Privatization and Marketization in Human Services: Implications for the Quality of Human Service Jobs

Background: The human services field has undergone substantial institutional shifts over the past four decades. Motivated by the New Public Management goal of "running government like a business," the government has actively contracted the delivery of many human services to the private sector (Abramovitz & Zelnick, 2015). The expansion of for-profit organizations in the human service field has further intensified market competition and resource uncertainty among human service organizations (HSOs)(Salamon, 1993). In this study, I examine the implications of these major shifts in human services – privatization and marketization – for the quality of frontline human service jobs. As privatization and marketization intensify within the human service field, HSOs face strong pressures to demonstrate cost efficiency and competitiveness. Labor costs, which constitute a considerable share of operating costs, are likely to become a primary target for cost containment, through strategies such as employing part-time instead of full-time workers or reducing wages and benefits (Lecy & Searing, 2015). I hypothesize that as the human service field becomes more privatized and marketized, the quality of human service jobs declines. I examine how these trends vary by race to provide insights into the implications of privatization and marketization for racial equity in the human service field.

Methods: Data come from the US Current Population Survey spanning from 1994 to 2022. Following Trounstine's approach (2015), I create new variables that assess the macro-level contexts of privatization and marketization in the human services. In order to leverage variation in these forces, degree of privatization and marketization are measured at the state-year level. The privatization variable is constructed by calculating the percentage of private sector versus public sector employment within major human service fields (healthcare, education, and social services) for each state by year. Marketization measures the share of for-profit versus nonprofit employment within the private sector in these human service fields, again for each state by year. Controlling for year and state-fixed effects as well as individual-level characteristics, I estimate regression models to assess the relationships between the degree of privatization and marketization in the human services and multiple aspects of job quality (full-time employment, involuntary part-time work, contract-based employment, benefits, and wages).

Results: The results provide evidence of the hypothesized association between increasing privatization and marketization and declining job quality in the human services. Privatization in the human services is negatively associated with full-time employment and hourly wage. Similarly, marketization is positively associated with involuntary part-time work and contract-based employment and negatively associated with access to employer-provided retirement plans. The results also provide evidence that privatization and marketization disproportionately impact Black human services workers through larger declines in full-time employment and wages, compared to their white counterparts.

Implications: The findings underscore privatization and marketization in the human services as institutional drivers that impact the quality of frontline human service jobs. Racial disparities in the ramifications of privatization and marketization for job quality highlight the need for social work researchers to examine the racialized consequences of broader trends in the field.