dc’s market financed by you

[patb]

http://www.nytimes.com/2013/01/13/magazine/washingtons-economic-boom-financed-by-you.html?hpw

DC is one of the best markets, it rode out the bubble and the bust better then almost any other market except NYC, driven by both cities have their hands in everyone elses pockets.

now while most market sare bottomed and recovering, what happens when rates start to rise?

[CA renter]

Thought this was interesting, too. I guess “privatization” doesn’t really save money, after all. Gee, who would’ve guessed?

Looks like a lot of our financial problems are tied to privatization and war (and domestic spying, IMHO). Things the “leftists,” who are often blamed for expanding govt costs, are largely opposed to.

….

[from the above-linked article]:

“Peak Washington of the early 2010s, many economists believe, got its start during the Reagan Revolution of the 1980s. Reagan’s messianic push to get government out of the way of private-sector growth famously led to lower taxes and reduced regulation. It also led to a subtle change in the way government did business. Hiring became secondary to contracting, and more and more public projects were outsourced to private firms.

Washington’s economy did well under Reagan (added military spending gave it a boost), but the move to contract out more and more government work proved to be a crucial long-term change. In 1993, Bill Clinton announced a “reinventing government” initiative, which ultimately included cutting the federal work force by about 250,000 positions. The agencies winnowed their rolls, but over the course of the Clinton years, their budgets expanded, and in many cases, the work just went to contractors. Those contractors often came at a bloated cost, too. In a study released in 2011, the Project on Government Oversight found that using contractors can cost the federal government about twice as much as federal employees for comparable work. According to the study, the salary for a federally employed computer engineer would be about $135,000; a contractor might bill the government around $270,000 for similar work.

It was not until the Bush years, though, that this increasingly wealthy not-federal-but-still-government work force truly metastasized. The amorphous war on terror and the creation of the Department of Homeland Security — plus the wars in Afghanistan and Iraq — bloated the country’s spending by about $1 trillion. The contracting dollars that were pumped into the local economy, Fuller says, more than doubled between 2000 and 2010, when it reached $80 billion a year. This, in turn, created hundreds of thousand of desk jobs and fostered a sprawl of nameless, faceless office parks lining the roads out to Dulles Airport.”

——–

Lobbyists, lawyers, defense contractors, and Wall Street bankers — people who are largely responsible for the mess in govt, and who’ve benefited the most from the massive expansion in spending, but have managed to shed all the blame by casting it onto others.

The supply-side argument about lowering taxes, reducing regulations, and increasing govt spending (flow more money to “private sector” contractors and lobbyists) doesn’t seem to be working, now does it?

[an]

That’s your conclusion from that bold text? What I see is, leave it to government and they can waste a lot of money. Even contractors in the bay area do not make $270k/year. The reason is that companies would NEVER pay that kind of money for just a simple computer engineer. As a contractor, I would charge as much as the client is willing to pay. Who in their right mind wouldn’t. It’s the business or in this case, the government, job to control the cost. FYI, $135k is more than what a computer Engineer would make in the bay in the hotest sub market (mobile) right now. My conclusion is that government are not spending their own money, so no need to control cost. Contractors will bill as much as the government is willing to pay.

[CA renter]

In most of the cases I’m aware of, the contractors in D.C. need special security clearances and are very specialized. That could account for most of the difference, though it probably doesn’t account for all of it.

Like the Bay Area and the need for “mobile” engineers now, there was so much demand for contractors in D.C. that the rates went up very quickly over the past decade or so.

But yes, when you combine powerful lobbyists, lots of tax money, and the desire to “spend it into the economy, right now” there is a lot of room for all kinds of shenanigans. This is why I say that the #1 place to look for fraud and abuse is where public money and private enterprise meet. Always was the case, and always will be.

…

Also, though I do not know this for sure, the cost of the contractor might be the cost that the govt pays a private company for the contractor (usually the case as far as I’ve seen). This cost would include all the overhead and profit for the corporation, this is not necessarily what the contractor is receiving individually. There is a lot of bloat, as usual, where the middleman is concerned.

[an]

[quote=CA renter]In most of the cases I’m aware of, the contractors in D.C. need special security clearances and are very specialized. That could account for most of the difference, though it probably doesn’t account for all of it.[/quote]Clearance does cost money but no where near that much.

[quote=CA renter]Like the Bay Area and the need for “mobile” engineers now, there was so much demand for contractors in D.C. that the rates went up very quickly over the past decade or so.

But yes, when you combine powerful lobbyists, lots of tax money, and the desire to “spend it into the economy, right now” there is a lot of room for all kinds of shenanigans. This is why I say that the #1 place to look for fraud and abuse is where public money and private enterprise meet. Always was the case, and always will be.[/quote]I totally agree with this. But I wouldn’t call this fraud. I just call it plain old capitalism. When you’re spending other people’s money, you don’t care about how wasteful you are. On the other end of that transaction. No one in their right mind would charge any less than what your customer is willing to pay. Did you or anyone you know say to their boss, it’s ok, you don’t have to pay me $X, you can just pay me $X/2 because I don’t think it’s fair to charge you $X? So, there you have it, a customer that spend other people’s money and the contractor who’s trying to get the most money for their work.[quote=CA renter]Also, though I do not know this for sure, the cost of the contractor might be the cost that the govt pays a private company for the contractor (usually the case as far as I’ve seen). This cost would include all the overhead and profit for the corporation, this is not necessarily what the contractor is receiving individually. There is a lot of bloat, as usual, where the middleman is concerned.[/quote]You’re probably right. I don’t know how the study calculated the pay, but if it’s just comparing base pay, then this is a faulty study. Now that I think about it, $135/hr sounds about right for what a high end contracting firm would charge a company. Those contracting firm is a business and does make a profit. They also have to pay for HR/Sales/admin/etc. people that the client doesn’t have to pay for, so part of that $270k goes to those people. Then of course, the company itself would take a cut from the top as well. Which is why it’s usually cheaper to hire directly instead of outsourcing to a contracting firm. The cheaper way would be to hire independent contractors and take care of the clearance, training, etc. yourself. But again, it’s probably easier to just outsource it to various different government contracting companies. After all, you’re not spending your own money, so why make your life harder.

So, this does not prove your statement:
[quote=CA renter]Thought this was interesting, too. I guess “privatization” doesn’t really save money, after all. Gee, who would’ve guessed?[/quote]
This isn’t privatization, this is government being lazy and and outsource the jobs to government contractors.

[CA renter]

Some security clearances can take more than a year to obtain, and the top levels need to be re-investigated on a regular basis.

I don’t think you understand the enormity of handling all of the administrative duties and security clearances for all of those people. It’s much easier for them to go through a company.

This is one of the things that far too many people do not understand about govt work. It takes a tremendous amount of resources to recruit and train people, and the sheer number of employees working for the government is unfathomable for most people who work in the private sector, even to those who work for very large corporations.

By using companies, it’s easier to keep these individuals in the “govt fold,” where they might work for one public agency, and then another, then another, and then back to the original agency…but all under the control of one company. By using the company, all of the administrative work is streamlined and, once the relationship between company and the various govt agencies has been established, it’s easy to just tell them that you need a person with x qualifications for x amount of money, and then that person arrives as soon as they are needed.

And yes, it does prove my point about privatization being more expensive than the govt having its own employees. The privatization movement wants to **expand** government (especially as it relates to expanding government spending for private contractors), and they spend a tremendous amount of money lobbying to get this done. With govt employees, while they might lobby for better pay and/or working conditions, they do not usually lobby for expansion in the way that private contractors do, and they cost less per employee.

[SK in CV]

[quote=AN]This isn’t privatization, this is government being lazy and and outsource the jobs to government contractors.[/quote]

With all due respect AN, this is exactly what privatization is. Instead of hiring people to do work, it’s outsourcing those jobs to private companies. And the $135K v $270K is almost exactly what you quoted the other day. 80 to 100% more for non-employee contractors.

[an]

I guess I wasn’t aware of outsourcing = privatizing. My definition of privatization is more of transferring the completely ownership to the private sector (for profit or non-profit). But I guess after looking into the term, it can mean either. So, I concede that if you’re talking about outsourcing, then yes, outsourcing will cost more. But if it’s transferring complete ownership, then that’s debatable.

You’re right, $135k vs $270k is almost exactly what I quoted. Although, that’s on the very high side. The $135k is also on a very high side to start with for just a software engineer, the $270k is very very high side. Also, wasn’t there some people who said government employees are underpaid because they have such wonderful fringe benefits? The $135k doesn’t bare out that claim.

[an]

[quote=CA renter]Some security clearances can take more than a year to obtain, and the top levels need to be re-investigated on a regular basis.

I don’t think you understand the enormity of handling all of the administrative duties and security clearances for all of those people. It’s much easier for them to go through a company.

This is one of the things that far too many people do not understand about govt work. It takes a tremendous amount of resources to recruit and train people, and the sheer number of employees working for the government is unfathomable for most people who work in the private sector, even to those who work for very large corporations.

By using companies, it’s easier to keep these individuals in the “govt fold,” where they might work for one public agency, and then another, then another, and then back to the original agency…but all under the control of one company. By using the company, all of the administrative work is streamlined and, once the relationship between company and the various govt agencies has been established, it’s easy to just tell them that you need a person with x qualifications for x amount of money, and then that person arrives as soon as they are needed.

And yes, it does prove my point about privatization being more expensive than the govt having its own employees. The privatization movement wants to **expand** government (especially as it relates to expanding government spending for private contractors), and they spend a tremendous amount of money lobbying to get this done. With govt employees, while they might lobby for better pay and/or working conditions, they do not usually lobby for expansion in the way that private contractors do, and they cost less per employee.[/quote]
I think you just contradicted yourself in this post. If it’s cheaper to do it in house, then why outsource? I never knew the privatization movement was for expanding government and increase government spending. If that’s the case, then I’m very anti privatization. What would you call completely offloading the service/job to the private sector then? Keep in mind that there are some jobs where I don’t think should be privatize. Jobs that need clearance are usually the one that needs to stay in house. In stead of paying contracting firms to do the clearance process that you set up. Why not just stream line the clearance process and allow your employee from one agency to move to another more easily. Streamline the process instead of paying extra money to not have to deal with the process.

[SK in CV]

[quote=AN]I guess I wasn’t aware of outsourcing = privatizing. My definition of privatization is more of transferring the completely ownership to the private sector (for profit or non-profit). But I guess after looking into the term, it can mean either. So, I concede that if you’re talking about outsourcing, then yes, outsourcing will cost more. But if it’s transferring complete ownership, then that’s debatable.

You’re right, $135k vs $270k is almost exactly what I quoted. Although, that’s on the very high side. The $135k is also on a very high side to start with for just a software engineer, the $270k is very very high side. Also, wasn’t there some people who said government employees are underpaid because they have such wonderful fringe benefits? The $135k doesn’t bare out that claim.[/quote]

I was wondering whether that $135K was actually the cost of a federal employee doing the work rather than the salary. (those who aren’t as pedantic as I am might think they’re the same thing.) If so, that would make the actual salary probably around $100 to $110K, benefits would increase that to about $135K.

The term “computer engineer” can encompass a whole lot of different jobs. My last gig, I had 130 employees who could all be called “computer engineeers”, though not a single one of them could write code (that I’m aware of). And their average pay was right around $150K, average total cost per employee was $180K (average billing rate around $210/hr. But there were some that earned well over $200K and billed $400/hr. Sadly, we never did any federal govt work.

[CA renter]

The “privatization movement” concerns the groups and individuals who want to take over public assets and services (redirecting cash flows to private sector companies and individuals).

Whether it’s “outsourcing” work, or handing the control/ownership of public assets to to private entities, neither have ever been shown to save taxpayers (consumers of those goods and services) money. To the contrary, most studies show that privatization is actually more expensive, less transparent, and more vulnerable to fraud and abuse…the myths about the “public sector” (propagated by these very same private enterprises), notwithstanding.

This is where the “anti-union” rhetoric is coming from: the middlemen/bloat in the private sector. It is not about saving taxpayers money, it’s not about shrinking government expenses or providing the same (or better) services for the same (or lower) costs. All of the studies to date — both from the private sector, and public sector, and everything in between — show that the government (with direct control and its own employees) is generally more efficient and less costly than privatization.

When you take into consideration the need for constant growth in the private sector, you’ll understand why the move toward privatization over the past few decades and the growth of “government” has been happening simultaneously.

[paramount]

The bulk of the country suffers, while DC thrives.

Sickening.

Reminds me of The Hunger Games – a rich Capital District surrounded by much poorer subjugated districts.

[paramount]

IMO, if you’ve ever spent considerable time – or even better worked in the DC area, you know that just like the post office, federal employment is a big work program.

Not every job/worker, but definitely lot’s of the jobs/workers.

I have witnessed it myself – fed govt workers LITERALLY doing NOTHING all day long.

Day after day….month after month…year after year…decade after decade.

[CA renter]

[quote=AN][quote=CA renter]Some security clearances can take more than a year to obtain, and the top levels need to be re-investigated on a regular basis.

I don’t think you understand the enormity of handling all of the administrative duties and security clearances for all of those people. It’s much easier for them to go through a company.

This is one of the things that far too many people do not understand about govt work. It takes a tremendous amount of resources to recruit and train people, and the sheer number of employees working for the government is unfathomable for most people who work in the private sector, even to those who work for very large corporations.

By using companies, it’s easier to keep these individuals in the “govt fold,” where they might work for one public agency, and then another, then another, and then back to the original agency…but all under the control of one company. By using the company, all of the administrative work is streamlined and, once the relationship between company and the various govt agencies has been established, it’s easy to just tell them that you need a person with x qualifications for x amount of money, and then that person arrives as soon as they are needed.

And yes, it does prove my point about privatization being more expensive than the govt having its own employees. The privatization movement wants to **expand** government (especially as it relates to expanding government spending for private contractors), and they spend a tremendous amount of money lobbying to get this done. With govt employees, while they might lobby for better pay and/or working conditions, they do not usually lobby for expansion in the way that private contractors do, and they cost less per employee.[/quote]
I think you just contradicted yourself in this post. If it’s cheaper to do it in house, then why outsource? I never knew the privatization movement was for expanding government and increase government spending. If that’s the case, then I’m very anti privatization. What would you call completely offloading the service/job to the private sector then? Keep in mind that there are some jobs where I don’t think should be privatize. Jobs that need clearance are usually the one that needs to stay in house. In stead of paying contracting firms to do the clearance process that you set up. Why not just stream line the clearance process and allow your employee from one agency to move to another more easily. Streamline the process instead of paying extra money to not have to deal with the process.[/quote]

No, I didn’t contradict myself. It is cheaper to use government employees, but with the growth of certain industries being fed by tax dollars, that’s not always possible, nor desirable. The government is (IMHO) paying for things that we have no business paying for, but the lobbyists are extremely powerful, and they (the people who hire them) control who we get to vote for, how much we spend, and where we spend it. This is why we’ve been seeing the huge moves toward privatization, even though it’s more expensive and more vulnerable to abuse.

Some good resources to get a better understanding of the privatization movement:

http://dianeravitch.net/category/privatization/

This is more biased, but argues some of the anti-privatization points fairly well:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=104&topic_id=5531195&mesg_id=5531195

And definitely read this:

http://www.pfaw.org/rww-in-focus/predatory-privatization-exploiting-financial-hardship-enriching-1-percent-undermining-d

It’s very important that people understand what’s going on WRT privatization and our government. Most important is that if we lose this battle, it will be almost impossible to turn back.

[an]

[quote=SK in CV]I was wondering whether that $135K was actually the cost of a federal employee doing the work rather than the salary. (those who aren’t as pedantic as I am might think they’re the same thing.) If so, that would make the actual salary probably around $100 to $110K, benefits would increase that to about $135K.

The term “computer engineer” can encompass a whole lot of different jobs. My last gig, I had 130 employees who could all be called “computer engineeers”, though not a single one of them could write code (that I’m aware of). And their average pay was right around $150K, average total cost per employee was $180K (average billing rate around $210/hr. But there were some that earned well over $200K and billed $400/hr. Sadly, we never did any federal govt work.[/quote]
I wonder the same about the $135k. I’m assuming that’s base pay, but I don’t know.

With regards to your $200k and $400/hr example, you and I both know that’s not the norm and we don’t know what is meant by computer engineer. IIRC, you brought this up before and it was some special system architect that is fetching that kind of pay, no? Your average “software/computer engineer” will not fetch anywhere near $400/hr. Using that example is as relevant as me using fresh grad fetching $40/hr. I have to use what the term is really used for in my industry, which means your peon developer.

[Author]

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