(September 17, 2004) California Chamber-opposed “job killer” bills to prohibit or restrict worldwide outsourcing are awaiting action by Governor Arnold Schwarzenegger.

The Chamber considers these anti-outsourcing bills to be “job killers” because they prohibit or restrict California businesses’ ability to conduct a portion of their operations abroad, which will invite retaliation from our trading partners that will have a negative impact, either directly or indirectly, on California jobs.

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.

'California's economy is dependent on the free flow of trade, with one and four jobs in the state being connected to international trade,' said Chamber President Allan Zaremberg. 'All of these bills restrict that free flow of trade, ultimately hurting California's economy.''

Anti-Outsourcing Legislation
Five “job killer” bills to limit or restrict worldwide outsourcing have moved to the Governor’s desk despite strong opposition from the California Chamber of Commerce:

• 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.
• 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.
• 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.
• 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 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.

Action Needed
The Chamber is urging all employers to write Governor Schwarzenegger using our easy-to-edit position letters and request “vetoes” on these anti-outsourcing bills.

Staff Contact: Dominic DiMare