Offshoring and the Massachusetts Budget

An amendment that would prohibit Massachusetts from hiring companies that outsource the state's work to other countries.
Stephen TaubJune 21, 2004

The politically charged issue of offshore outsourcing is poised to play out in the home state of Democratic presidential challenger John Kerry. Tucked into the state budget is an amendment that would prohibit Massachusetts from hiring companies that outsource the state’s work to other countries, according to the Boston Globe.

This is not an unusual requirement. According to published reports, nearly 40 states are mulling similar provisions in response to offshoring critics, who assert that many jobs are being lost to countries that pay their workers a fraction of U.S. wages.

According to the Globe, Massachusetts has contracted with companies that are use workers in Bangladesh to enter Medicaid data and in India to handle questions about food stamps.

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Gov. Mitt Romney has proposed incentives for private companies that hire Massachusetts workers, the paper pointed out, but it’s unknown where he stands on the state’s own outsourcing practices. A spokesman told the Globe that Romney is not prepared to discuss his position on the issue, and that he has 10 days to approve or veto specific provisions.

The amendment was introduced by State Senator Jack Hart (D-Boston), chairman of the Joint Committee on Commerce and Labor; not surprisingly, it’s supported by the National Association of Government Employees.

”To save a little bit of money, we’re actually putting people out of work here and sending this work to India and employing those people with taxpayer dollars,” Hart reportedly said. ”The majority of citizens in Massachusetts would side with me on this one, that I would rather employ people in the Commonwealth than save a little money by shipping these jobs offshore.”

Hart asserted that the state Department of Transitional Assistance has a $160,000-a-month contract with Citigroup to operate a system of electronic food-stamp cards that includes a customer phone service center in India.

When Kansas faced a similar issue, noted the Globe, state senators amended the budget to require that food-stamp telephone service be performed in the United States, but they removed that language after learning it would boost the state’s costs by $640,000. In New Jersey, added the paper, the state built a call center at a cost of $1 million rather than contract overseas for the work.

Massachusetts Taxpayer Foundation president Michael Widmer said of the proposed budget amendment: ”You’re trying to prohibit something that is clearly part of the global marketplace. You can do it, but it’s going to come at a significant cost to taxpayers.”