Michigan Education Association

Decision to outsource school jobs hurts local economy

Outsourcing decision in Southfield could cost community $31 million

EAST LANSING, Mich., May 20, 2008 – The economic impact of a decision by the Southfield school district to fire more than 300 employees and hire out-of-state contractors to do their work instead could total $31 million, according to a new study.

Using widely accepted economic principles, MEA economist Ruth Beier analyzed the impact of the district’s decision to privatize the jobs of custodians, maintenance and transportation workers.

“For every dollar not earned by a Southfield resident, the economic impact could be $2.20 or more,” Beier said, estimating the total economic impact to the community as $18.6 million to $31 million.

In Southfield, the school board hired one out-of-state company and one foreign company to do the work of the custodial, maintenance and transportation employees. The companies will hire their own workers; they will not be obligated to hire Southfield residents or those who’ve previously been employed by the district.

Many of the 315 Southfield employees who will lose their jobs next month live in the city of Southfield. All spend money in Southfield businesses. Most do not expect to be hired by the private companies, even though they are qualified for their jobs.

Beier’s report has been shared with local Southfield business owners and leaders, as well as school board members. The school board could reconsider its decision to outsource the work of district employees.

Beier analyzed the impact by considering how much each dollar change in economic activity affects the output and income in the local economy, a widely accepted formula for calculating economic impact.

A copy of Beier’s report is available for credentialed media. Please contact MEA Communications at 517-337-5508 to request a copy.

CONTACT: Ruth Beier, economist, Michigan Education Association, 800-292-1934

Updated: February 6, 2009 4:38 PM

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