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Bill proposed to restrict state contracts to companies employing U.S. citizens

March 17, 2004
By: Gaurav Ghose
State Capital Bureau
Links: HB 1474

JEFFERSON CITY - If a Missourian from one of the state's nearly 245,000 households in Food Stamp Program calls a toll-free number with questions, it is answered by a call center employee 8,000 miles away in Mumbai, India -- formerly known as Bombay.

Two years ago eFunds, the company contracted for five years to manage Missouri Social Service's Food Stamp Electronic Benefits Program, closed its call center in Wisconsin and moved it to India.

Wednesday, a House committee heard testimony on a measure to ensure that if eFund's contract with the state is renewed, the company would have to employ citizens of the United States or persons authorized to work in the United States. The bill targets state contracts for services only. It does not concern private contracts.

"Looking through the functions of the state and what is available to be outsourced that you can make a very strong case that a great percentage of the things that are being done right now by good hardworking state employees could be outsourced overseas," the bill's sponsor Rep. Mark Abel, D-Festus, told the House Job Creation Committee Wednesday. Examination of tax returns, medical claims in the Medicaid program, design and architecture of highways and engineering done by the department of transportation--all can be done by overseas workers at a tenth of the cost of what is paid to the employees here, he said.

Abel added that when the state employees lose their jobs, they become dependent on the state, go for food stamps and when they make a call they have the phone answered by somebody overseas.

"This is something we cannot accept," Abel said.

With a stagnant economy, outsourcing of jobs has become a matter of national concern, forcing it to be a critical election issue in the run-up to the presidential elections. Sen. John Kerry, the expected Democratic Party nominee, has called chief executives of companies outsourcing jobs overseas as the country's "Benedict Arnolds," the traitor in the war of independence.

Testifying in support of the bill, Rita Voorheis, area director for the Communications Workers of America, said that taxpayer dollars should be used to create jobs for Missouri residents.

"How ironic, we send taxpayer money to India to help low-income Americans get food stamps and other welfare-to-work assistance," Voorheis said.

She said that Missouri should follow the example of the New Jersey Department of Human Services, which reached an agreement with eFunds to end its customer servive operation in India and return the service to the United States. Efunds has opened a call center in New Jersey to answer questions about the state's food stamp program.

Besides loss of jobs, the issue of outsourcing has also raised questions about security and privacy.

"Once those functions leave this country you have no control over what those people can do with the information that they have," Abel said. "For example, having tax returns done overseas. They have your Social Security number, they have your tax information, they know where you sent your money, they have a lot of valuable information and let's say it's abused -- you can't bring them back to this country and prosecute them."

Arguing in favor of the bill, Missouri AFL-CIO Legislative Representative Luana Gifford said it would help American workers. She added that a recent AFL-CIO survey found that the loss of jobs is the most important national issue, second only to health care.

No one testified against the bill.

However, the concept behind the bill does not find favor among some economists.

"The whole question of outsourcing is exaggerated," said Michael Podgursky, chair of MU's economics department, who is also an expert on labor studies. "Preventing outsourcing is not good for either of us."

He said it is important to remember that after achieving its independence the United States economy grew because of international free trade. And now India and other developing countries are increasing their trade with developed countries, Podgursky said, which helps improve their citizens' standard of living. That, in turn, could help discourage terrorism in developing countries, he said.

"If we want them to modernize and be sympathetic to Western ideas of free market, democratic institutions, we have to encourage free trade," Podgursky said.

"It is not in the United States' interest to stomp on the developing countries and prevent them from getting a piece of the international trade pie."