Monday, April 4, 2011


Is Privatization a Bad Deal for Cities and States?
To save money, New York is turning the clock back on outsourcing by replacing private contractors with city workers.

Outsourcing the Wrong Jobs
Updated April 4, 2011, 10:00 AM

John "Jack" Donahue, a former assistant secretary of labor, is the faculty chairman of Harvard University's Master in Public Policy program and the co-author of "Collaborative Governance: Private Roles for Public Goals in Turbulent Times."

Some things government should do itself. Some things it should outsource. The rules for smart contracting aren’t mysterious. Tasks that are well-defined, easy to monitor and available from competitive suppliers — call them “commodity tasks” — are prime candidates for privatization. Tasks that are complex and mutable, lack clear benchmarks or are immune from competition — “custom tasks” — should be kept in-house.

Governments often perversely outsource jobs that are hard to monitor, yet keep "commodity" jobs like clerical work..
In a perfect world, governments would delegate all the commodity tasks and none of the custom tasks. In the real world, of course, we should expect some jobs to end up in the wrong box. But the pattern should trend to logical sorting, or at worst a random scatter.

In fact, we do lots worse. Much commodity work remains in government — half a million construction jobs, 600,000 food-service workers and more than 3.5 million routine administrative and clerical jobs. Meanwhile, many tasks are outsourced even though they’re hard to monitor, entangled with an agency's overall mission or sheltered from market pressure. Agencies hire private firms to build and run their information technology, manage their personnel systems and craft strategy.

Why this pattern? Blame generation-scale tectonic shifts that opened gaps between public and private work. In the private sector, but not in government, the ceiling has blown off the pay distribution, and the floor has dropped out. Less-skilled workers cling to the public jobs that still pay middle-class wages. More-skilled workers shun government for greener private pastures. The gap at the top starves government of custom-task talent, forcing ill-advised outsourcing. The gap at the bottom means that outsourcing commodity tasks meets ferocious resistance.

Campaigns are underway to drive compensation for less-skilled public workers down to private-sector levels. But narrowing the lower gap addresses just one cause of perverse privatization. And nobody is calling to fix the gap at the top.


  1. Daley was big on contractors. They could contribute to his campaign funds and fly him all over the world without oversight. They couldn't make enough office space for them on the technical floor at OEMC. When there's work to be done they call in other contractors. What a joke.

  2. There is good and bad, but the bottom line is what they think about. Quality of work suffers and in the long run it costs more... now when you're mentioning nepotism and kickbacks and city politics... was quality or saving money ever the point?

  3. Another Scandal at OEMC?????

    Hundreds of Thousands of Dollars wasted and missing?

    Missing and Stolen Equipment?

    What Boss will take the Rap for this Mess?

    (silly me, it will be blamed on former Boss's)