Making Crime Pay

Whatever it has been doing for criminals, the nation's rising crime rate has been paying off handsomely for one burgeoning industry: private security firms. This year businessmen and other crime-wary customers will spend a total of $6.6 billion on private guards, up 46% in five years. Already, the large and small companies in the security business have a total of 800,000 people in uniform, compared with fewer than 450,000 state and local police in the U.S. Says Neal Holmes, head of Pittsburgh-based Allied Security: "There's only one business better than ours, and that's crime. As long as it flourishes, we flourish."

Among the flourishers have been the industry's established leaders. At Pinkerton's, Inc., whose 108 offices across the U.S. and Canada and 36,000 guards make it No. 1 in the field, revenues grew from $175 million in 1973 to $200 million last year. At the No. 2 firm, Burns International, which provided the red-and blue-uniformed guards on duty last week at the Republican Convention in Kansas City, revenues reached $181 million last year, up 18% since 1973. But demand for security services is such that many local firms have been able to find room to grow among the biggies. For instance, Allied Security, launched in 1957 by a former Army criminal investigator and an ex-counterintelligence agent, now employs 2,450 guards and last year earned $803,000 on revenues of almost $9 million. In the Detroit area, Titan Security Services had eight employees and a weekly payroll of about $745 when it was founded in 1972; today the company has about 400 full-and part-time guards and pays out weekly paychecks totaling $45,000.

Part of the reason for the boom is the lingering effects of the 1974-75 recession, which has forced curbs in spending on police at a time of increasing crime. In addition, insurance companies have become much more prickly about requiring commercial customers to take security measures--especially the hiring of uniformed guards --before giving them coverage. Security agencies report a surge of business from motels and hotels since July, when a jury ordered Howard Johnson's to pay Singer Connie Francis $2.5 million in damages because she had been raped in a motel room that had an inadequate lock on a door.

As their frequently elaborate uniforms suggest, private guards essentially function like scarecrows in a field: by their mere presence they act as deterrents to would-be criminals. They may carry guns (if they are licensed to do so), as well as nightsticks, but they have no police powers other than the right to make citizen's arrests.

Shifting Liability. Yet employers prefer to assign agency guards instead of their own staffers to security duty for two reasons. One is cost: while a firm might have to pay one of its own employees $8 to $10 an hour, including benefits, to stand guard, a security agency will do the job for about $5 an hour, paying the guard $2.50 to $3.50. With agency guards on the job, companies avoid costly liability problems. Explains Howard Chapman, vice president of Intel Security Systems in Los Angeles: "Let's take the example of a store with shoplifting problems. If it hires a security company and the company's guard makes a false arrest, then the liability may become that of the security company."

Security firms find that this selling point is becoming increasingly expensive to them. At Allied Security, the cost of liability-insurance premiums, which used to amount to 10-c- for every $100 the company paid in guard wages, has risen to $6 per $100 of payroll.

At present, guard instruction typically ranges from barely adequate at larger firms to none at all at some smaller ones. Too often, says a Los Angeles County sheriffs official, "a man is hired off the street. He is given a gun, paid sometimes only $2.50 an hour--and he's a guard. It's frightening." Some states have tightened licensing requirements; Pennsylvania, for example, demands 75 hours of training before a private guard can carry a gun.

While short on professionalism in many cases, the security firms are quick to mine new markets for their services. Hottest growth area at present: executive protection. By some official measures, businessmen are fading as targets of violence in the U.S.* Yet security companies report rising demand for providing top corporate officers with bodyguards and teaching executives how to avoid kidnapers and extortioners.

A few firms offer short courses in personal security. One recently founded outfit, the Institute for Systematic Security Strategies in Germantown, Md., offers courses lasting several days in such fields as "protective driving" and electronic surveillance. Even junior colleges are getting into the act. Many have started teaching security services on the assumption that at least in this field graduates can always be assured of finding a decent job.

-Accprding to the FBI, bombings of commercial buildings peaked at 485 incidents in 1975 and totaled "only" 173 in the first half of 1976. "Federal hostage cases," generally meaning kidnapings. bomb scares, and extortion attempts against businessmen or members of their families, reached about 40 in 1974, fell to about 16 last year and totaled only six in the first five months of 1976.

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