No Multipliers: MVPC Fails to Spur Local Economy

Fig 4. Trends in the number of employers—what the QCEW calls “establishments”—for each of the five counties, compared to their starting point in 2006, the year MVPC opened. Source: Keystone Research Center and IRI analysis of QCEW data.

No Multipliers: Why Detention Centers Fail to Spur Local Economic Growth

A number of factors affect the employment and unemployment rates over this time. Since MVPC is just about one percent of all employment, MVPC is hardly the only factor.

Economists typically isolate the impact of opening a prison on a local community by comparing the economic trajectories of a number of similar areas, some with and some without newly sited prisons. How do areas that added prisons fare compared to those that did not?

What academic studies have shown is:

• Prisons directly employ some people, but do not generate the hoped-for boost to overall employment.
• There is no “multiplier” effect. Hiring at the prison does not generate jobs in other industries, and may even shrink employment in other industries.
• Despite the substantial amount of public money spent on the prison, the local economic impact is typically not discernable.
• Impact on the immediately surrounding area is more negative than on the county as a whole, with prisons creating a “dead zone” for the immediate area, with decreased property values.

A 2004 study titled “Development of Last Resort” notes that prior to the 1980s, prisons were typically built in urban areas, with rural areas resisting local prison construction. But, the study reports, stresses on rural economies of the following decade pushed many small communities to turn to prisons in the hopes that they might be a lifeline for economic growth. The paper’s analysis looks at 248 towns where new state prisons were built between 1990 and 2000, and finds that “[c]ompared to other small towns roughly matched on 1990 indicators, the new state prison towns experienced substantially less growth in every economic indicator except total number of housing units and public-sector jobs,”⁴Terry L. Besser and Margaret M. Hanson, “Development of the Last Resort: The Impact of New State Prisons on Small Town Economies in the United States,” Journal of the Community Development Society, vol. 34, no 2, 2004. with the prison jobs typically being in the public sector.

A 2022 study looked more broadly at county-level impacts in two geographies: Texas and the United States as a whole. In both cases the study compared counties where prisons opened with those where they did not, with the Texas example allowing for a particularly strong determination of which counties could be considered comparable. The results showed no economic ripple effect—there was neither a positive nor negative impact on private-sector employment.

The way economists measure these ripple effects is through a “multiplier.” For every dollar invested, the multiplier shows how many additional dollars of economic activity are created. A multiplier of 1.5, for instance, means for every dollar invested there is $1.50 in economic activity, and a multiplier of 2 means there is $2.00 of activity. The 2022 study finds a multiplier of “approximately one.” In other words, where other sources of outside investment typically produce a positive spillover that makes local businesses grow, there is no positive spillover in the case of prisons. This study also found that property values fell in the areas nearest to the prison.⁵Chirakijja, J. (2022). “The Local Economic Impacts of Prisons.” The Review of Economics and Statistics, 1–45.

Finally, a 2024 study showed even less encouraging results. Looking at counties across the United States over the four-decade period from 1960 to 2000, the study found that jobs added in a prison seem to be offset by job loss in the broader private sector. The analysis showed that when a prison opened there were, of course,  jobs in the prison. But, the prison in turn had a negative impact on private-sector employment. Counties with prisons were associated with decreased employment in manufacturing, finance and the recreational services sectors.⁶Yiwen Zhang, “Did the Prison Industrial Complex Deliver on Its Promise? Prison Proliferation and Employment in Rural America,” The British Journal of Criminology, Volume 64, Issue 1, January 2024, Pages 229–247.

These studies do not look at budget impacts on local governments, but there can also be costs to the county associated with emergency medical care, wastewater treatment, or investigation of assaults or deaths inside the facility.

The Human Toll of MVPC

While this report is focused on the unfulfilled economic promise of MVPC, the economic question should not overshadow the human cost of immigration detention.

One very visible aspect of the cost is deaths at the facility. ICE has reported three horrifying deaths since MVPC opened as a detention facility in 2021. Chaofeng Ge, a Chinese immigrant, was found dead with his hands and feet tied. While the county coroner ruled his death as a suicide, his family is suing to obtain records that may explain the circumstances of his death. Frankline Okpu was found unresponsive in his cell following an overdose. And Fouad Saeed Abdulkadir suffered from complex mental health needs, asthma, and chronic pain. For weeks he reported chest pain and numbness before he died in Moshannon from “medical distress.”

Despite MVPC’s walls and razor-wire fence, the facility does not operate on in isolation. The families and friends of these individuals will be forever haunted by images of their loved ones in danger and distress in immigration detention. These discoveries can also have a traumatic impact on the facility guards or nurses.