Privatization helping middle class disappear

Privatization replaces union jobs with non-union jobs.

from Florida Today

There’s a constant drumbeat from Republicans at all levels of government: Let’s save money by privatizing. Privatize our trash pickup, our welfare systems, our schools and prisons, because private firms can run them more efficiently.

Let’s see where these “efficiencies” come from. A privatized function has all the costs of the government version: salaries, depreciation, maintenance, supplies. In addition, there’s a new group, the stockholders, who expect a healthy return on their money. And top executives, who might have earned a salary in the $150,000 range with the government, expect a salary in the millions, plus performance bonuses and stock options.

So where do the savings come from? If you’re a school, you might increase class size or replace classroom instruction with less-effective online courses. If a prison, hire fewer guards, and keep the inmates locked up more of the time.

Since privatization almost always results in a union job being replaced with a non-union one, management can pretty well dictate the terms. Compared to a government job, salaries in a private firm are usually not too much lower, but benefits will be radically reduced, and anyone who complains about it can be laid off without cause.

The net result is top management receives a much bigger share of the pie, while the rank and file have to make do with less. And we wonder why the middle class is disappearing. I submit that privatization is a major factor.

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