Taxpayers seldom have recourse when a private enterprise fails to perform and tax dollars have already been sent out of state. Privatization exports tax dollars from employees and the locality to large corporations located outside the community. Cities and towns lose public sector jobs and wages which sometimes cripples their already fragile economies. Contracts with local businesses that provide supplies and equipment to government agencies often see their contracts canceled once a large corporation that supplies itself takes over. There may be no mandate for competitive bidding leaving the door open for price fixing.
Privatization also creates opportunities for criminal activity.
Bribery, kickbacks, and political patronage, and bid rigging have occurred in many instances where entrepreneurs were attempting to get public contracts. The quality of services that are contracted out are jeopardized by a contractors incentive to make money. A less desirable workforce is created by replacing experienced public servants with inexperienced contract workers making near minimum wage. This less experienced workforce usually lack the skills and training to do the job. Employee turnover rates frequently increase when services are contracted out to low paid unskilled labor and safety regulations are sometimes avoided in order to maximize profits.