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Six Reasons Why Government Contracting Can Negatively Impact Quality Jobs and Why it Matters for Everyone

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Almost one of every 5 non-farm workers in the US is employed in the public sector, with half of those working in K-12 schools, public colleges, and universities. Recessions and corresponding budget deficits, coupled with the mistaken belief that the private sector is always more efficient than the public sector, has led the federal, state and local governments to contract out many of the services they once provided.

There is considerable and growing evidence that contracting out does not save government and taxpayer money and negatively impacts quality of service. Privatization of public functions reduces government jobs, especially for non-managerial and administrative workers and eliminates good jobs for workers without college degrees. While it may sound like a good idea, contracting out deserves a closer look. This white paper summarizes recent research that shows how the public sector provides quality middle-class jobs, and describes how government privatization eliminates these good jobs without much savings to the taxpayer, and increases inequality, which is costly – today and in the future. As mounting evidence shows, when government functions as a model employer in employment and compensation practices, our families, neighborhoods, communities, states, and society as a whole benefit.