The Real Cost of Prisons Weblog

In 2000, the Oregon Department of Corrections predicted that a prison in tiny Madras would set off a minor economic miracle. The Deer Ridge Correctional Institution would employ 500 people on its $22 million payroll.

Nearly 70 percent of employees would be hired locally. The spillover effects would create an additional 1,666 jobs, according to a DOC-commissioned study.

While the prison could turn out to be Madras’ ticket to economic prosperity, no Oregon correctional institution has lifted the town where it was located out of economic hardship in the past 20 years.

After three months of research, including visits to three prisons and more than 60 interviews with residents and city officials of current prison towns, professors, current and former corrections employees, The Bulletin identified a handful of reasons prisons don’t deliver on their economic promise:

‘ Prisons hire far fewer local employees than the DOC predicts.

‘ They don’t pay taxes to local governments or buy supplies locally.

‘ Corrections officers and other employees often don’t live in the towns where prisons are located.

‘ Unpaid inmate work crews compete with locals for low-wage jobs.

‘An optimistic view’

In the early 1990s, like today, Malheur County was one of the poorest in the state. Unemployment was more than two points above the state average, while per capita income was thousands less. Even for a place whose French name translates to ‘unfortunate’ county, times were tough.

Residents embraced the idea of 1,000 jobs when the state announced it planned to expand a 500-bed prison into a 3,000-inmate correctional institution.

‘When they built it in our area, what it immediately did was give a sense of optimism economically,’ said Malheur County Sheriff Andy Bentz. ‘Folks who were holding off on building a new house went out and built one. People just got an optimistic view.’

A similar sense of optimism is growing in Madras today. In less than two years, the Deer Ridge Correctional Institution is scheduled to open, with up to 500 new jobs and 1,884 inmates.

For years, Madras leaders have hyped the prison as a way to add jobs and boost wages in Central Oregon’s poorest county. But other rural Oregon prison towns, such as Umatilla and Ontario, found that the prison wasn’t the windfall they expected.

There’s no local backlash against those prisons. After all, they’re one of the biggest employers in each county, with wages and benefits that outstrip most, even after the majority of prison employees decided to live elsewhere. But the continued struggles of rural prison towns suggest that betting heavily on corrections institutions for economic development doesn’t always pay off.

A big payroll

In Ontario, 10 years after the prison opened, locals say the prison’s few naysayers have been proved wrong. Here, in Malheur County’s largest city, with 12,000 people, there are no ‘felony flats’ ‘ apartment complexes filled with families of inmates. The crime rate has dropped from 165 crimes per thousand to 156. And home prices exceeded $100,000 for the first time in the years following the prison’s construction, according to longtime real estate agent Barbara Lee.

Still, some locals say the prison hasn’t been the panacea some made it out to be. Ontario’s Snake River Correctional Institution employs 1,000 people, yet the county’s unemployment rate, 7 percent in 1994, was up to 9 percent last year. Per-capita income has dropped from more than $20,000 that year to less than $19,000 in 2002, the latest data available.

Worse, the problems that have always plagued the region ‘ poverty, drug addiction and a stagnant economy ‘ haven’t improved.

And Ontario’s sense of optimism’

‘I’d say it’s leveled out,’ Bentz said.

Bobbi Burton, community development director for the Department of Corrections, said the department hasn’t studied the economic impacts of its prisons. It conducted impact studies before building the Umatilla and Ontario prisons, but destroyed the studies as part of regular records-cleansing procedures, Burton said.

But with yearly payrolls that range into eight digits ‘ in Madras it’s projected to be $22 million ‘ prisons must be good for local economies, she said.

‘We would view the economic impact as very positive,’ Burton said.

Scent of onions

The smell of raw sweet onions starts a few miles outside of Ontario. They grow in fields all around the city. Their smell grows stronger closer to the city limits, where it mixes with the scent of french fries made at the Ore-Ida plant near downtown.

Entering city limits, gas stations, fast-food establishments and mini-strip malls give way to neighborhoods of single-story homes in varying states of repair and then to the few blocks of slightly dingy two-story storefronts that make up downtown.

The highlights include the remodeled train depot, local watering hole Spuds n’ Suds and the Jolts & Juice coffee chain.

Snake River Correctional Institution, the largest prison in the state, hides a few miles outside of town, safely out of sight of travelers driving U.S. Highway 20 cross-country.

For years, the working-class community relied on agriculture and food-processing plants to sustain the local economy.

Over the past 20 years, however, foreign competition and new farming techniques have drained jobs from the county and forced many young people to leave the area to find employment, said the Rev. Jim Mosier, an Episcopal archdeacon and Ontario city councilman.

Total employment in Malheur County has dropped from 13,531 jobs in 1994 to 11,729 jobs in 2005, according to Jason Yohannan, a regional economist for Oregon Employment Department in La Grande. Farming jobs were hardest hit, Yohannan said.

‘It’s just been challenging to work in agriculture over the past few years,’ he said.

For those who do stay in Ontario, the penitentiary is one of the few places that offers benefits and above-average wages, said Harlan Hartman, a 60-year-old Ontario resident.

Hartman retired from the Ore-Ida plant after working there for decades. His son, Geral Hartman, got a job at the penitentiary.

‘The (inmates) he works with, he doesn’t like,’ Hartman said. ‘But around here it’s hard to find jobs.’

Mosier loves his city, but over coffee at Jolts & Juice, he wasted no time listing its problems.

‘We have a high rate of poverty in this community, hunger is a problem, the city has some real budget issues,’ Mosier said. ‘We don’t have nearly the hand labor (jobs) we used to.’

More than 18 percent of the county lives in poverty, according to state figures ‘ the worst in Oregon. The state economic development department rated the county as ‘extremely distressed’ last year.

These problems are not new, or because of the prison, said Estela Gomez, the former head of the Malheur County Commission on Children and Families.

‘For 30 years, children have lived in poverty in Malheur County,’ Gomez said. ‘We have generational poverty. We don’t seem to have good family-wage jobs. We have a high poverty rate.’

Every student in the Nyssa School District, 12 miles south of Ontario, qualifies for free or reduced lunches, Gomez said.

Back in the early 1990s, when the community was deciding whether or not to welcome the Snake River Correctional Institution, the debate polarized Ontario, Mosier said.

Opponents feared the institution would lead to the spread of diseases transmitted by inmates and families. They also worried about prison escapes, and declining property values, Mosier said. Proponents saw an opportunity for more jobs, a chance to sell services to the correctional institution and community growth. The proponents won out.

Now, 11 years later, prognosticators on both sides of the fence have turned out to be wrong.

‘The things we were afraid were going to happen didn’t and the things we hoped would happen didn’t,’ Mosier said.

‘A very large hotel’

Since 2000, three studies, two by professors at Washington State University and Iowa State University, and a third by the nonprofit group The Sentencing Project, found that small rural towns with prisons have less job growth than comparable communities without prisons.

‘What you’ve got with a prison is arguably a very large Super 8 hotel that nobody wants to live in but people are forced to,’ said Washington State University Professor Greg Hooks, who co-authored the most comprehensive of those studies in 2001 with fellow WSU Professor Clayton Mosher.

Hooks and Mosher acknowledged that prisons provide economic benefits for rural towns, including nearly recession-proof jobs and increased funding for local services. Still, Hooks and Mosher said, there’s no doubt that the facilities have a much smaller economic impact than, say, a similarly sized factory or lumber mill.

When the Snake River Sugar Co. factory in Nyssa closed last year, it wasn’t just the factory’s 700 workers who felt the impact, said Mosier, the Ontario city councilor. Farmers, truckers and suppliers supported by the factory all lost a major client. Local governments lost tax revenue. Economists call the phenomenon the ‘multiplier effect.’

‘With a prison, though, there’s less connection to the community, fewer links in the economic chain,’ Hooks said. ‘I don’t think there’s very many multipliers to use.’

That fact goes against the common assumption that any place employing 500 or 1,000 people has to be good for the economy.

After studying employment data from every U.S. county over a 30-year period, Hooks and Mosher concluded there’s slower job growth, lower total earnings and less income per capita in rural communities with prisons compared to rural counties without prisons.

‘Instead of helping counties in greatest need, (prison) expansion has the least beneficial outcomes for depressed rural areas,’ their study found. Meanwhile, in bigger and wealthier cities that already have diverse econo-mies and don’t need prison jobs, the prisons don’t have much impact at all, they found.

The direct benefits ‘ 500 jobs ‘ are easy to identify. But beyond that, there’s a lot less than there appears.

Hooks and Mosher didn’t prove the prisons caused the poverty in prison towns, but they did cite several aspects of prisons that tend to hurt local economies: The prisons don’t hire locally; don’t pay taxes; unpaid inmate work crews compete for low-wage jobs; and small towns invest too many resources to achieve limited results.

In Madras, backers originally pushed the prison as a way to boost the region’s economy and diversify the job market.

Jefferson County’s economy lags behind Deschutes and Crook counties, but not because the area lacks jobs, said Roger Lee, executive director of Economic Development for Central Oregon. The problem is the jobs, particularly agricultural jobs, don’t pay enough.

According to the state Employment Department, Jefferson County businesses and government agencies employed 6,390 workers in nonfarm jobs last year. Most of the jobs are located in Madras’ robust manufacturing sector, which employs 5,500 people, including Bright Wood’s 1,100-employee factory and 150 jobs at Keith Manufacturing. In Culver, Seaswirl Boats employs about 250 people.

‘What’s unusual about Madras is how many people are actually employed in Madras,’ Lee said.

But the county’s per-capita income is last in Central Oregon, at $20,670, compared to $27,880 in Deschutes County. Jefferson County’s median family income of $46,000 trails the state average by more than $12,000, according to statistics from the Bureau of Economic Analysis and Department of Housing and Urban Development.

Pie in the sky

By now, it’s become conventional wisdom among Madras residents and DOC employees that current employees will flock to the Deer Ridge Correctional Institution because of its location in rapidly growing Central Oregon.

More transferred employees means fewer jobs that go to locals, said Brad Halverson, former administrator of drug investigations for the Oregon corrections department who now lives in Madras.

‘I know a couple of people (in the DOC) who are just waiting for the prison to open,’ Halverson said. Other current DOC employees in Ontario and Umatilla echoed Halverson’s sentiments.

Under the department’s procedures, current employees have priority over new hires when it comes to filling the slots, corrections officials said. The high number of expected transfers has caused corrections administrators to backpedal from a prediction in 2000 by then-DOC Director Dave Cook that 70 percent of employees would be hired from Central Oregon.

A year ago, DOC Community Development Manager Burton predicted fewer than 60 percent of employees would be hired locally.

‘I can’t see us having 70 percent local hires, I just can’t,’ Burton said at a meeting in December 2004.

Earlier this month, Burton revised her prediction again ‘ to 50 percent local hires.

‘I think it’s very difficult to try to predict what that number’s going to be,’ Burton said. ‘I would guess probably closer to 50-50, but that’s really what we’re doing is, we’re just guessing.’

At a Deer Ridge prison advisory committee meeting on March 21, DOC head of labor relations Gary Kilmer told the audience that kind of overestimation is normal for the department.

‘We kind of always start with a pie-in-the-sky number of 70 percent local hires, 30 percent transfers,’ said Kilmer, who also avoided predicting the ratio in Madras. ‘We’ve never quite gotten there.’

The highest percentage of local hires occurred in Ontario, Kilmer said, where the state hired more than 60 percent of employees at Snake River Correctional Institution locally.

A less-publicized economic drag are the cheap or free inmate work crews that sometimes compete with locals for low-wage jobs.

In Ontario, work crews sort onions at the Heinz Ore-Ida frozen foods plant and do maintenance work at nearby parks, according to Snake River spokeswoman Amber Campbell. If it weren’t for the prison, Hooks said, employers would have to pay at least minimum wage for that work.

In Jefferson County, for instance, the Culver Seaswirl plant wouldn’t lay off current employees to use prison workers, but the company would consider using the work crews for some jobs, said General Manager Curt Olson.

Another common pitfall, according to Hooks, is small cities devote so many resources ‘ both of time and money ‘ to secure new

prisons, they end up neglecting other development opportunities.

‘We think that the city or the county ends up overinvesting in this large employer and they don’t have the resources to go after other options,’ Hooks said.

The investments can be even slower to pay off than some towns expect, because states don’t buy supplies from local communities. For the majority of goods, Oregon puts out bids for the entire prison system, said DOC spokeswoman Perrin Damon.

‘Most items would come from centralized suppliers,’ Damon said.

So, unlike the sugar beet factory, supporting industries don’t see a boost from the prison.

Madras hopes to avoid overinvesting in the prison by going after a potpourri of other economic development opportunities, from its new industrial park to efforts to attract more tourists to Lake Billy Chinook, former Madras Mayor Rick Allen said.

Hooks and Mosher also noted that prisons pay no property or income taxes to local governments, meaning locals sometimes pick up the tab for the state’s wear and tear on city infrastructure.

In Madras, as in Ontario and Umatilla, the state has agreed to pay for the road to Deer Ridge and fund almost half of a new sewer treatment plant, which is more compensation than most states provide, Hooks said.

While Madras officials have worked hard to minimize the prison’s potential drawbacks, the reality is that, like other communities that house prisons, it has just one way to capture prison-generated wealth: by persuading corrections employees to live there.

Home near the big house’

Umatilla resident Carla McLane agreed that the prison hasn’t caused any problems, but said she wished more prison employees would settle in Umatilla. Instead, they live 10 miles away in Hermiston or across the Washington border in the Tri-Cities.

‘I know quite a few people who work at the prison and none of them live in Umatilla,’ said McLane, standing in the lobby of the cozy Umatilla Museum, before a Umatilla Historical Society meeting. ‘The commuting rate between here and the Tri-Cities (in Washington) is huge.’

Out of 400 employees at Two Rivers Correctional Institution in Umatilla, about 60 now live in or near the town, estimated City Manager Larry Clucas and Mayor David Trott.

That’s similar to Ontario, where only 42 percent of the 900-some Snake River Correctional Institution employees live in Oregon, according to Superintendent Jean Hill. The rest make their home across the Idaho border in towns like Nampa, Caldwell and even 60 miles away in Boise.

A few blocks from the museum at City Hall, an artist’s rendering of Sixth Street in Umatilla sits on a shelf, covered with a thin layer of dust.

Painted in bright colors, the image is strikingly different from the road just out the door. Empty lots and dilapidated, abandoned gas stations are filled in with new storefronts.

In the foreground, there’s a bright building adorned with a two-story clock tower, a possible replacement for the existing City Hall and police station, currently based in modular buildings.

The drawing is a few years old, according to Mayor Trott.

‘The downtown revitalization part of it is a big bite we have to take,’ Trott said. ‘We don’t really have the money to be able to pull that off.’

A soft-spoken man with steel-gray hair and a neat mustache, Trott, like each of the four mayors and city managers of prison towns interviewed for this series (in Lakeview, Ontario, Umatilla and Walla Walla), said he thinks his city is better for having a prison.

‘It’s been a community friend,’ Trott said.

Trott, head of emergency preparedness at the nearby Umatilla Chemical Depot, notes that since Two Rivers Correctional Institution arrived in 1999, the city has built a new soccer field near the banks of the Columbia River and has launched a neighborhood watch initiative designed to cut crime. They’re not directly connected to the prison, but they show progress.

‘The successes we’ve had around here are due because people see possibilities,’ he said. ‘Change is possible if they’re willing to put some sweat-equity into it.’

In a driving tour of Umatilla, City Manager Clucas points out the purple box-planters built by inmates that now decorate the sidewalks and the gazebo in a small, green park that replaced a mobile home site.

Frank Harkenrider, the former mayor of neighboring Hermiston, said the prison there has been great for his city, but for some reason just didn’t help Umatilla.

‘I go through Umatilla, it’s kind of sad,’ Harkenrider said. ‘They used to be the city down here. They just don’t have it.’

Clucas and Trott said their town is growing at the right pace, about 1.5 percent a year, according to the latest Portland State University population survey. Still, Trott said, he wishes new businesses would come to Umatilla along with the new people.

‘We’ve got to get some businesses in,’ Trott said. ‘If we don’t, all we’re going to be is a neighborhood.’

There’s brisk traffic through Umatilla during the day from commuters heading for Highway 82, the main arterial north to Washington and east to Pendleton, the county seat. The traffic attracted 12 gas stations, which lined the highway, in the 1960s and ‘70s, Clucas said.

Now all but two have been abandoned or converted to other businesses. At night, the town is quiet and dark.

The one exception is The Riverside Sports Bar and Lounge, a restaurant by day and the only strip club in Umatilla County from 6 p.m. until closing.

It’s been open for 12 years now, according to owner Paulette Dufloth, who’s married to a corrections officer at Two Rivers Correctional Institution. Along with the prison, it’s the only thing in Umatilla that regularly attracts folks from out of town.

The Riverside’s owners are good people, Trott said, and as far as he’s concerned, it’s just another business in a town that desperately needs them.

‘I don’t want Umatilla to be known as the adult entertainment capital of northeast Oregon,’ Trott said. ‘But if it’s bringing people into the area that wouldn’t otherwise take a look at the area, that would probably be viewed as positive.’

Keith Chu can be reached at 541-504-2336 or at kchu@bendbulletin.com