Social Services Industrial Complex?

Daniel Stid at the Bridgespan Group has written a provocative new piece on the politics of performance management for the Washington Post entitled “The Social Services Industrial Complex.”

In it, Stid compares the national network of nonprofit organizations that provide social services to low-income communities today to the “military industrial complex” decried by President Dwight Eisenhower as he ended his presidency. Stid suggests that this new social services industrial complex is blocking efforts to make social service programs more performance-based.

As indicators of the sector’s power, Stid cites an Urban Institute report that shows that nonprofits receive more than $100 billion in federal funding each year. Separate federal labor statistics from May 2011 indicate that nearly 1.9 million people are employed in the sector. According to Stid:

One doesn’t have to impugn the motives of the individuals and nonprofits working in this industry to observe that, in the aggregate, they consistently behave like other industries: working closely with elected officials and government agencies to preserve the government funding that supports their work. The result is ingrained inertia that makes it harder to shift resources to programs that could provide better outcomes and do so more efficiently.

As further evidence, he cites the work of Jon Baron, president of the Coalition for Evidence-Based Policy, and the Brookings Institution’s Isabel Sawhill, who indicated that of 10 federal social services programs subjected to randomized control trials, 9 were found to have weak or no positive effects. These programs included Head Start, Upward Bound, Job Corps, and 21st Century Community Learning Centers (the one federal program that did do well in this examination was Early Head Start). Yet despite this lack of results, according to Stid, “the federal government continues to spend billions on these other programs each year.”

I think Stid makes a powerful argument, one that encourages all of us to be aware of and wary of the power of self-interested interest groups. That said, I think the comparison to the military industrial complex does not describe the reality of politics in the social services sector very well.

Social Service Organizations Just Aren’t That Powerful

Simply put, yes, the “social services industrial complex” does exist, and yes it does act in its own self interest. But importantly, it isn’t really all that powerful. I say this as someone who has spent most of his career working as an advocate for several of the major organizations in the sector, including United Way Worldwide and, more recently, the Alliance for Children and Families.

There are several reasons why the sector isn’t that powerful. First, it consists mostly of public agencies and nonprofit organizations, neither of which can make campaign contributions or get directly involved in elections. Some of the public agencies have unionized employees (usually AFSCME or SEIU-affiliated), and they are probably the most powerful political players in the field. But most nonprofit employees are not unionized. Finally, for the most part, the individuals they work with (usually low-income, disadvantaged populations) do not vote in high numbers and, to the extent that they do, they are reliably Democratic, which means their votes are not really in doubt in elections so they are taken for granted.

As it turns out, the biggest determinants of political outcomes for social services programs are elections — but elections are rarely influenced by issues affecting low-income and disadvantaged populations. If anything, politicians are more likely to run against these populations than cater to them (think of Newt Gingrich running against President Obama as “the food stamp president” or even President Clinton pledging to “end welfare as we know it“).

Taken together, these factors leave the “social services industrial complex” relatively powerless to force policymakers to do much of anything that they don’t want to do, or to stop them if they do want to do something. Instead, these organizations must rely on powers of persuasion to get what they want.

The Real Power Players: Policy Experts

Once the elections are over, the real players are not interest groups, but a small number of professional policy experts at the federal and state levels. These policy experts include those inside government (in the executive and legislative branches) and those outside government at various policy organizations such as the Urban Institute, Brookings, the Center on Budget and Policy Priorities, or their equivalents.

The policy professionals inside the executive branch are typically the most important, with those serving in the legislative branch coming a close second. In both cases, the power of these experts is derived from higher-level political superiors. But they are usually deferred to by those superiors, which both insulates them politically and gives them substantial sway over any issue they are involved with.

In this environment, the power of social services organizations boils down to this. If they can persuade these policy experts that they are right, they win. If not, they don’t. That’s why, for instance, welfare reform was passed in the mid-1990s despite the opposition of virtually all of the “social services industrial complex.” It is also why low-performing Head Start grantees are being forced to compete for their contracts today.

We Still Have a Problem: It’s Called Gridlock

So if the policy experts are the most important players, and they are generally favorably disposed toward improving outcomes and performance (and they seem to be), then the road ahead must be free and clear for reform, right?

Well, no — but for entirely different reasons. Far more important than the social services industrial complex is a more problematic political obstacle: partisan gridlock. In recent years, each of our major parties has become so partisan that it reflexively opposes the other on almost everything. Both are reluctant to grant the other any policy victory, no matter how small.

Combined with the American system of checks and balances, this partisanship spells government inaction. Government inaction spells status-quo.

That, unfortunately, is the real enemy of performance-based reform.

Postscript: It is common these days to view politics cynically, but the truth is that interest groups lose more often than you might think. For a less cynical, but realistic perspective on power and politics, I recommend Henry Waxman’s “The Waxman Report.” My review is here.

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