The outsourcing of government labor is nothing new, but the focus on privatization has certainly sharpened under the Bush administration -- as have the levels of attendant inefficiency and abuse. But civil service unions and allied advocates have won a few small victories lately in stemming the tide of outsourcing.
Start with the happy ending of a recent labor conflict in, of all places, the U.S. Department of Labor. Last May, nearly 250 workers received word that their jobs had been eliminated and would be outsourced through the Administrative Support Services Competition, a departmental bidding process, without an absolute guarantee that another job could be found for them within the department. Their union, American Federation of Government Employees Local 12, protested the decision, holding a rally by the Capitol Reflecting Pool in June and pointing out that most of these "non-inherently governmental" jobs (as the department's human resources staff called them) were held by minorities and women.
During the same month, however, President Bush signed legislation (initiated by West Virginia Senator Robert Byrd) making it illegal to outsource any positions at the DOL's Mine Safety and Health Administration. The complications involved in going through the competition process in light of this new law prompted the DOL to scrap outsourcing for the time being. To the union's glee, the 250 workers no longer face the imminent threat of unemployment, though the legislation did not protect jobs in other areas.
Meanwhile, the U.S. House of Representatives is considering a bill that would abolish the Internal Revenue Service's practice of contracting out debt collecting rather than using IRS employees The National Treasury Employees Union is lobbying for the bill, but expects heavy opposition in the Senate.
Let's back up and review the stated merits of outsourced labor. The main reasons an employer, whether in the private or public sector, would want use an outside contractor for a service or duty are to save money and to increase efficiency. It might cost less to have a private firm handling, say, information technology rather than to hire a few IT experts directly. The firm won't have to worry about those workers' compensation, unemployment insurance, and pensions, and won't need to bring on more managers and so forth. "Basically, when you hire in-house labor, there are fixed costs," says Diana Furchtgott-Roth, a scholar at the conservative Hudson Institute. "It's a lot easier just to contract operations."
But in some cases, it doesn't actually save the government money. Private tax collectors for the IRS get to keep about 24 percent of what they collect (sidenote: this arrangement has the added "benefit" of encouraging them to use overly-aggressive tax collecting tactics). The IRS and outside experts agree that private debt collecting doesn't save the government that much. Indeed, Kevin M. Brown, the IRS's acting commissioner, recently told the House Ways and Means Committee that the rationale for using private contractors wasn't necessarily to save money.
Even if there was an economic advantage to outsourcing tax collection, moreover, putting citizens' financial information in the hands of unregulated, for-profit companies carries with it serious and obvious risks, as the Center for Economic and Policy Research's Heather Boushey points out .
Then there is the debate about what kind of labor is "inherently governmental." The Department of Justice, for example, might argue that it should outsource its IT workers -- why should it be burdened with having managers keep a staff in that section while a contractor would allow the department to focus its energies on representing the government in court? In the case of the DOL, AFGE Local 12 President Alex Bastani argues it's not so cut and dry. An IT worker on DOL payroll, he says, has departmental know-how and the understanding of the unique processes and customs of the workplace that a contractor, who might work in several different sectors, could not fully achieve.
This is not to say that outsourcing should never happen. But the tendency to wantonly outsource federal government labor even when it doesn't save money or make the mechanisms of the government more efficient is a product of an economic dogma that holds that a private firm can always -- always -- do a job better than the public sector.
While there has been progress in ending this myopia, even some of that has come at a cost. For example, in July, the U.S. Postal Service announced a tentative collective bargaining agreement with the urban letter carriers' union that puts a six-month moratorium on outsourcing and sets up a labor-management committee to study and make recommendations on the issue. But the contract also allowed management to pay 80 percent, down from 85 percent, of workers' health care premiums, and offered cost-of-living adjustments and wage increases that hardly alleviate the high living costs for workers in areas like New York or Los Angeles.
For DOL employees, the specter of outsourcing is gone, for now. It could come up again any time. Organized labor has fought outsourcing to protect is members, and its tenacity has helped make some gains in the federal government. But this is an issue that affects taxpayers generally. As the case of the IRS shows, employees and taxpayers will need the help of Congress to ensure broad, lasting change.
