Hard Bargain

The Los Angeles Times had a good piece over the weekend on foreign security contractors looking for and finding work in Iraq. Just as in any other “outsourcing” story, the invisible hand of the market is encouraging the U.S. government, and its contractors to look to cheaper labor markets abroad.

But how much of a deal are these mercenaries? According to a former Dyn-Corp manager, they go at the low end they go for about $2,500 a month. At DoD pay rates, a Sergeant Specialist would have to max out their seniority before they’d start making that much. And most soldiers make much, much less. In theory, the efficiencies of not having to train the contract fighters should make up some of the difference. But most of the American private security guys in Baghdad are ex-military. Some fought earlier in the conflict, went home, and came back at ten times their old pay. (And many of the South American fighters were trained by the U.S. to fight insurgency or narcotics producers in their home countries.) The government has already paid to train a lot of them, and now they’re taking advantage of inefficiencies in a Pentagon-created market. The question is complicated, but I haven’t seen anything that really demonstrates that the contractors, who are only outnumbered in the occupation by regular U.S. forces, are actually saving the Pentagon money.