Outsourcing slows full-time employment

Private sector contracting results in lower full-time public employment and higher numbers of part-time government workers, demonstrates a study of nearly 500 city and county governments by Indiana University, Bloomington, and the University and Georgia, Athens.

For each additional service contracted out to a for-profit firm, fulltime employment declined by approximately 20 employees and part-time employment increased by about nine employees, according to the report. However, the use of nonprofit firms as contractors resulted in no changes in either full-time or part-time employment. Service provision by other sectors of government was associated with higher numbers of full-time employees, suggesting that contracts with other government agencies were undertaken for reasons unrelated to efficiency.

This research helps to clarify earlier findings that private outsourcing had little to no effect on public employment, says Sergio Fernandez, a professor in the Indiana University School of Public and Environmental Affairs. "The net effect on total government employment may be minimal, but that is masking the effects on full-time and part-time employment. With privatization, the public sector is getting more temporary workers, part-time workers, and seasonal workers who don't have job protections or benefits and have not gone through the official civil service hiring process that includes thorough background checks and exams. This gives the agency more flexibility in making changes to the workforce."

He adds, "It's a normative question whether losing full-time employees and gaining part-timers is a good or bad thing. People who want smaller government might be satisfied with the conclusions as an indication that outsourcing works. On the other hand, unions and public employees might feel that this research confirms what they have feared all along."

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