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Outsourcing is bad for Pennsylvanians

Tribune-Review
| Wednesday, May 19, 2004 4:00 a.m.
The fact that call center employees in India and Mexico are answering questions from Pennsylvania food stamp recipients is, at best, ironic. It also is insulting to food stamp recipients, many of whom are unemployed or underemployed. At worst, though, state tax dollars are being used to pay foreign workers to perform many government-related tasks. The very concept of state work being conducted offshore -- let alone outside the commonwealth's borders -- violates a basic principle of economic development. The principle is simple: Money paid to workers in any market is spent and re-spent many times over within that market. The process enriches economies. When Pennsylvania pays tax dollars to companies that send the work overseas, the money is gone. Oh, the money paid to Mexican and Indian workers will be re-spent over and over. However, it will be re-spent in such places as Mexico City and Bombay -- not Connellsville, Monessen, Donora or even Harrisburg. Much of the outsourcing occurs when Pennsylvania or United States companies win state contracts, and then subcontract the work to companies in nations where employees receive low salaries and limited benefits, if any. Some state officials are demanding answers. The Department of General Services asked all state agencies to report by May 1 on offshore work being performed by state contractors. And Gov. Ed Rendell is backing legislation to provide preference to prospective state contractors who pledge their work will be done in the United States to the "fullest extent possible." In the event the legislation isn't passed, the governor said he would sign an executive order to accomplish the same thing. Matthew Brouillette, president of the Commonwealth Foundation, a Harrisburg think tank, says it's not as simple as it appears. "To say you are no longer outsourcing would effectively raise the amount paid by taxpayers," he said. The elimination of outsourcing could be easier than Brouillette believes. To accomplish the goal, though, lawmakers would have to do more than limit work for companies that outsource work to foreign countries. The Legislature and the governor also would have to change the economic atmosphere in the commonwealth. They would have to reduce corporate income taxes and take other steps to lure business to the commonwealth. Should that occur, businesses could better afford to operate profitably in Pennsylvania. That tack, combined with other benefits for businesses that conduct all contracted state work in Pennsylvania, would go a long way toward solving the outsourcing problem.


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