Counting What Matters: Privatization, People with Disabilities, and the Cost of Low-Wage Work
43 Pages Posted: 4 Jun 2008 Last revised: 11 Jun 2008
Privatization is justified on a cost-benefit analysis, that is, as providing better services at lower cost. The value of that assessment depends on including all costs and benefits. However, most assessments appear to be primarily limited to a comparison of wages and benefits. As a result, it appears that many important costs may not be included in assessing privatization.
This article attempts to improve our assessment of privatization by using a small privatization event to identify types of costs not normally considered. The event was the privatization of Internal Revenue Service mailrooms in the period April 2003 to the present. Among the items included in the assessment were costs of the process of privatization, the taxpayer costs from dislocating the job incumbents, and taxpayer subsidies provided to the private non-profit contractor that gave it a market advantage compared with for-profit employers.
Keywords: privatization, disability, labor, work, unions, taxes, nonprofits, contracting out, Office of Management and Budget
JEL Classification: L33, J3, J38, J45, J58, J65, J68, K31, K41, M55
Suggested Citation: Suggested Citation