Outsourced jobs spark questions

By Lisa Koivu

Daily Staff Reporter

Although University Board of Regents members don't traditionally speak during the public comments session during their monthly meetings, Regent Laurence Deitch (D-Bloomfield Hills) responded to concerns regarding the outsourcing of labor in the University's Medical Center cafeteria.

The unexpected move has encouraged students who have fought to protect hospital workers.

During the spring semester, the University reached an agreement with Aramark Services to run and manage cafeteria operations and contract out 58 cafeteria employees.

Aramark is a privately-owned company, which works in approximately 375 colleges and universities, as well as cafeterias in other areas.

Scott Burkhardt, an RC senior and member of Students Organizing for Labor and Economic Equality, said the group views the decision to hire a private company as a move to undercut University workers.

"We see it as a slap in the face to University workers by the administration," Burkhardt said. "This is the first instance in which an outside contractor has been brought in on a permanent basis."

The Medical Center began its search for a company to manage cafeteria operations last December citing the need to improve clinical outcomes and service, create a safe and healthful workplace and enhance financial strength and competitiveness.

Officials are searching for vendors to staff the hospital cafeteria, catering services and two coffee kiosks, all located within the hospital and Taubman Health Center.

Although there was speculation that the University actively undermined workers' rights, Anthony Denton, associate director for operations at the hospitals and health centers, said the claim is unfounded.

"Our primary reason for this decision was to focus more on our patient service mission and to spend less time on areas that are not directly tied to patient care," Denton said in a written statement. "However, we do expect moderate expense savings since we are no longer in the retail food business. Other savings will depend on sales performance of Aramark."

Denton said Aramark is helping the hospital reduce expenses and provide a positive margin, as many other university hospitals in the country are not making money.

"The reality of health care for us, as it is for most other academic health centers, is that revenue per case is decreasing from many payers, and thus more pressure is on to

reduce expense in order to continue generating a positive financial margin, year to year," Denton said.

While all people who had been working in the cafeteria, were offered new jobs, Rackham student Michael Dover, who has protested in support of the workers', said the issue is that 58 people lost jobs with benefits.

"When contracting out is done, it is essential a follow-up be done to see how well the workers were able to adjust to their new surroundings," he said.

Dover also said losing their jobs brought turmoil to cafeteria workers. "The human cost of transferring needs to be taken into consideration," he said.

Doug Warner, an Aramark spokesman, said every cafeteria employee was offered a new job within the University.

"All employees were offered positions either at the cafeteria or at other jobs within the health system," Warner said in a written statement. "Because of their seniority with the hospital, some employees elected to be placed in other jobs within the health system."

"All employees were placed at equal or higher rates of pay; no employees lost their jobs in this management change," he added.

Denton said only one employee chose to resign.

Ian Wiesner, an RC senior and SOLE member, said the biggest problem with hiring Aramark was that it decreased union jobs.

The University is "outsourcing those jobs to private companies like Aramark that pay inferior wages, do not offer benefits, and do not offer job security," Wiesner said.

"Keeping in mind that the cafeteria was breaking even with $4 million in expenses and $4 million in revenue, we see the elimination of these jobs as an attack on the workers of this University," Wiesner said.

Burkhardt said the University's decision to outsource labor in the hospital undermines the work of SOLE in trying to get better conditions for sweatshop workers.

"The members of SOLE find it ironic and unacceptable that while we've been working with the University's administration to create an enforceable code of conduct to protect workers' rights for workers making University apparel abroad, the University has taken this action which undermines the union and workers' rights heart the University," Burkhardt said.

Wiesner said since the University decided to outsource labor in the hospital he is worried that other cafeterias on campus could be next.

"There is no reason for us to believe that this is a unique situation," he said.

Burkhardt also said he had a problem with Aramark being chosen at all. "Aramark doesn't have a particularly good record. I couldn't imagine why you'd choose them in terms of food service and labor relations," he said.

But Warner said there are bound to be complaints with any large companies, and those complaints are unfair.

Roland Zullo, an assistant research assistant in the School of Social Work, has conducted studies on privatization. Zullo said the main reason private companies enter into business deals is to gain a profit. He said the companies must make a profit from somewhere in the service operations.

"Usually they are generated by cutting costs. For public services, this typically translates to a reduction in labor costs, like lower wages and fewer benefits, but there can also be a reduction in non-labor factors like cheaper inventory and few service offerings," Zullo said.

Zullo also said there needs to be a careful examination of the revenues and expenses of the private company.

"What is needed, and what I hope will happen here, is full disclosure of the revenues and expenses to permit a thorough external analysis," Zullo said.

Wiesner said he hopes Deitch's comments will spark an investigation into the situation at the hospital.

"We believe that through his investigation, Regent Deitch will expose the fact that not only was this outsourcing unnecessary but may have even been a breach of the University's contract with (the union) which stated that it is not the University's intention to outsource jobs," Wiesner said.

University spokeswoman Julie Peterson said she has not heard of action being taken as of yet. Deitch did not return calls made throughout last week.

Wiesner said he'd like to see the cafeteria staffed by union workers.

"The workers who were already there were doing a good job and were not losing any money for the University. The people who staff the cafeteria should be rewarded for their hard work and dedication with well paying jobs that include benefits for their families," Wiesner said.