September 29, 2004 - Speaker Fabian Núñez: "Arnold's Moving Company" Sends Jobs Overseas

SACRAMENTO - Assembly Speaker Fabian Núñez (D-Los Angeles) today expressed disappointment over the Governor's refusal to shore up the state's economy by signing Assembly Member Carol Liu's (D-La Cañada Flintridge) AB 1829, a bill that would have prevented the offshoring of California jobs.

"The Governor had a choice – protect hard working Californians, or protect multi-national corporations. He chose wrongly," said Speaker Núñez. "Now, the people's tax dollars will continue to support jobs in India and Mexico. This sends the wrong message to Californians who look to Sacramento for job protection."

Assembly Bill 1829 would have prohibited the state of California and local agencies from contracting with companies who use workers in other countries to fulfill the contracts. If a contractor or subcontractor was found to have fulfilled a contract with workers outside the U.S. during the life of the contract, the contract would be terminated and the state or local agency would withhold payments equal to the value of services performed offshore.

Under the bill, a state or local agency would have been allowed to use a contractor who fulfills a contract with workers outside of the U.S. if the public health or welfare would be endangered and no contractor with workers within the U.S. is immediately available; or if the service in question is mandated and can't be adequately performed by workers in the U.S. A waiver not exceeding one year would be required to contract with a company that uses foreign labor to fulfill the contract.

"This issue will not go away. In the coming session, we intend to craft new and creative ways to stop the offshoring of California jobs," added the Speaker.

FYI: Attached is a letter from Assembly Member Joe Nation to Dr. Jon Haveman with the Public Policy Institute of California regarding the incomplete draft report on offshoring that is referred to in Governor Schwarzenegger’s AB 1829 veto message.

August 19, 2004

Jon Haveman, Ph.D.
Public Policy Institute of California
500 Washington Street
Suite 800
San Francisco, CA 94111

Dear Dr. Haveman:

Thank you for forwarding a copy of the paper you authored, entitled “Services Offshoring: Background and Implications for California.” I appreciate your attention to this matter. While this paper investigates various aspects of offshoring, I feel it fails to address certain subject areas I believe critical to the overall view of offshoring. I request you examine the below issues in your final report to the Office of Policy Planning and Research (OPPR).

• Federal Tax Policy

How the deferral of taxes on profits earned overseas by U.S. multi-national corporations may promote the offshoring of U.S. jobs. To what extent do other provisions of the U.S. or California Tax Codes encourage the offshoring of California jobs of California jobs?

• Trade Adjustment Assistance (TAA)

Expansion of the TAA to include workers in service industries.

• Worker Assistance Policies

Possible expansion at the state and/or federal level of a range of additional workers assistance policies, including the subsidization of retraining, health care and/or relocation benefits for workers who are displaced, the feasibility of re-employment wage insurance and transition assistance. Relative to the paper’s assertion that offshoring hold the potential of increasing domestic living standards, an attempt needs to be made to quantify the costs associated with the provision of additional social services and other government costs that result from job losses attributed to offshoring.

• Economic Impacts

Effects of offshoring on the widening income inequality that currently exists in California. How has the trend of exporting jobs due to offshoring placed downward pressure of the wages of the U.S. and California workforce, especially given the wages of the U.S. and California workforce, especially given the increasing trend of offshoring what are generally considered higher-paying “white collar” jobs in the service, high technology, and biotechnology industries. Moreover, offshoring needs to be considered and evaluated in the context of this “jobless recovery,” especially given the diminished employment prospects workers that are displaced due to offshoring are bound to challenged with.

• Data

Measures the U.S. Government and the state of California may take to improve the collection of data surrounding the issue of offshoring.

• Contracting

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. Does this trend place California businesses at a competitive disadvantage vis-à-vis those businesses that elect to outsource those businesses that remain in California.

• Incentives

What types of incentives would state government afford to those businesses that seek to contract with the state for service contracts that commit not to outsource any jobs that are attached to the contract?

Again, thank you for sharing with me your paper on offshoring. Speaker Núñez and I look forward to reviewing the final draft prior to its release to ensure the questions set forth in this letter are reflected in the final document. We appreciate the confidentiality PPIC affords to protect the requestors’ interests and understand the final document will not be released until it has been reviewed.

Sincerely,

COPY

JOE NATION

JO:jd