Monday, November 07, 2011

Cutting Off Your Nose To Spite Your Face

When Teabaggers talk about the high price of public employees, I wonder if this is who they mean?

Ginny Townsend, 41, took a job in January as a nursing assistant in the state-run home for veterans here. Technically, she works for a private company that supplies some employees to the veterans home under a [Michigan] state contract. She makes $10 an hour, about half the wage of the public employees working at the facility.

“I love my job, and I appreciate the opportunity to be here,” Ms. Townsend, a former home health care aide, said on a recent afternoon as she cheerfully delivered fruit and a newspaper to an 85-year-old resident in a sun-drenched solarium.

With the national unemployment rate at roughly 9 percent, Ms. Townsend says she feels lucky just to have a job. But on her low wages, she is barely scraping by. She said she was raising four grandchildren under 11 with her unemployed sister and could not support them without the $300 in food stamps she collects every month.

Do a little math here: $10 an hour works out to less than $23,000 a year, so $20 an hour works out to a little over $45,000 a year. Undoubtedly, with benefits and insurance costs, and of course profit, her employer is being paid about $20 an hour for each full-time equivalent (not all employees would work a full time shift). The average private care worker in Michigan is paid $12.25 per hour.

On top of this, she takes down $300 in food assistance each month or $3,600.

In other words, the state pays $55,000 or so for a $50,000 employee. OK, the state incurs other expenditures like pension contributions and other benefits mandated by collective bargaining, but the differential is clearly not as grand as Teabaggers would have you believe. call it $55,000 for a private contractor's employee versus $60,000 for a public worker.

But Townsend's case highlights the real danger in offsourcing jobs to contractors: Contractors are going to hire the cheapest, underpaid workers, which means they will hire less qualified workers, since even average workers will earn $12.25 per hour, which means that the quality of care will diminish while also draining state resources in other ways (unemployment benefits, food assistance, and so on.)

The savings, in other words, is minimal at best and likely a real waste of state resources.
This is not to say that the state should never outsource work. There are some jobs the private sector will do better than the public sector, and if the area is non-critical, it seems to be those are areas where outsourcing might commence. But no one wants to see the public security and health risked for a false profit.