It's been a rough couple of months for Nashville-based prison profiteers Corrections Corporation of America. Shares in CCA, the largest for-profit prison company in America, took a hit in August after the U.S. Justice Department announced its plan to phase out its use of private prisons. They took another hit when news came that Immigration and Customs Enforcement, one of the industry’s biggest customers, might consider doing the same.
The value of those stocks dropped yet again after Democratic presidential nominee Hillary Clinton declared her support for ending the private prison system altogether, calling on states to cut ties with them. Following that news, our colleagues at the Nashville Post report that CCA will be laying of between 50 and 55 employees at its Nashville headquarters.
From the Post, including corporate word salad from CCA CEO Damon Hininger, who forfeited a block of shares he was granted in February, when they were valued at $2 million.
The move to cut costs comes shortly after officials at the Department of Justice and Immigration and Customs Enforcement said they either will cut back or are considering curtailing their use of privately owned prisons. Those pronouncements have helped cut the value of CCA’s stock (Ticker: CXW) by more than half since late June. They rose slightly after hours Tuesday following the company's news.
"Recognizing the continuing evolution of our core corrections and detention businesses, and our strategy to grow our reentry and real estate platforms, we conducted a thorough review of our corporate structure to optimize our support of both existing and future operations," Hininger said. "Proactively addressing the challenges and opportunities of our business means very difficult decisions must be made […] Together with the ongoing initiatives that are diversifying our business model, I am confident this restructuring and cost reduction plan will better position CCA for long-term value creation for our shareholders."
No one here rejoices at the news that these individuals will be losing their jobs. But the diminished value of a company that profits from the warehousing of (disproportionately poor and minority) individuals is good. CCA, and the industry it leads, is a blight on our nation and our state, which should end its relationship with the company as soon as possible.
