Thursday, January 31, 2013

Does Government Outsourcing Impede Job Growth?

Robert Strenge reports at thee Washington State University News Center that new research indicates privatization of prisons yields disappointing results for the states' labor market, especially in rural areas.  The article is Researchers Find Prison Privatization Can Impede Job Growth.  Here is a quote:
Proponents of privatization anticipate positive economic outcomes - lower costs to taxpayers, similar or improved service delivery and improved salary and working conditions. But Hooks and fellow researchers Clayton Mosher, WSU associate professor of sociology, and Shaun Genter, a WSU alumnus teaching sociology at Tacoma Community College, found many of the jobs promised by private prisons simply never materialized. . . The researchers also determined that private prisons are less likely to contribute to employment stability than publicly run prisons because of their comparatively high turnover rate, which the researchers believe is the result of the relatively low wages paid by private prison operators.
  - Dru Stevenson

1 comment:

  1. Comparing private to public prisons, the private prisons HAVE to have lower payroll costs or there is practically no reason to even consider such a plan.

    My company privatizes the operation of public parks. Public costs are typically 85% labor. To get a cost savings, as we typically do, of up to 50% payrolls HAVE to be cut.

    The theoretical economic benefit is the freeing up of resources from unproductive tasks to be used by the market for more productive tasks. So, instead of overpaying for prison guards, the money stays in the economy, presumably doing something with a higher return than incarcerating drug users.

    This is a hard proposition to test, and one the authors did not seem to even try to test.

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