How do you save money when dealing with low-level service employees?
For more than 40 years, the Federal Government's response has been to outsorce certain service jobs under a 1965 law, called the McNamara-O'Hara Service Contract Act. It is supposed to guarantee equivalent pay, but there are loopholes and poor enforcement. After all, when it comes to service, the easiest and, often, only way to save money is to cut wages and cut benefits. The companies that are running the service expect to make money at it. Usually, the bigger companies do offer health care coverage because it is nominally required by their contract, unless the contractor can show that health care coverage is not normally provided in the sector, but many contractors, particularly smaller ones, who have contracts that require health care coverage fail to offer it or to pay the cash alternative of $3.16/hour.
The Wall Street Journal has an article about this problem today.
The people who are most affected by this outsourcing are the people at the lowest rung of the economic ladder. Sure, some are younger folks who aren't planning to stay in the job, just as they aren't in the rest of the world. Working at McDonalds or as a building cleaner is not considered a lifetime career by most, but there are people who, for whatever reason, are willing to do it for years. People who work for the federal government get excellent benefits. The disparate impact of this law is that the poor or the unskilled are treated much more badly if their services are contracted out than if they were directly hired. The federal government saves far less (if anything) than the employees lose when these jobs are outsourced and there is no evidence that such jobs are more effectively managed by the third parties that are making money on the contract.
Does it matter? Yes. The federal government outsources about five and a half million jobs. 80% are low level service jobs. Many are uninsured. The government does not check to see that the contractors actually offer health care coverage unless these employees complain, but the government has fewer people to investigate.
The WSJ article includes an anecdote about one victim of the savings:
Yet, unlike the federal workers who were her customers, Ms. Derricotte had no health insurance from her job. She worked for a private contractor hired by the federal government that didn't provide coverage -- and earning about $14,500 a year left her unable to afford good medical care on her own.
Only after she was laid off did Ms. Derricotte qualify for federal insurance programs. That is when she was diagnosed with multiple sclerosis, an often-debilitating disease that attacks the central nervous system. Today, two years after her MS diagnosis, the 44-year-old is confined to a wheelchair, is jobless and relies on Social Security disability payments and other public assistance.
...
Still, her condition worsened. Today, Ms. Derricotte can't write, suffers from memory loss and needs help taking care of herself. Dr. Rogers says Ms. Derricotte's lack of insurance led to a delay in treatment, which contributed to her disability. Dr. Mehndiratta says there is no way to know how the delay affected her, but if he had seen her earlier, he would have treated her with steroids and physical therapy, among others, to attempt to slow the progress of the disease.
In January, Ms. Derricotte qualified for Medicare, the federal health program for the elderly and disabled. People younger than 65 often have to wait for two years after being certified as disabled by the Social Security Administration before getting Medicare. "She'll have great coverage, just two years too late," Dr. Rogers says. "Once the damage was done, it's largely irreversible," he says.
Yep. Let business get richer and let the poor get sicker.
Sadly, this is not just an example of Republican abuse of the Federal Government. It is a bipartisan failure.