Saturday, January 6, 2018

Privatization, Increased Costs And Income Inequality

The Journal Sentinel recently reported that, State of Wisconsin's Spending On Private Workers Up 57% Since 2010.
From laundry and legal services to computer upgrades and health care, state taxpayers spent $653 million last year on private workers, part of a growing reliance on outside firms to do public business. 
In the final term of Democratic Gov. Jim Doyle, these payments dropped, falling from $490 million in 2006 to $417 million in 2010, according to figures from the state Department of Administration.

But under the first six years of GOP Gov. Scott Walker, spending on contractors rose by 57%, or several times the rate of inflation for that period. Contractors are often more expensive than state employees — but not always, officials said.
Senate Minority Leader Jennifer Shilling (D-La Crosse) said that she would seek a nonpartisan audit of the spending on contractors, saying she's worried taxpayers are paying more than they would for state workers.

"Positions have been cut and outsourcing has happened and we have seen the price tag increase," Shilling said.

Overall, state jobs haven't been cut under Walker — they've actually risen by nearly 3% during his time in office to 70,400 full-time positions, according to the Legislature's budget office.

But outsourcing has risen more quickly. The Walker administration says the increase has been driven in part by a once-in-a-generation overhaul of state computers and by a shortage of state workers in some jobs.
And, this really isn't news. The Project On Government Oversight (POGO) found:
The government actually pays service contractors at rates far exceeding the cost of employing public employees to perform comparable functions.

POGO estimates the government pays billions more annually in taxpayer dollars to hire contractors than it would to hire public employees to perform comparable services. Specifically, POGO’s study shows that the federal government approves service contract billing rates—deemed fair and reasonable—that pay contractors 1.83 times more than the government pays federal employees in total compensation, and more than 2 times the total compensation paid in the private sector for comparable services.
The Journal Sentinel actually researched the privatization issue years ago and found that Wisconsin transportation contracts would have been cheaper in 125 out of 214 cases if the work would have been done by state employees rather than a private contractor.

Good Jobs First's research into the privatization issues has discovered:
Creating Scandals Instead of Jobs: The Failures of Privatized State Economic Development Agencies 
“In 2007 we consolidated Wisconsin’s economic development efforts, including terminating a state-created private economic development entity, Forward Wisconsin, in order to reduce political favoritism and misuse of public funds,” said State Senator Mark Miller. “Unfortunately we reverted to old-style cronyism in 2011 with the creation of the Wisconsin Economic Development Corporation which has been plagued with predictable ethics improprieties and gross mismanagement.” 
The report finds that: 
The Wisconsin Economic Development Corporation (WEDC) was accused of spending millions of dollars in funds from the U.S. Department of Housing and Urban Development without legal authority, failed to track past-due loans, and hired an executive who owed the state a large amount of back taxes. 
Based on this persistent pattern of abuses, the report concludes that the privatization of economic development agency functions is an inherently corrupting action that states should avoid or repeal. With the “economic war among the states” already dominated by corporate interests and bargaining dynamics made worse by a long-term drop in job-creation deals, taxpayers are best served by experienced public-agency employees who are fully covered by ethics and conflicts laws, open records acts, and oversight by auditors and legislators.
There is no free lunch. This boils down to a choice between living wage, public jobs or siphoning that money to less accountable and more costly private actors, where most of that money goes to fewer workers or even fewer private business owners.

Continuing this "privatizing will save money" charade only benefits the select few receiving the contracts at the expense of the community and the good jobs that could be created for residents.

If we're really concerned about good jobs and good neighborhoods we would be wise to allow public workers to provide the needed services rather than contracting more costly private companies.


This privatization scam also ties in with the recently overturned City of Milwaukee residency requirement. For 75 years, if you wanted to receive a paycheck from the City, you had to live and pay taxes in the City.

But Republicans are racist (not all, but seemingly most) and don't want to live near people with darker skin than them. They like the good paying job, with good health care and retirement benefits. They just don't want to live near all those undesirables in the City. And, just because the City pays their way, they still have no responsibility for anything that happens in the City.

Yet, they also love to belittle government as out-of-touch, inept and over-reaching. But they'll gladly cash that check and enjoy those pension benefits. David Clarke and his $100,000 pension is a great example of this hypocrisy.

So, they should be able to have all the benefits but none of the responsibility. So much for the mouthpieces of personal virtue and duty to your fellow man.

And, just as the City predicted, 22% of City workers now live in the suburbs. In essence, 22% of labor costs for the City, which could have been spent, most likely, back in the City, now goes outside the City. Thus less revenue (those 22% of workers spending their earnings) percolates within the City, which ends up costing taxpayers more in the long run.

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