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Wrong number

 

Many people are suspicious of free trade and globalization, even in the best of times. And when times are tough economically, this sentiment intensifies.

So it’s no surprise that Sen. Charles Schumer, an astute politician, would zero in on this issue. Hence his proposal to "rein in outsourcing of call center jobs" to foreign countries by imposing a 25-cent excise tax on any customer service call placed in this country that is transferred to a call center abroad.

This proposal, which also would require businesses to tell customers that their calls are being transferred overseas and to disclose regularly how many of the customer service calls they received were sent abroad, no doubt will resonate with many Americans. Indeed, the plan was favored by most people responding to this week’s RBJ Daily Report Snap Poll-a business audience that typically takes a dim view of any new tax.

This support notwithstanding, the senator’s proposal is a bad idea. It is unlikely to achieve his goals of keeping jobs at U.S. call centers and providing an incentive for the return of jobs that already have gone abroad. And it could very well do more harm than good.

First, this measure would stick businesses with the burden of a new reporting requirement. For some firms, add to that the expense of paying the excise tax. Both costs surely will be passed on to consumers.

Second, even more than encouraging U.S. firms with outsourced call center operations to bring them back home, the Schumer approach would prompt these companies to look for even cheaper locations overseas.

And as always, enacting a protectionist measure would invite other countries to retaliate.

In Mr. Schumer’s statement announcing his tax plan, the senator included Ireland and Canada on a list of countries "with an ample supply of English-speaking, low-wage workers." In fact, a 2007 Cornell University study found that call center workers in Ireland earn nearly as much as their U.S. counterparts-and those in Canada outearn them.

Cornell researchers also showed that "most call centers serving U.S. customers … are operated in the United States, not in India or other overseas locations."

It’s hard to say what’s shakier: Mr. Schumer’s grasp of the global economy or his "remedy" for it.

6/11/10 (c) 2010 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail
rbj@rbj.net.

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