(August 20, 2004) The California Chamber of Commerce and a broad coalition are emphasizing that anti-outsourcing proposals pending before the Legislature ultimately hurt California jobs and the economy.

”California’s economy is dependent on the free flow of trade, with one in four jobs in the state being connected to international trade,” said Chamber President Allan Zaremberg at an August 12 press briefing. “All of these bills restrict that free flow of trade, ultimately hurting California’s economy.”
Job Investment

International trade and free commerce are 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.”

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 otherwise was characterized by layoffs and economic uncertainty. 

Overall, 6.4 million Americans work for U.S. subsidiaries of foreign companies. The anti-outsourcing measures being considered could have serious unintentional consequences if enacted by the Legislature. These bills could lead to retaliation by foreign partners, which could result in mirror restrictions on California having a negative impact on the state’s economy for years to come.

“These bills hurt California’s economy by making businesses in the state comply with laws that will only exist here at no added value to the consumer,” Zaremberg said.

Under the label of “job protection,” seven “job killer” bills to limit or restrict free trade have been under consideration in the California Legislature. The bills and their status are:

• AB 1829 (Liu; D-La Cañada Flintridge) 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. Senate floor.
• AB 2715 (Reyes; D-Fresno) Imposes additional costs unique to doing business in California and 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. To Governor.
• 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. Senate floor.
• 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. Assembly floor.
• SB 1453 (Figueroa; D-Fremont) Imposes additional costs on California employers only, 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. Assembly Appropriations Committee.
• 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. Assembly floor.

Amended

•  SB 1451 (Figueroa; D-Fremont ) originally exposed businesses to increased litigation and ignored the already-existing legal remedies available to consumers if a company fails to protect information.  With amendments removing the private right of action and requiring conformity with existing laws, the Chamber is now neutral on SB 1451. Senate unfinished business. Concurrence in Assembly amendments pending.

The Chamber believes 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 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.

Action Needed
The Chamber is urging all employers to contact their Assembly and Senate representatives using our easy-to-edit position letters and urge a 'no' vote on these anti-outsourcing bills.

For more information on these bills or to view the entire 'job killer' list, please visit our website at www.calchamber.com.

Staff Contact: Dominic DiMare