Taken from; http://www.care2.com/causes/human-rights/blog/the-u-s-prison-system-a-multimillion-dollar-industry/
The U.S. prison system is not simply a method of punishing and detaining criminals, but is also a profitable, multimillion-dollar industry. This leads to some problems.
The number of private prisons have sprung up in recent times. While in 1998 there were only 5 private prisons, by 2008 the number jumped to 100. According to journalist and author Eduardo Galeano in his book Upside Down, the private U.S. prison company Corrections Corporation of America was one of the five highest priced companies on the New York Stock Exchange by the end of the twentieth century. In fact in 1996, World Research Group held a conference to discuss how to maximize profits in this burgeoning industry.
What's wrong with the privatization of prisons? It creates a financial incentive to keep people behind bars, regardless of whether they deserve to or not.
While crime rates have gone down, the number of people incarcerated has gone up. According to Human Rights Watch, 2.3 million people were incarcerated as of 2007. The United States has the largest incarceration rate in the world with a staggering 762 per 100,000 residents. Compare this to the U.K. whose rate is 152 per 100,000 residents, or Canada whose rate is 102.
So many prisoners create a large workforce. According to the Left Business Observer, the federal prison industry is responsible for the production of war supplies such as military helmets, ammunition belts and bullet-proof vests. In addition they also produce equipment services, body armor, medical supplies and more. From an employer's perspective, prisoners create the ideal workforce -- no need to give them benefits, compensation or reasonable wages.
While few would argue that dangerous criminals should be allowed to roam the streets, keeping people in prison for the sake of maximizing profits is immoral and unjust. Incarceration takes a toll on families and communities, and the formerly incarcerated experience great difficulty in getting hired to new jobs once released. In addition, overcrowding in prisons leads to security concerns for inmates and officers alike.