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Privatization of Government Services Hurts Taxpayers- and Not Only In Their Wallets

While private think tanks propose privatization as the answer to America’s economic problems, it will only lead to more outsourcing of jobs and more pressure on the middle class.

Almost one of every five American workers is employed in the public sector – working in our schools, colleges, universities, police and fire departments, and providing many other vital public services.

Conservative governors, mayors, think tanks like the American Legislative Exchange Council and the Reason Foundation are promoting privatization as an answer to state and local fiscal troubles. Large corporations in waste, water, prison and other industries that want to take control of public services are spending millions on lobbyists across the nation to capture new business.

Government outsourcing hurts the middle class and increases economic inequality.

A new backgrounder brief, Six Reasons Why Government Outsourcing Hurts the Middle Class, describes how the public sector provides quality middle-class jobs, and details extensive research showing how privatization eliminates these good jobs and increases economic inequality.

Here’s the six reasons.

  1. Contracting out often ends up costing more and lowering service quality
  2. When governments contract out public work, many good jobs disappear – wages, benefits, and hours decrease.
  3. Contracting out creates hidden costs for government and taxpayers.
  4. Government outsourcing disproportionately impacts African American workers.
  5. Contracting out hurts families and communities
  6. Contracting out leads to greater economic inequality.

Privatization proponents claim that handing public services over to private contractors will save taxpayer money. The evidence shows otherwise. Contract costs often are higher than promised and turning middle class jobs into low wage jobs without benefits simply shifts costs to hospital emergency rooms and public income support programs.

You can download the full backgrounder here.

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