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Outsourcing Public Services Hurts Working Class, Communities

by Clyde Weiss  |  June 03, 2014

Outsourcing Public Services Hurts Working Class, Communities

When local governments outsource public services, such as preparing food for school children or custodial work, an unintended consequence is undermining a community’s working class, especially women and African Americans who hold those jobs in greater numbers.

That’s the sad conclusion of a new study, “Race to the Bottom: How Outsourcing Public Services Rewards Corporations and Punishes the Middle Class,” released today by the group In the Public Interest (ITPI), a resource center on privatization and responsible contracting.

The full report can be read here.

The study, which reviews examples of public service outsourcing in several states, says such practices create “a downward spiral” in which reduced worker wages and benefits may easily end up hurting the local economy and the overall stability of middle and working-class families.

Women and African Americans are disproportionately affected because they hold public service jobs in greater proportions.

Another unavoidable consequence of outsourcing public services is that it widens the income inequality gap, as corporate executives benefit from big government contracts while local communities get lower wages.

Outsourcing also results in a lower quality of services. Often, lower wages and benefits result in higher turnover among employees and ultimately lower levels of reliability and quality of care.

AFSCME, which fights hard to preserve quality public services, agrees with the report’s recommendations, which include: ensuring that cost savings promised by contractors are derived from increased efficiencies, not from a decrease in employee wages and benefits; requiring contractors to pay a living wage and provide health and other important benefits; and conducting a social and economic impact analysis before outsourcing.

The report is the latest evidence that outsourcing public services contributes to income inequality.  In March, a report by University of Colorado Professor Daphne Greenwood made similar conclusions.

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