Sponsor Testimony - House Bill 536, Economic and Workforce Development Committee (November 18, 2020)

Summary

Sponsor testimony on House Bill 536, The Consumer Protection Call Center Act, from Representative Michele Lepore-Hagan and Representative Haraz N. Ghanbari to the Ohio House Economic and Workforce Development Committee, dated Wednesday, November 18, 2020. The testimony states that 171,000 Ohioans work in call centers earning an average of $33,000 per year, and that call centers generate more than $15 billion in economic activity in Ohio each year. It describes companies relocating call centers to the Philippines and India, with examples including JPMorgan Chase and Wells Fargo. It states that the Act would require an employer relocating a call center from Ohio to a foreign country to notify the Director of Job and Family Services at least 120 days before relocating.

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                        Representative Michele Lepore-Hagan
                                 58th House District

                         Representative Haraz N. Ghanbari
                                3rd House District


                   House Bill 536 Sponsor Testimony
             Economic and Workforce Development Committee
                    Wednesday, November 18, 2020

Chairman Zeltwanger, Vice Chair Powell, Ranking Member Sobecki, and
members of the Ohio House Economic and Workforce Development Committee,
we are grateful for the opportunity to provide sponsor testimony for House Bill
536, The Consumer Protection Call Center Act.

The call center industry and the Ohioans who work in it play a vital and
irreplaceable role in our state’s economy. Today, 171,000 men and women earning
an average of $33,000 per year contribute more than $5.6 billion in wages into our
economy annually. When generally accepted multipliers are applied to those
earnings, the call centers generate more than $15 billion in economic activity in
Ohio each and every year. That’s more than $15 billion in federal, state and local
taxes, wages for workers in other businesses, sales of equipment, property rentals,
utility payments and other expenditures that fuel development and job growth
across our state.

When you consider the sheer size and impact of this industry two things become
clear: why Governor Kasich issued an order in 2011 prohibiting executive agencies
from purchasing services from companies that outsource, and why we need to take
the steps encompassed within HB 536 to strengthen a business sector that is
already beginning to shrink in Ohio.

That shrinkage, along with our state’s sluggish economy, makes the passage of HB
536 more urgent now that it was when introduced previously. As noted then, these
jobs are among the easiest in the world to off-shore. That is why company, after
company, after company is abandoning the U.S. and relocating to the Philippines,
India, and other less-developed countries. According to a 2013 report1, 400,000
call center and another 240,000 back office jobs have moved to the Philippines and
hundreds of thousands more have left for India. And the trend is accelerating:
estimates are that the U.S. and Europe will lose another 3.7 million call center jobs
in the years ahead.

The reasons for the exodus are painfully familiar to those of us who represent
communities decimated by unfair foreign competition: weaker environmental,
labor, and consumer protection laws and, of course, low wages. The average
Filipino call center worker earns $4,932 each year, a small fraction of the $33,000
earned by U.S. workers. These huge disparities make it easy to understand why so
many companies are turning their backs on American workers.

Here are a few examples of what has happened:
   JPMorgan Chase laid off 400 workers in Albion, New York and shifted the
      jobs to the Philippines and India.
   Hewlett-Packard (HP) shifted 500 call center jobs out of Conway,
      Arkansas after accepting $43 million in state and local incentives. HP’s call
      center locations now include Costa Rica and India.
   T-Mobile closed seven U.S. call centers and put 3,300 employees out of
      work after accepting $61 million in state and local subsidies. The jobs
      moved to Honduras and the Philippines.
   Wells Fargo laid off hundreds of workers in Florida, California, and
      Pennsylvania and moved operations to the Philippines. The banking giant,
      which received more than $25 billion from the federal Troubles Asset Relief
      Program, is tripling the number of its Filipino employees and has asked
      some U.S. employees to train their own replacements.
   Bank of America put 1,100 Ohioans on the unemployment lines when it
      closed mortgage service centers in Cleveland, Cincinnati, and Independence.

We simply can’t afford to stand idly by as these companies and others ship
hundreds of thousands of good-paying jobs overseas. And it’s certainly folly for us
to finance their exit with taxpayer-funded incentives that could and should be used
to attract and retain companies that are loyal to Ohio and America.



1
    https://files.cwa-union.org/national/offshoring-security.pdf
The Consumer Protection Call Center Act will:

    Require an employer that intends to relocate a call center or qualifying
     facilities or operating units within a call center from Ohio to a foreign
     country to notify the Director of Job and Family Services (JFS Director) at
     least 120 days before relocating.
    Require the JFS Director to compile, every six months, a list of employers
     that have relocated a call center or one or more qualifying facilities or
     operating units within a call center from Ohio to a foreign country during the
     preceding six months.
    Disqualify, unless an exception applies, an employer that has relocated a call
     center or one or more qualifying facilities or operating units within a call
     center from Ohio to a foreign country from receiving a grant, guaranteed
     loan, tax benefit, or other economic incentive from the state until five years
     after the relocation.
    Require a state agency to ensure that all call center and customer service
     work performed for the agency is performed entirely within Ohio.

Call center jobs often offer living wages and flexible hours. Every individual doing
call center work for the state should be living and working within Ohio’s borders,
helping our economy and workforce thrive.

While economic development and jobs are one focus of HB 536, there is another,
critically important reason for the state to discourage the offshoring of the call
center industry: cybersecurity. In the United States, the Federal Trade Commission
and state agencies investigate and prosecute cases of fraud and identity theft. But
in the developing countries, data and consumer protection laws are weak or non-
existent.

This puts Ohioans and Americans in jeopardy because corporations frequently
transfer large volumes of highly sensitive personal information about customers,
including bank records, medical histories, payroll and benefits information, social
security numbers, and credit reports when they offshore call center operations. In
the digital age, a few numbers in the hands of the wrong person can ruin lives, and
if those numbers are in the hands of employees in countries beyond the reach of the
U.S. consumer protection laws, then civil and criminal prosecution can be difficult.

We want to emphasize that this is not an idle threat. To date, millions of American
citizens and numerous companies and other entities have been victimized by cyber-
criminals who have obtained private data by hacking into or hijacking systems
located in the Philippines, India and other nations that host call centers once
located in the United States. We have a responsibility as legislators to both protect
our constituents from attack and hold companies that facilitate them accountable
for their actions when they move operations from the U.S. to less secure
environments. HB 536 accomplishes both of those critical goals and is therefore
worthy of favorable consideration by this Committee and the Ohio General
Assembly.

Chairman Zeltwanger, Vice Chair Powell, Ranking Member Sobecki, and
members of the Ohio House Economic and Workforce Development Committee,
we thank you again for this opportunity to testify on the Consumer Protection Call
Center Act and would be happy to answer any of your questions.


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