Privatized Government Services Lead to Millions for Corporate CEOs
by Nick Schwellenbach, 2/20/2014
State and local governments around the country have sold off functions that once were provided largely, if not entirely, by government workers. But it is becoming increasingly clear that that these privatization deals not only reduce democratic control over services the public pays for, but, despite attacks on the public sector, outsourcing is often more expensive to boot.
Yesterday, the latest round of evidence was published by the Center for Media and Democracy (CMD), a nonprofit organization. Its report, EXPOSED: America’s Highest Paid Government Workers, documents the not-so-pretty reality of outsourcing our public services to for-profit companies. It focuses on the salaries of corporate CEOs.
"Given these astronomical salaries, and evidence of higher prices, poor service, and at times outright malfeasance, taxpayers have every right to be concerned about how their outsourced dollars are spent," said Lisa Graves, executive director of CMD, in a written statement.
It’s useful to contrast the sky-high salaries of the CEOs with the average salaries of the workers – from the Bureau of Labor Statistics – in the occupations being privatized. Many, if not most, of these workers still work in the public sector. The contrast makes it clear that public-sector salaries are not the problem.
The average salary for the over 4 million teachers is $54,550.
In contrast: “Ron Packard of K12 Inc. is America’s highest paid ‘teacher.’ Packard made more than $19 million in compensation between 2009 and 2013, despite the alarming fact that only 28 percent of K12 Inc. cyber schools met state standards in 2010-2011, compared to 52 percent of public schools. CMD estimates that K12 Inc. makes 86 percent of its revenue from the taxpayers.”
The average salary for the roughly 435,000 correctional officers and jailers is $43,550.
In contrast: “George Zoley is America’s highest paid ‘corrections officer’ and CEO of private prison giant GEO Group. Zoley made $22 million in compensation between 2008 and 2012. CMD estimates that GEO Group makes 86 percent of its revenue from taxpayers. GEO Group writes language into private prison contracts that forces taxpayers to keep prisons full or else pay for empty beds. GEO Group has faced hundreds of lawsuits over prisoner deaths, assaults, excessive force, and more, which have led to secret court settlements.”
The average salary of the nearly 1.9 million community and social service workers is $44,240.
In contrast: “Richard Montoni, CEO of Maximus, is America’s highest paid ‘caseworker.’ Maximus is a for-profit firm that handles government services for poor and vulnerable residents. Montoni made more than $16 million between 2008 and 2012. In 2013, Maximus landed in hot water for improper billing in Wisconsin. In 2007, Maximus paid $30 million to settle a U.S. Department of Justice criminal investigation into fraudulent billing.”
The average salary of the close to 118,000 refuse and recyclable material collectors (sanitation workers) is $35,230.
In contrast: “David Steiner, president and CEO of Waste Management, is America’s highest paid ‘sanitation worker.’ Steiner made a whopping $45 million in compensation from 2006 to 2012. Waste Management's makes about 50 percent of its revenue from U.S. taxpayers, says Goldman Sachs.”
The mantra that the private sector can always do it cheaper than the public sector is steadily confronting reality. Sometimes it makes sense to use the private sector, but it often doesn’t. The vilification of the public sector means we all pay the price.