The decades-long experiment of contracting out public goods and services by governments, known as “privatization,” has often had dire consequences for the public, workers, and the environment. Our report, Cutting Corners: How Government Contractors Harm the Public in Pursuit of Profit, details the negative impacts on the public of cost-cutting by contractors across a variety of public goods and services and at every level of American government.
To maximize profit, companies have often cut corners by reducing the quality and accessibility of services, reducing staffing levels, lowering worker wages, and sidestepping protections for the public and the environment.
When government contractors cut corners, the impacts often have dire consequences. For example:
- In 1998, Atlanta signed a 20-year contract with United Water for water and wastewater services. Only five years in, the city ended the contract after the company cut more than half of the workforce and violated federal drinking water standards, including chlorine levels six times higher than levels allowed by the contract.
- In St.Louis, a private school bus operator recently incentivized employees for every dollar he or she withheld from school bus maintenance. The practice resulted in problems due to underinvestment and lack of maintenance, such as broken heaters, faulty brakes, excessive rust, doors falling off hinges, and tires falling off.
- California Virtual Academies (CAVA), a network of charter schools that provide online K-12 education, employed one administrator for every ten administrators employed by school districts of similar size. As a result, one in four teachers spent 80 percent of their time on clerical work rather than teaching.
The report concludes with recommendations for public officials and communities to help protect the public and the environment from companies that seek to increase profits and lower costs by cutting corners.
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