Let me walk you through some important reporting that CalMatters Housing just put out about what's happening in California's prison towns, and frankly, it's a sobering story that tells us something about economic development and community resilience.
So here's the situation. Back in the 2010s, California started changing how it handled criminal sentencing and incarceration, which led to a drop in the prison population. Governor Brown pushed for major reductions, and now Governor Newsom has closed five prisons since taking office in 2019. The problem is that certain towns, particularly in rural areas, had built their entire economic foundation around having prisons. These were the places the state put facilities in because the communities were already struggling economically and desperate for stable jobs. When the prisons started closing down, these towns found themselves in serious trouble.
According to CalMatters, take the town of Susanville up in the Lassen National Forest as a perfect example. When the governor announced the prison closure in 2021, the town's population started dropping fast, from around 16,000 down to 14,000 by 2024. The school system lost about 10 percent of its students. More than a thousand state jobs with solid benefits and paychecks disappeared. The former city manager is now saying the town is heading toward insolvency. The state even passed a budget bill that exempted prison closures from environmental review, which blocked Susanville's legal challenge to stop it from happening.
Here's something interesting that the research shows. According to CalMatters, scholars studying this phenomenon have found that the economic benefits of prisons to small communities were probably exaggerated in the first place. One 2024 study found that a lot of prison jobs were filled by people from neighboring towns anyway, so the local economic benefit wasn't as big as advertised. Even research going back to 2010 suggests that having a prison in your community might have actually prevented other industries from developing there.
The pattern seems clear from the reporting. According to a Brown University researcher quoted by CalMatters, towns that built prisons early in the boom saw temporary improvements in home values and income, with less poverty and unemployment. But those gains didn't last. The effects wore off within about a decade. Now we're seeing that play out in real time as prisons close.
CalMatters reports that different towns are handling closure differently. Susanville fought it and lost. Another town called Blythe decided not to fight after watching Susanville's failed lawsuit, and instead is trying a different approach with state economic development efforts. But the reality is these communities are struggling to find new economic anchors to replace what they've lost.
What I am seeing locally is that this story reminds us that economic development built on a single industry or government anchor is always vulnerable. Here in the Bay Area and the East Bay, we're fortunate to have diversified economies, but we should pay attention to what happens when communities lose major employers. It's a lesson in planning ahead and building resilience into our local economies rather than betting everything on one sector.
