Public Safety Service Providers: Contemporary Data & Circumstances

By: James F. Pastor, PhD, JD
President of SecureLaw Ltd. and Associate Professor in Public Safety at Calumet College of St. Joseph

The relative size and scope of policing and security are well known in industry circles. Much of this data is derived from the groundbreaking Hallcrest studies. These studies reveal that in 1981, the security industry spent approximately $21.7 billion, compared to the $13.8 billion spent on public policing. In 1991, these expenditures rose to $52 billion for private security, compared to only $30 billion for public policing.1  By the year 2000, private security spent approximately $104 billion, while public policing spent only $44 billion.2 This ratio of expenditures reveals that about 70 percent of all money invested in crime prevention and law enforcement is spent on private security. Furthermore, statistics reveal that the annual growth rate for private security is about double the growth rate of public policing.3 Through the year 2004, private security grew at a rate of 8 percent per annum.4  Most of this growth was prior to September 11, 2001. These figures illustrate that private security is one of the fastest growing industries in the country.5

Following the terrorist attacks of September 11, 2001, some security firms predicted revenue growth in the range of 10 to 12 percent per year.6  One verifiable example of this growth is the increased presence of private security officers in New York City since 9/11.  In September 2001, there were 104,000 security officers in New York City. By October 2003, the number of security officers there had risen to 127,006.7  This level of growth is not atypical of the expansion of the security industry in other parts of the country.

The number of security employees in relation to police further emphasizes the growing predominance of the security industry in the crime reduction arena. Consider some historical trends. From 1964 to 1991, employment in private firms increased by an astonishing 750 percent, with the number of firms providing security and investigative services increasing by 543 percent.8  Public policing agencies also grew their number of full-time sworn police personnel to about 700,000. Thenumber of police personnel, however, pales by comparison of recent security industry estimates of 2 million people employed by security firms.9  In some urban areas, such as El Paso, Texas, the number of private police is estimated to exceed that of public police by a ratio of 6 to 1.10

The growth of private security is reflected in recent financial and hiring data from of two huge international firms that dominate the security industry. Securitas, a Swedish based firm, had revenues of $5.8 billion with a net income of $115.2 million in 2001.11  It employs 220,000 people worldwide, with 98,000 in the United States. Since 9/11, they have hired more than 10,000 additional guards to serve U.S. accounts. Similarly, the Danish firm Group 4 Securicor had revenues of $2.81 billion dollars, with a net income of $3.7 million dollars in 2001. This firm employs 400,000 full and part time personnel worldwide, with 53,000 in the U.S., of which about 3 to 5 percent are directly attributable to 9/11.12  By any account, these are impressive numbers, both in terms of revenue and employee growth.Overall, the data suggest that the private security is so disproportionately large compared to that of public policing, some observers argue that private security is now the primary protective resource in the nation.13  Based on expected additional terrorist incidents, these numbers will likely grow—possibly substantially.

Likewise, the ratio of public police officers to reported crimes has undergone a dramatic change. In the 1960s, there were about 3.3 public police officers for every violent crime reported. In 1993, there were 3.47 violent crimes reported for every public police officer.14  While crime levels have decreased since then, these statistics illustrate that each public police officer in contemporary America must deal with 11.45 times as many violent crimes as police from previous eras. Walinsky notes that if this country were to return to the 1960s ratio of police to violent crimes, about 5 million new public police officers would have to be hired by local governments.15  This has not occurred and will not occur. Instead, the security industry has stepped in to serve this growing market need.

Justice Department data reveal that despite the decreasing ratio of the number of police to that of violent crimes, the economic costs of public policing increased from $441 million in 1968 to about $10 billion in 1994. This represents a 2,100 percent increase in the cost of public policing, while the number of violent crimes exploded 560 percent from 1960 to 1992.16  Thus, as crime rates increased, the tax monies used to “combat” crime also dramatically increased. While more recent  Justice Department data reveals that crime has decreased from 1994 to 2004, one obvious question begs to be answered: Would spending additional money on public policing, in fact, reduce crime? Based on this short historical and statistical overview, the answer appears to be no.The most obvious conclusion to be drawn from these statistics is this: Over the last generation, the relationship between the amount of crime and the amount of money spent on public policing has changed radically.

As dramatic as these statistics may seem, numerous authors assert that the security industry should not be assessedon data alone. Indeed, the sheer and undeniable growth of the industry can be viewed by its involvement in businesses, homes, and communities throughout the country.17  This involvement stems from such diverse services as alarm systems, security guard services, and investigative and consulting services. Indeed, the impact of the security industry may even be more substantial than what this data suggests. For example, one observer noted, “We are witnessing a fundamental shift in the area of public safety. It’s not a loss of confidence in the police, but a desire to have more police.”18  Indeed, there are appropriate comparisons being made of the security industry in relation to the advent of public policing in the mid–1850s. In light of the historical summary, this comparison of private security to the advent of public police seems right on the mark.

Numerous authors have argued that there is a need for more police, or at least more protective services.19  Other authors have a more critical view. They doubt the capability of the public police to provide an appropriate level of protection.20  In either case, private policing may be seen as the “wave of the future.”21  Similarly, another author observed, “People want protection, and what they cannot get from the police, they will get from private security companies.”22  This statement has particular significance in light of the current increased terrorist threat. The authors of the National Policy Summit suggest a connection between this threat and the conflicting roles facing modern police departments. In their analysis, police are finding that in addition to the crime-fighting duties, they now have significant homeland security duties.23

The impact of crime on average people suggested by a 2004 survey conducted by the Society of Human Resource Managers (SHRM) is worth considering. The researchers asked, “Do you feel safe at work?” The majority of respondents answered no. Indeed, for almost every demographic and industry category, safety at work ranked at the top or near the top in terms of employee priorities. Specifically, safety was the number one issue for woman, and tied for first with benefits for older employees. Overall, “feeling safe at work” was ranked “very important” by 62 percent of the respondents, up from about 36 percent two years previously.24

Business leaders also need to assess the current threat environment and consider security countermeasures. A Booz-Allen Hamilton study conducted in 2002 surveyed seventy-two CEOs from firms with more than $1 billion in annual revenues. This study revealed their post- 9/11 security concerns. This survey found that 80 percent of respondents believed that security is more important now than it was prior to 9/11, with 67 percent actually incurring or anticipating substantial new security costs.25  In addition, expenditures for security-related personnel and hardware were tracked and summarized in another study (see Table 1-1).26  The data in this table reveal an increase in the use of various security methods as well as a reduction of security expenditures by some firms. This trend in the data seems to suggest that despite the threat posed by crime and terrorism, some organizations still remain content to believe that “it won’t happen here.”

Table 1-1: Security Budgets and Expenditure

Expenditure Area	% Increased	% Stayed the Same	%Decreased
Internal Security Personnel	32%	52%	11%
Internal Security Operations	40%	50%	7%
Security Consulting	23%	43%	27%
Contract Guards	32%	37%	22%
Personnel Screening	34%	49%	12%
Access Control	55%	31%	8%

Other more recent studies conducted after the London train bombings and Hurricane Katrina reveal that “there is an increased focus on domestic safety and security.”27  One study revealed that 56 percent of companies have revised their disaster preparedness plans, while 44 percent have not. Again, the statistics suggest that while some people will seek to prepare for or prevent a disaster, others prefer to merely to hope for the best.28  As previously asserted, this mind-set will always exist in some measure—despite the liability exposure and security threats facing society.

Considering the impact of liability exposure upon business, the incentive to provide security is substantial. In 2004, the U.S. Chamber of Commerce reported that small businesses incurred more $88 billion annually in litigation expenses.29  An employment law firm’s annual survey in 2003 reported that 57 percent of companies had an employee file a lawsuit against the company, up 8 percent from 2002.30  The EEOC itself collected more than $420 million dollars from employers who had violated discrimination laws. Of course, regardless of whether a lawsuit has any legal merit, litigation has both direct and indirect costs to the employer. These costs may include attorneys’ fees, lost productivity, decreased employee morale, increased turnover, and poor public relations. Clearly, it is important to provide a secure workplace environment, since crime prevention and misconduct reduction have wide-ranging implications.

1. Cunningham, et al. op cit. at 1–2; and Pastor op cit. at 42.

2. Cunningham et al op cit. at 2; and Pastor op cit. at 42.

3. Cunningham et al op cit. at 2; and Pastor op cit. at 42.

3. Bailin, Paul (2000). Gazing into Security’s Future. Security Management, November.

5. Clifford op cit. at 304; and Pastor op cit. at 42. Also see Zielinski, Mike (1999). Armed and Dangerous: Private Police on the March. Covert Action Quarterly. Caq.com/caq/caq54p.police.html.

6. Perez, Evan (2002). Demand for Security Still Promises Profit. The Wall Street Journal, April 9.

7. National Policy Summit: Building Private Security/Public Policing Partnerships to Prevent and Respond to Terrorism and Public Disorder, Community Oriented Policing Services, U.S. Department of Justice, 2004.

8. Benson, Bruce (1997). Privatization in Criminal Justice. National Institute of Justice, Office of Justice Programs.

9. Zielinski op cit. at 1; and Pastor op cit. at 42.

10. DuCanto, Joseph N. (1999). Establishment of Police and Private Security Liaison. Manuscript presented at the 45th annual seminar of the American Society of Industrial Security, Las Vegas, NV, September 27–30.

11. Perez op cit. at 4; Pastor op cit. at 42–43, and www.securitasgroup.com.

12. Ibid, and www.g4s.com.

13. Bailin op cit. at 12; and Cunningham, et al. op cit. at 1; and Pastor op cit. at 44.

14. Walinsky, Adam (1993). The Crisis of Public Order. The Atlantic Monthly, July.

15. Walinsky op cit. at 40; and Pastor op cit. at 43.

16. Walinsky op cit. at 40; and Pastor op cit. at 43.

17. Pastor op cit. at 44; and Zielinski op cit. at 1. Also see Carlson, Tucker (1995). Safety Inc.: Private Cops Are There When You Need Them. Policy Review 73, Summer; and Goldberg, Ceil (1994). New Roles for Private Patrols. Security Management, December.

18. Tolchin, Martin (1985). Private Guards Get New Role in Public Law Enforcement. The New York Times, November 29.

19. Walinsky op cit. at 44; and Cunningham et al, op cit. at 2. Also see West, Marty L. (1993). Get a Piece of the Privatization Pie. Security Management, March; and Dilulio, John J. (1995). Ten Facts About Crime. National Institute of Justice, Office of Justice Programs, January 16.

20. Benson, Bruce L. (1990). The Enterprise of Law: Justice Without State. San Francisco, CA: Pacific Research Institute for Public Policy.

21. Goldberg op cit. at 12; and Pastor op cit. at 44.

22. Kolpacki op cit. at 47; and Pastor op cit. at 44.

23. National Policy Summit: Building Private Security/Public Policing Partnerships to Prevent and Respond to Terrorism and Public Disorder, Community Oriented Policing Services, U.S. Department of Justice, 2004.

24. Schramm, Jennifer (2004). Feeling Safe. HR Magazine, May.

25. Taken from Booz-Allen Hamilton website on September 16, 2002 at www.boozallen.com.

26. Security Management (2002) October.

27. Lockwood, Nancy R. (2005). Crisis Management in Today’s Business Environment: HR’s Strategic Role. SHRM Research Quarterly (4).

28. Ibid at 2.

29. Maseda, Mike (2005). How to Ensure You’re Not Courting Workplace Litigation. San Antonio Business Journal, May 30.

30. Ibid.

 

SecureLaw, Ltd.    65 West Jackson Blvd., #112, Chicago, IL  60604-3598    Phone: 312-423-6700    Fax: 312-692-2322    © James F. Pastor 2007