President's
Message on
Privatization:
"How AFSCME Can Fight
the Growing Threat to Public Services"
The growing trend toward privatization and contracting
out is a genuine threat to workers in the public sector and an attack
on the American system for providing public services for AFSCME
West Virginia families and all Americans.
Faced with tight budgets, many government officials
and politicians see privatization as a quick fix. But in the long
run, privatization often ends up costing taxpayers more, while putting
private profit ahead of the public interest.
It is important that all AFSCME members understand
this issue and are prepared to fight back against privatization.
My local, 2531 representing Huntington Sanitary Board
employees faced a real threat earlier this year and our brothers
and sisters in the WV Parkways Local 3229 employed at Tamarack are
recently facing a serious privatization/layoff challenge.
What is Privatization?
Privatization means allowing profit-making corporations
to take over the duties that have traditionally been performed by
public agencies. Usually, this means that government will contract
out work to private companies that previously was performed by public
employees.
Why the Growing Trend Toward Privatization?
Over the last two decades, managers in the public
sector have faced a very real problem: the public expects quality
services, but tax revenues are often inadequate because corporations
and the rich don’t pay their fair share. Anti-government politicians
and corporate special interests don’t streamline government
and reform the tax code to raise revenue fairly. They argue that
the solution is to turn over government functions to profit-making
companies.
Many officials and citizens innocently fall for this
scheme because it is packaged as a quick fix for government problems.
They are promised that contracting out will:
In reality, privatization rarely meets those goals.
In fact, the real reasons for privatization often
include the following:
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As a payoff to friends or political allies.
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To avoid paying workers’ benefits.
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As a way to keep workers from having union protection.
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As a way to intimidate unions during bargaining.
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Because of political pressure from powerful corporations.
Myths and Realities About Privatization
AFSCME must be prepared to counter the arguments
of privatization advocates who want to contract out public services.
This list of Myths and Realities should help.
Myth: Contracting out saves money.
Reality: Nearly two decades of experience now clearly
shows that contracting out rarely saves money in the long run.
Privatization may show short-run savings. This is because private
contractors will purposely under-estimate costs at the beginning
in order to get a contract. This is called "low-balling"
or "buying in." But once government work is turned over
to a private business, the drive to produce profits takes over and
contract costs rise. Contractors will pad later contracts with unnecessary
expenses. After a while, government loses the ability to perform
the work and becomes dependent on the contractor, no matter what
the cost.
There are also lots of hidden costs. Drafting, negotiating,
and monitoring compliance with contracts can require a whole new
layer of government bureaucracy. Because privatization usually leads
to layoffs and loss of pay and benefits, taxpayers will face the
hidden burdens of unemployment compensation and public assistance
programs. As good paying government jobs are replaced with low paying
contract jobs, the government will collect fewer dollars in tax
revenue. Private sector workers suffer because laid-off public workers
can no longer afford the goods or services they produce.
Myth: Private businesses are more efficient that
the government.
Reality: Although many people believe this, no one
has ever demonstrated that it is true. But examples of inefficiency
on the part of companies that contract with governments are numerous.
Private Pentagon contractors are legendary for their inefficiency,
like charging thousands of dollars for a hammer or a toilet seat.
Less famous examples exist at the state and local levels.
Quality usually decreases under privatization because private managers
cut corners to reduce costs. They tend to hire inexperienced, low-paid
workers who do not get training on how to do the job right. Also,
the low pay, poor working conditions, and lack of union representation
often cause high turnover of employees.
Private firms often increase their profits by providing
good service only to certain areas. For example, suppose New York
City’s ambulance service was privatized. Firms would rush to
provide services to highly profitable areas, such as Manhattan.
But areas where working people live would get less priority.
Myth: Competition keeps private service providers
accountable.
Reality: Competition only works when there are many
firms competing to provide a product or service. But under most
privatization schemes, competition ends once the work is contracted
out. After the contract is signed, one firm becomes a monopoly because
it gets all the equipment, experience and training. Once a company
knows that the government will not contract with another firm, it
can jack up its rates or cut quality.
When governments subcontract work, other accountability problems
are created. It is often not clear who is responsible to taxpayer
– the government agency or the contractor. Contractors can
pass the buck for shoddy work, claiming that it is the government’s
fault. Citizens often do not know who is supposed to receive complaints
or fix problems.
Contracting out creates many opportunities for corruption.
Contracts to provide government services may be given to political
cronies or campaign contributors. Competition for initial contracts
often leads to kickbacks, bribery, and collusive bidding.
Myth: Private contractors are able to use a more
flexible, specialized workforce, thus saving a lot in overhead costs.
Reality: Privatization undermines the workplace protections
and standards that AFSCME members have fought hard to win. When
work is taken away from union members, it is often given to inexperienced,
less-skilled workers. Costs may be cut in the short run, but over
time quality will decline.
In practice, flexibility is often harmed by the contracting out
process. It is impossible to design bid specifications and contracts
that foresee all future needs. So governments lose their ability
to respond to new situations.
Plan Now to Fight Privatization
The best way to fight privatization and contracting
out is to be prepared before it starts by educating members about
privatization issues and involving them in a constant campaign to
promote public services. An educated and involved membership will
be ready to fight any move toward privatization through:
Community Alliances: Reach out to community, consumer,
religious, and other groups in an ongoing effort to promote public
services and maintain alliances with those who use the services.
These groups can be AFSCME allies in a fight about privatization
if it is proposed.
Political Action: Legislative efforts involving AFSCME
members and other groups can defeat bills that promote privatization.
Contract Language: Collective bargaining, where &
when it exists, can be used to gain contract protections against
contracting out.
Legal Strategies: Privatization may conflict with
civil service laws or violate an employer’s duty to bargain.
The International can help locals develop ongoing programs to fight
this threat to workers and to public services.
Watch for upcoming materials from our International
Union on political action, internal organizing, community campaigns,
and other topics to help WV public employees build membership support
and fight privatization.
For more information, contact Council 77 below.
Sincerely & fraternally,
Ronnie Napier, Council 77 President
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