Behind shrinking middle-class jobs: A surge in outsourcing

Source: Don Lee, Los Angeles Times, June 30, 2016

Globalization and the offshoring of U.S. manufacturing jobs to China and other cheap-labor countries are commonly blamed for driving down the wages and living standards of ordinary American workers, but there is another, less-known factor behind the shrinking middle class: domestic outsourcing. From human resource workers and customer service reps to cooks, janitors and security guards, many occupations have been farmed out by employers over the years. No one knows their total numbers, but rough estimates based on the growth of temporary-help and other business and professional service payrolls suggest that one in six jobs today are subcontracted, or almost 20 million positions, said Lynn Reaser, economist at Point Loma Nazarene University in San Diego.  Separate Labor Department data show that some of these occupations have seen a significant decline in inflation-adjusted, or real, wages over the last decade. In 2005, there were 138,210 workers nationwide who repaired ATMs, computers and other office machines, earning a mean annual salary of $37,640. Ten years later, the number of such jobs had shrunk to 106,100, with most of them subcontracted at annual pay of $38,990. But after accounting for inflation, that’s a drop of about 15% from 2005. …

Related:

Race to the Bottom: How Outsourcing Public Services Rewards Corporations and Punishes the Middle Class
Source:In the Public Interest, June 2014

From the summary:
As state and local governments outsource important public functions to for-profit and other private entities, what happens to the quality of life for the workers who provide these services, and the communities in which they live? A growing body of evidence and industry wage data suggest an alarming trend: outsourcing public services sets off a downward spiral in which reduced worker wages and benefits can hurt the local economy and overall stability of middle and working class communities. By paying family-supporting wages and providing important benefits such as health insurance and sick leave, governments historically created intentional “ladders
of opportunity” to allow workers and their families to reach the middle class. This is especially true for women and African Americans for whom the public sector has been a source of stable middle-class careers. Low-road government contracts reverse this dynamic. While corporations rake in increasing profits through taxpayer dollars and CEO compensation continues to soar, numerous examples in this report show that workers employed by state and local government contractors receive low wages and few benefits.

Report: Privatizing public service jobs a disaster
Source: Mark Gruenberg, People’s World, June 12 2014

Privatization widens economic inequality and punishes communities
Source: Donald Cohen, The Hill, June 6, 2014

A growing body of evidence suggests an alarming trend: outsourcing public services is accelerating the downward spiral in which reduced worker wages and benefits hurt the local economy and overall stability of working and middle class communities. This growing income gap, driven by local and state government contracting, rising CEO contractor salaries and falling worker wages, is the subject of a new report from In The Public Interest (ITPI) titled “Race to the Bottom: How Outsourcing Public Services Rewards Corporations and Punishes the Middle Class.”

Civil Servitude
Source: Phil Mattera, Dirt Diggers Digest, June 7, 2014

Privatizing Government Services Doesn’t Only Hurt Public Workers
Source: David Moberg, In These Times, Working in These Times blog, June 6, 2014

How Outsourcing Whacks the Middle Class
Source: Gregory N. Heires, The New Crossroads, June 9, 2014

One percent’s twisted new heist: What’s really behind privatization
Source: Elias Isquith, Salon, June 6, 2014

Outsourcing government not only leads to poor services — it’s killing the middle class, an expert tells Salon…To explain how that is — and why it’s important that people committed to economic justice push back against the practice — Salon recently spoke with ITPI research and policy director Shar Habibi. Our conversation is below and has been edited for length and clarity….

The High Cost of Low-Wage Public Service Outsourcing
Source: Rob Garver, Fiscal Times, June 3, 2014

In the late 1990s, as part of a rush to save money by privatizing government services, many school districts in New Jersey turned over their school lunch programs to private contractors. For the school districts, the results were what they expected – costs dropped. But a study set for release this afternoon suggests that the overall cost to New Jersey may have been higher than the amount saved by individual school districts – a warning that could apply to states, municipalities, and the federal government alike. The study, “Race to the Bottom: How Outsourcing Public Services Rewards Corporations and Punishes the Middle Class,” was produced by In the Public Interest, a watchdog group that monitors privatization of government contracts. Its central finding is that when the government outsources its services, “local communities suffer the consequences of lower quality services and middle class jobs being replaced with poverty-level wages” while “far-away corporate executives benefit from lucrative government contracts.” …

How privatizing government hollowed out the middle class
Source: Timothy Noah, MSNBC, June 3, 2014

Two decades ago, liberals and conservatives found common ground in the doctrine of government privatization. … A generation later, the federal government employs more than three times as many contract workers as government workers, and state and local governments spend a combined $1.5 trillion on outsourcing. … Now a new report by In the Public Interest, a nonprofit group that tracks government contracting, argues that privatization at the state and local level “contributes to the decline of the middle class and the rise in poverty-level jobs, thereby exacerbating growing economic inequality.” … Much of the “efficiency” realized by privatization lies in reducing former middle-class workers to poverty wages. Jared Bernstein of the Center on Budget and Policy Priorities, a Washington nonprofit, argued in the conference call that even from an efficiency point of view, privatizing low-end government jobs was self-defeating.