-
Chapter 4. Battling the Welfare Profiteers: Campaigns Against Welfare Privatization
- Russell Sage Foundation
- Chapter
- Additional Information
72 Chapter 4 Battling the Welfare Profiteers: Campaigns Against Welfare Privatization1 There has been great concern about welfare privatization and these companies , especially Maximus and Lockheed and the for-profits, just because they have a bad history in other places. They have paid off politicians to win contracts and their concern is to make profits. . . . When your concern is profits and not people, that’s going to show in a program to help the poor. There is something wrong with that on a deep level. –Service Employees International Union (SEIU) Local 660 staff member, Los Angeles There was a sense among the agencies that they could do pretty much anything they wanted. Performance standards were so low, expectations were so low, that they never had to work too hard, and what they did was work to the minimum with folks. . . . It’s just so darn tempting for these privatesector companies. If they can make money, they will, that’s what’s going to happen. –9to5 staff member, Milwaukee Maximus was doing insufficient outreach; they were just kind of holed up in their office waiting for people to come to them. . . . We are also concerned about the number of clients that were not getting follow-up service in terms of calls back. As we understood it, they were left to hang, not getting responses back from their Maximus staff. . . . I mean, it’s bad enough that they spent the money on frivolous, bizarre activities; they didn’t use the money for outreach. –Hope Offered through Shared Ecumenical Action (HOSEA) staff member, Milwaukee S CHOLARS ON “mixed governance” point to various forces that have contributed to support for the privatization of welfare and other social services in wealthy democratic countries since the 1980s. Battling the Welfare Profiteers 73 Declining tax bases and increased demands for state services, especially specialized services, put pressure on states to contract out services to private agencies in order to cut costs. Because private agencies tend to employ non-union workers, their services tend to be cheaper than the unionized public sector.2 Criticisms from both the left and the right also undermined the legitimacy of the welfare state, paving the way for public -private partnerships in the provision of public goods. Conservatives argued that quasi-markets and private agencies were more flexible and efficient than the public sector and that private agencies would be more responsive to consumer demands.3 Meanwhile, some progressives portrayed nonprofit organizations as sources for “bottom-up, people-centered alternatives to the hierarchical, highly impersonal quality of many state-run welfare agencies.”4 Like critics on the right, critics on the left charged that state-run agencies were “unresponsive, unaccountable and alienating.”5 Private agencies also contributed to criticisms of the public sector. Even as they sought public funds, they differentiated themselves from the state, actively promoting their services and portraying themselves as superior to public-sector alternatives.6 Public-private partnerships in the administration of welfare and services were thus portrayed as providing a “third way” between government control and the free market7 and as enabling a “more fluid process of reform facilitated by the proliferation of new organizational forms and strategies utilized in social welfare provision.”8 Third-sector organizations promised to help the state meet local needs and the needs of special and ethnically diverse populations.9 Nonprofit organizations in particular promised to provide services with “personalization, flexibility, and ‘client’-centeredness.”10 Those who favored the increased use of nonprofits to provide services emphasized these organizations’ “ethical and compassionate ” qualities.11 Others claimed nonprofits would be a source for service innovation: “. . . the nonprofit sector can become a field of experimentation , an area for trying out new ideas that may not necessarily have to stand the test of either the market or the ballot box.”12 Such political claims contributed to support for the privatization of welfare services in the U.S., much as they did in Western Europe. In 1996, the U.S. Congress authorized the privatization of a wider range of welfare services than ever before through the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA). State and local governments could now offer contracts to for-profit and nonprofit private agencies to handle eligibility determination and welfare-to-work case management services for Temporary Assistance for Needy Families (TANF). The implementation of PRWORA also spurred welfare privatization in other ways. Block-grant funding for TANF constrained welfare...