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Bill prevents the state from contracting with companies that have work done overseas

SACRAMENTO - 08/25/04 - The California State Senate has passed a controversial bill aimed at keeping California companies from "outsourcing" jobs, despite the fact that an unreleased report commissioned by the leadership of the State Assembly said that such legislation, if approved, would cost the state more jobs than it saved.

The bill - AB1829 - passed the Senate on a vote of 21-14 and was sponsored by Assemblywoman Carol Liu (D-La Ca񡤡-Flintridge).

Next stop for the bill is Gov. Arnold Schwarzenegger's desk for his signature or veto.

The legislation would prohibit the California government from contracting with outside service providers who plan to use "foreign workers" for the work they do for the state.

Several other anti- "outsourcing" or "off-shoring" measures are currently working their way through the legislature including one that would prohibit the state Office of Homeland Security from having any of its work done abroad, while another would require all companies doing business in California to report how many employees worked out of the country.

Another would prohibit healthcare companies from transmitting abroad private medical information about patients.

The legislature has already passed a bill requiring that call-center workers disclose where they are located if a California customer inquires.

There is substantial controversy surrounding the anti-outsourcing stance the Democrat-controlled legislature has taken as an independent report commissioned in April by the Democratic leaders in the Assembly concluded that the negative impact of outsourcing on the state's economy is overblown.?

According to the unreleased report, compiled by the Public Policy Institute of California, "What data are available suggest that the number of jobs being off-shored is small relative both to the overall labor market and to the number of people working in the relevant at risk-occupations."

The bigger challenge for the state, it said, "is the?movement of jobs from California to elsewhere in the United States."

The report goes on to caution that that foreign countries "might retaliate by limiting their purchases of California goods."

The state "may end up spending more taxpayer money if it hires only companies offering domestic workers, because the higher labor costs will make the contract prices larger," the report said, adding that "at a time when California is considering decreases in help to the poorest Californians and making other difficult spending choices, limits on off-shoring will aid above-average wage earners," the report said.

The report was commissioned in April from the Public Policy Institute of California, a San Francisco-based nonpartisan group, and sides largely with arguments against the legislation put forward by the minority Republican members of both the Assembly and Senate.

The report said that although there is not enough information to make definitive conclusions about the effects of jobs being moved abroad, the problem probably is not as severe as it has been made out to be.

The Assembly's Office of Policy Planning and Research has not released it, but a copy, dated Aug. 12, was obtained by the Los Angeles Times.

Abby Cook, a spokeswoman for the Public Policy Institute, told the Times that the report had not been released because it was still a draft, although she said it was "unlikely that its conclusions would change substantially."

According to the paper, Joe Nation (D-San Rafael), chairman of the Assembly's economic development panel, last week asked the Institute "to revise its report substantially" to include federal tax rules, worker assistance policies and other subjects.

"Consideration should be given to the concern that California should not, as a matter of policy, contract out with firms located outside of California that undercut California's own labor policies, environmental standards and other business practices," Nation wrote in a letter.

Several major labor organizations labor organizations have come out in favor of the legislation, arguing that the state "should make sure it is not unwittingly sanctioning corporate behavior that hurts Americans," according to one source.

At the same time, the California Chamber of Commerce and a number of other state-wide and regional business groups and chambers of commerce have aggressively opposed AB1829 and the other "outsourcing" bills under consideration.

"This [the passage of AB1829] is very bad news," said Joe Harrison, president of the San Francisco-based California Council for International Trade. " We had hoped there would be no action, but in an election year all bets are off."

(Sacramento Bee political columnist Daniel Weintraub has written a highly-charged piece on AB1829, "outsourcing," and the Public Policy Institute report. It can be found at http://www.sacbee.com/content/politics/columns/weintraub/story/10491129p-11410494c.html)

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