Bill Could Harm Jobs in Connecticut

Posted on April 13, 2010

Connecticut’s chief business lobby is warning that a bill aiming to restrict state contracts from going to companies that ship work outside the United States will reduce cost-effective competition and potentially cause the loss of jobs in Connecticut (click here).

According to HartfordBusiness.com, the bill, which has passed out of the labor and public employees committee, aims to keep jobs in Connecticut by restricting privatization contracts of at least $100,000 from going to a contractor that would provide services at a location outside the United States.

Companies would also be restricted from hiring subcontractors from outside the country and the bill requires state agencies to give preference when awarding a contract to goods and services originating in Connecticut.

Jesmin Basanti, a lobbyist for the Connecticut Business and Industry Association, said the proposal is a protectionist measure that will raise the costs of state contracts. It will also hinder some Connecticut companies from bidding on state contracts.

More importantly, Basanti said, the bill sends the message that Connecticut doesn’t want to operate in the global economy.

Basanti said Connecticut is home to about 1,200 foreign companies, which export $8 billion worth of state-made products annually.

“Rather than encouraging trade and growth, the bill will discourage other states and countries from trading with Connecticut,” Basanti said. “This only makes it more difficult for Connecticut companies to compete in the global marketplace. If we close off trade routes, others will retaliate by doing the same.”

State Rep. Joseph Aresimowicz, a Democrat from Berlin, is a supporter of the bill because he says Connecticut is sending too much taxpayer money out of state and overseas.

The bill will now go to the Senate floor, but Aresimowicz isn’t sure whether it will pass both chambers. He said similar legislation has passed the House and Senate in previous years, but not during the same session. He said the state’s high jobless rate could get the bill over the hump this year.

“For too long, work has been going to low-wage countries like China,” said Brian Anderson, a lobbyist for Council 4 AFSCME, a union representing 35,000 public and private employees in Connecticut.

Anderson said Connecticut has shed 101,300 jobs since the beginning of the recession in March 2008, adding that corporations continue to send jobs overseas, putting Connecticut residents on the unemployment line.

“It seems that the CBIA won’t be happy until corporations pay their workers in fish heads and rice,” Anderson said

Some state agencies, meanwhile, say the bill could disrupt the way they do business.

The state’s Department of Information Technology said the measure might affect the state’s ability to contract with global IT or telecommunication vendors that are headquartered outside the United States, or that use subcontractors in foreign countries. Among those are IBM, AT&T, Microsoft, and Computer Associates.

Another part of the bill that is drawing concern would require certain employers with at least 100 employees to give six months written notice that they are planning to reduce their Connecticut workforce by 25 percent or more.

“If you have a company that is potentially on the rocks, and you force them to make an announcement six months in advance, you are essentially digging their grave,” Basanti said.

He said he has many unemployed constituents who would be ready, willing and capable to provide state services that are now being done outside Connecticut.

At the very least, Aresimowicz said, the state needs to require more disclosure from companies about where state contract work is being done. “There has to be a certain amount of corporate responsibility when they are taking state money,” he said.

“If they cannot engage a person at a site located outside the United States, they may not be able to use their current employees,” the department wrote in its testimony. “The ability to draw upon global resources in the event of an urgent service need is essential.”