Last modified: Thursday, January 25, 2007
Study: Outsourcing cuts full-time jobs, boosts part-time
by Steve Hinnefeld
January 25, 2007
Outsourcing government services reduces the number of full-time jobs in the public sector but seems to increase part-time jobs, according to a study by an Indiana University professor.
Sergio Fernandez, a professor in the School of Public and Environmental Affairs, conducted the study with Craig Smith and Jeffrey Wenger of the University of Georgia. It was published this month in the Journal of Policy Analysis and Management.
They looked at employment data for 500 city and county governments of various sizes from 1997 to 2002, combined with census data on government finance.
Fernandez said there has been surprisingly little research on the impact of outsourcing on jobs. And studies that have been done, he said, tended to show little change in employment. But that may have been because researchers didn't distinguish between full-time and part-time jobs.
"What we found," he said, "was a negative effect on full-time employees but a positive effect on part-time employees, with the increase almost offsetting the decline in full-time employment."
A possible conclusion, he said, is that government managers shift operations to the private sector for more than one reason. They contract out services to save money, so there are fewer full-time jobs with benefits. But they try to improve efficiency and flexibility in their deployment of human resources, hiring more part-time and temporary workers.
Fernandez said the study doesn't shed light on whether outsourcing is good or bad. That, he said, depends on whether you place more value on efficiency or on the pay and benefits of full-time jobs.
"It's kind of a normative question. It depends on who you're asking," he said.
He and his colleagues hope to do similar research on the federal workforce. And they want to study whether outsourcing reduces jobs for minority, female and young workers, who may have been the last government employees hired and, as a result, would be the first laid off when employment is cut.