Privatizing Government Services Doesn’t Only Hurt Public Workers

June 6, 2014 | In These Times |

If you want to understand how privatization of public services typically works, Grand Rapids, Michigan is as good a place as any to start.

The state operates a nursing home for veterans in the town. Until 2011, it directly employed 170 nursing assistants, but also relied on 100 assistants in the same facility provided by a private contractor. The state paid its direct employees $15 to $20 an hour and provided them with health insurance and pensions. Meanwhile, the contractor started pay for its nursing assistants at $8.50 an hour—still billing the state $14.99—and provided no benefits for employees. This led to high worker turnover, reduced quality of care, and heavy employee reliance on food stamps and other public aid. 

Yet despite the evidence from this useful—albeit unplanned—experiment, which showed that any savings the state made through privatization came at the expense of workers and their clients, the new conservative Republican state government decided in 2011 to complete the privatization of the provision of nursing aides to the home.