(August 10, 2004) Providing incentives to keep jobs in California by reducing the cost of doing business here is a better approach than restricting free trade for fear the state is losing jobs, California Chamber Vice President Dominic DiMare recently told a talk show radio audience.

“California is a very dynamic state. Reducing the cost of doing business here will motivate businesses to stay in California,” said DiMare “Moreover, trade restrictions could invite retaliation by California trading partners.”

Through outsourcing, California is able to maintain strong ties to foreign trading partners where goods are manufactured or services provided.  When businesses in California have operations in other countries, these businesses help to boost that economy. Outsourcing also can provide companies and government the option of obtaining goods or services at lower costs, which in turn means lower prices for consumers here or savings for tightened government budgets.

International trade and free commerce is a staple of the California economy and a key source of job creation. Foreign firms invest in California’s economy and create new jobs in exchange for California companies’ investments abroad -- this is also known as “insourcing.”

“One in four jobs in California is related to trade and is trade dependent “ continued DiMare. “California also has a large amount of foreign investment, with many countries outsourcing their jobs here to California.”

California leads the nation in the number of jobs insourced with 713,500 in 2003, according to March 2004 data from the U.S. Department of Commerce.  This number reflects a 28 percent growth rate over the last five years – a period that was otherwise characterized by layoffs and economic uncertainty.  Overall, 6.4 million Americans work for U.S. subsidiaries of foreign companies.

The Chamber along with a broad coalition of business, ethnic, taxpayer, international trade and consumer groups is leading the fight against anti-outsourcing legislation. Under the label of “job protection,” nine bills - including seven the Chamber considers “job killers” - are moving in the California Legislature to limit or restrict free trade. 

The seven “job killer” anti-outsourcing bills pending in the Legislature are:

AB 1829 (Liu; La Cañada/Flintridge)/ SB 1452 (Figueroa; D-Fremont) Opens threat of retaliation by overseas trading partners and subsequent loss of jobs and foreign markets for California products by prohibiting the state from contracting with companies that use employees outside of the United States to provide services under the contract.  

AB 2715 (Reyes; D-Fresno) Assumes knowing the location of a call center is important to the customer by requiring call centers to provide their location if requested by a California resident.

AB 3021 (Committee on Labor and Employment) Increases the cost of doing business in California and adds to ongoing state costs, yet provides no added benefits to workers, consumers or taxpayers by subjecting California companies to different regulatory requirements than companies in other states and requiring California employers to report the number of workers employed outside the state. Failed passage in the Senate Labor and Industrial Relations Committee; granted reconsideration. 

SB 888 (Dunn; D-Garden Grove) Invites retaliation from trading partners and subsequent negative impact on California jobs, directly or indirectly, by restricting under the guise of “homeland security,” California businesses’ ability to conduct a portion of their operations abroad.  

SB 1453 (Figueroa; D-Fremont) Based on the incorrect premise that workers are not given adequate notice of possible job layoffs and transfers by requiring employers to notify the state and employees each time employees are relocated or transferred out of California due to outsourcing.  

SB 1492 (Dunn; D-Garden Grove) Increases health care costs and delays processing of medical and payment information by imposing redundant requirements that increase costs to businesses and consumers. Ignores already-existing stringent consumer protections.  

Efforts to erect barriers limiting the free flow of goods, information and services, as opponents of outsourcing want to do, will be especially harmful in California, which is the largest exporting state in the nation. Instead of benefiting workers and their families, the prohibitions in the anti-outsourcing bills will isolate California, making it less attractive for employers looking to expand or relocate here.

The Chamber believes that the free flow of jobs and services is key to the state’s economic recovery. Efforts to create jobs and bolster the economy should begin with making California a more business-friendly state.  These bills go directly against those efforts.