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Offshore Jobs Bill Is OKd

Measure would prevent companies from moving labor abroad. It now goes to the governor.

August 24, 2004|Jordan Rau | Times Staff Writer

SACRAMENTO — The Democratic-controlled Senate on Monday passed the first of several measures intended to prevent companies from moving jobs abroad, even though an unreleased report commissioned by the Assembly leadership concluded it could cost California more jobs than it would save.

The subject of jobs moving offshore is one of the most politically charged this year given the recent attention to the migration of white-collar jobs overseas.

"These are high-paying jobs, and we'd like to keep those jobs at home," said Assemblywoman Carol Liu (D-La Canada Flintridge), the author of a bill that would prohibit the state from hiring outside service contractors, such as software companies and call centers, if they planned to use foreign workers for the jobs.

The Legislature is considering six measures to clamp down on California companies, as labor organizations argue that the state should make sure it is not unwittingly sanctioning corporate behavior that hurts Americans. The California Chamber of Commerce and other business interests have been aggressively lobbying against the measures, particularly Liu's bill, AB 1829, which now goes to Gov. Arnold Schwarzenegger after passing the Senate 21 to 14.

Other bills under consideration would prohibit the state Office of Homeland Security from having any of its work done abroad; require all companies doing business in California to report how many employees worked out of the country; and block 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.

The debate has largely been polarized along partisan lines, with Republicans saying the measures would end up costing jobs in California and Democrats saying the opposite.

But in an odd twist, a report that Democratic leaders in the Assembly requested in April from the Public Policy Institute of California, a San Francisco-based nonpartisan group, sides largely with the GOP.

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

"What data are available suggest that the number of jobs being offshored is small relative both to the overall labor market and to the number of people working in the relevant at risk-occupations," the report says. "The bigger challenge for California is the ... movement of jobs from California to elsewhere in the United States."

The report warns that foreign countries might retaliate by limiting their purchases of California goods, and that 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.

"At a time when California is considering decreases in help to the poorest Californians and making other difficult spending choices, limits on offshoring will aid above-average wage earners," the report said.

The Assembly's Office of Policy Planning and Research, which commissioned the report for $25,000, has not released it, but a copy, dated Aug. 12, was obtained by The Times.

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

On Thursday, Joe Nation (D-San Rafael), chairman of the Assembly's economic development panel, 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.

Barry Broad, a Sacramento labor lobbyist, said the argument that moving jobs abroad increases jobs stateside is ludicrous.

"That's what they said about NAFTA," he said, referring to the North American Free Trade Agreement. "All it is, is you fire a bunch of people here and replace them with a bunch of people in the Third World and pay Third World wages, and somehow, magically, the U.S. economy grows."

But Roger Baccigaluppi, an international business consultant and former chief executive of Blue Diamond Almonds in Sacramento, said the threat of retaliation is real.

"Twenty-five percent of our economy is based on exporting, and in agriculture, where I spend most of my time, we're very dependent on exporting places all over the world," he said. "I see this really hurting lots of clients."

Also Monday:

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