project at Brookings put it plainly: typical private prison contracts pay based on beds used and contain no incentive to lower recidivism. We are paying for the wrong thing and then acting surprised when we get more of it.
Compare that to programs built to send people home and keep them there. The Last Mile, which trains incarcerated people in coding and technology, reports that more than 70 percent of its alumni find jobs within six months of release. Michigan’s Vocational Village, built with employer partners like Ford and DTE Energy, has become a national model precisely because it measures whether people succeed on the outside. California announced it will close the California Rehabilitation Center by the fall of 2026, a move expected to save roughly 150 million dollars a year. Empty beds, in that frame, are not a loss. They are the point.
Who really benefits when nobody comes home?
I teach a simple framework for understanding why decent people do wrong things. Fraud needs three ingredients: a need, an opportunity, and a rationalization. I’ve always applied it to individuals, because that’s how I lived it. But read it as an institution and it fits uncomfortably well. The need is revenue and the local jobs a facility supports. The opportunity is an occupancy guarantee and a public that rarely looks behind the walls of America’s roughly 1,664 state and federal prisons. The rationalization is the most dangerous part, because it sounds so reasonable: we tell ourselves it’s all about public safety.
Here is what gives me hope. The public isn’t buying it. In recent Brennan Center polling, only 32 percent of registered voters agreed that prisons treat people fairly, and 72 percent said prisons focus on punishment rather than preparing people to return as better citizens. People sense the gap between what we say the system is for and what it actually rewards. As a business ethics keynote speaker, the strongest recommendation I can give any leader — in corrections, in government, in any organization — is this: stop paying for activity and start paying for the result you claim to want. Tie the money to the outcome.
None of this excuses the choices that send a person to prison. I made mine, and I paid for them. But the choices an institution makes are choices too, and they carry consequences just as surely. A system that profits from filled beds will, sooner or later, fill them. The question every leader should sit with is whether the scoreboard they built measures the thing they say they care about. I’ve written more about choices and consequences at ChuckGallagher.com, because the principle holds whether you’re one person or a billion-dollar contract. Every choice has a consequence — including the choice to look away.
Frequently Asked Questions
What does it mean to say “prison is a business”?
It describes a system where correctional facilities, especially private ones, earn revenue tied to how many people are locked up rather than to rehabilitation results. More than half of private prison beds in the United States are owned by CoreCivic, and many contracts include occupancy guarantees that require governments to pay for empty beds. The financial incentive rewards filled cells, not successful reentry.
Do private prisons actually save money or reduce crime?
The Government Accountability Office has repeatedly found no clear evidence that private prisons are more cost-effective than public ones. Recidivism in private facilities runs near 40 percent, roughly the same as in public prisons. On both cost and outcomes, the promised advantages have not shown up.
What is an occupancy guarantee in a prison contract?
An occupancy guarantee is a clause requiring a government to pay a private operator for a minimum number of beds — often around 90 percent — even when those beds sit empty. Research from In the Public Interest documented these clauses across many state contracts. They shift the financial risk of falling crime onto taxpayers and reward keeping facilities full.
How does business ethics apply to the prison system?
As a business ethics keynote speaker, Chuck Gallagher argues that incentives shape institutional behavior the same way they shape individual behavior. When a contract pays for occupancy instead of outcomes, the organization drifts toward protecting occupancy. Ethical reform means tying payment to results, such as reduced recidivism, rather than to filled beds.
What actually reduces recidivism?
Programs that prepare people for life after release show strong results. The Last Mile reports that more than 70 percent of its graduates find jobs within six months, and Michigan’s Vocational Village, built with employers like Ford, has become a national model. Steady employment, housing, and education are among the most reliable factors in keeping people from returning to prison.
Join the Conversation
Here’s the question I keep coming back to, and I’d like yours: if an organization is paid to keep beds full, can we honestly act surprised when it does? Drop a comment below and tell me where you’ve watched incentives quietly pull people away from the outcome everyone claims to want — in corrections or anywhere else. To take it further, here are five questions worth sitting with.
Five Questions for Further Thought and Consideration
- If your organization measured success by the wrong number, how long would it take before behavior bent to match it?
- Where in your own industry are people paid for activity rather than outcomes, and what does that quietly encourage?
- What would change if prison contracts paid operators only when former inmates stayed out?
- How much of what we call “public safety” is really about protecting jobs and revenue tied to the system itself?
- When you look away from a problem because it’s uncomfortable, whose consequence are you choosing to ignore?
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