Outsourcing bill dies, but backers keep issue alive

Despite growing concerns that Washington is hemorrhaging good jobs to cheaper labor markets abroad, lawmakers this week killed a proposal that would have banned outsourcing for state contracts.

Supporters of House Bill 3187 said the Legislature's reluctance to control outsourcing is tantamount to a $15 million subsidy for workers in foreign countries paid for with Washington tax dollars.

Detractors fear such legislation could hurt local businesses but compel trading partners to retaliate with similar prohibitions. They also are concerned that not enough is known about outsourcing's effect on the state.

Marcus Courtney, president of WashTech, a high-tech workers union based in Seattle, was disappointed but said the effort to pass the outsourcing bill was not completely in vain because it elevated the level of debate.

"We put a lot of hopes on this bill because a growing number of legislatures around the country are bringing up similar legislation and we really hoped Washington would be one of the first states in the country to pass such a ban," Courtney said.

Courtney said the bill would have been good public policy because:

State government lacks the moral authority to regulate outsourcing in the private sector if its own white-collar jobs are exported.

State government has an obligation to ensure that tax dollars create jobs in this country and are not subsidizing job creation overseas.

Kris Tefft, general council for the Association of Washington Business, said Washington is commonly referred to as the most trade-dependent state in the union.

Tinkering with laws affecting those relationships without thorough study would be ill advised, he said.

"The bill raised more questions than answers, given our collective knowledge or lack thereof, of the issue in the state," Tefft said.

"The ramification of putting in place a prohibition of that kind with respect to Washington's trade dependence, would we be courting retaliation with trading partners who might want to close their markets to trade with Washington?"

It is unclear how many professional jobs in Washington have been lost to outsourcing in recent years, but some industry watchers believe that nationally as many as 200,000 service jobs could be lost each year for the next decade.

A preliminary study by the state indicated that 36 of 41 state agencies outsource work overseas with contracts worth more than $15 million.

"That could be several thousand jobs," said Courtney, of the high-tech union.

"Easily more than 1,000. In perspective, Washington's private-sector high-tech economy generated about 2,000 (new) jobs over the last two years."

Courtney said the government's responsibility to create jobs was not at odds with its mandate to spend tax dollars responsibly.

"Making sure tax dollars create domestic jobs is spending tax dollars wisely," he said.

In addition, he said that many of the contracts moved overseas have faced cost overruns.

"It is in doubt if state agencies are really saving money by exporting jobs," Courtney said. "Nobody has reached that conclusion yet -- and there's an additional cost: jobs, tax revenue and unemployment benefits."

Although the ban on state outsourcing is dead for now, the House passed a resolution Tuesday sponsored by Rep. Sandra Romero, D-Olympia, that would establish a task force to study the effect of outsourcing and report the findings to the Legislature at the end of the year.

"We want to know exactly how many Washington contracts and subcontracts have been signed with companies outside the United States," Romero said. "And we want to know exactly how much public money is being sent overseas in these contracts."

Courtney said the call for new legislation curbing outsourcing is not going away.

"We have every intention of renewing this fight to ban state contracts from moving offshore," he said.

P-I reporter Chris McGann can be reached at 206-448-8169 or chrismcgann@seattlepi.com

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