Why the middle-man? Quit keeping my pay!

Katie82, RN · May 31, 2008

Governments are finding it cheaper to "outsource" jobs rather than pay for their own employees. Labor is the most expensive line item on most organizational budgets, not only because of the pay, but benefits, retirement, liability, etc. By paying another company a flat rate, the hiring company has to deal with all the hassle. Because the state does not want to lose total control, they maintain a workforce of state employees, especially at the administrative/supervisory level. Other state employees may have been grandfathered when the transition to private industry took place. HR management is very costly and can be a lot of headaches, especially in the area of hiring/firing. Governments just find it a lot easier to have someone else do it.

caliotter3 · May 31, 2008

I used to work for a company that had seasonal work once a year, as did many local people. When they went to one of the staffing agencies, we were paid $1.50 less per hour and were constantly pounded upon to use the staffing agency go-betweens for any problems. The staffing agency always gave the brush-off and were somewhat rude. One season of working for them was enough for me. Anytime you can work directly for the source employer and not the agency, you will come out ahead.

HM2VikingRN, RN · May 31, 2008

Hi,
Help me understand this: my state uses a staffing company for staffing nurses at some of it's prisons, yet some nurses in the state prison system are state employees. Are state benefits better? (I suspect so, as far as medical, pension and other things.) Are the nurses who are state employees making more total money (benefits, etc.) than 'contracted' (not "agency") -- nurses doing the same job? (Obviously I think so, or I wouldn't be writing this. ha)
It seems like the middle company is taking what would be "my" benefits, and then paying me what's left over. This system, apparently, is not costing the state any less, either, like they thought it would. And, the state has made the directors of nursing and top local administrators state employees, so there must be some attraction to it.
It doesn't seem fair to the rest of us.
Op

What you are describing is the myth of cheaper outsourced jobs. THe "efficient" private vendors are contracted for the same net amount that a permanent employee costs. But the employees of these shell companies receive lower pay and benefits which is what you are experiencing. The differences are kept for "profit."

Outsourcing of services to save money is one of the really big lies of conservative ideology. Instead of 85 cents of every dollar (estimated) going for public services under the outsourced model only about 70 cents makes it for direct public services. In effect the public gets fewer services at higher costs. (in other words less than they paid for.)

For the big picture of this phenomenon look at DOD spending. An enlisted truck driver would cost 20,000/year. A KBR driver is over a 100,000.

Opera26 · May 31, 2008

Ksilty,

Thanks for your reply.

They let the supervisors work for the state now, instead of the contract company. Happened within the month. So, "that boat left without us," so to speak. Also, from what I've heard, the contract company couldn't staff the place at the price they said, so the state is paying more.

If they let the supervisors work for the state, they should let the rest of us work for the state too, I think. If it wasn't a better deal, the supervisors wouldn't have done it so readily.

Op

Because the state does not want to lose total control, they maintain a workforce of state employees, especially at the administrative/supervisory level.

HM2VikingRN, RN · Jun 1, 2008

This is an example of how being unionized benefits employees. The union would have been able to show legislators how and why privatized services are more expensive. MN has a contracting law that in essence forces management to prove how privatized services save money before contracting out can proceed. Since poblic sector workers are most often cheaper than the private sector this tends to prevent most attempts at privatized services.

sample24 · Jun 1, 2008

I know what you mean. We are very short staffed at work right now. Instead of opening up more positions, we're getting a bunch of travel/agency nurses for our busiest season. It just doesn't seem cost effective to me.