Sending a message that New Jersey values companies that refuse to relocate jobs and money outside the state sounds like a wonderful idea, but in the case of legislation recently introduced by a trio of assemblymen, the cost of sending such a message may end up being more than the resulting benefit.
The legislation in question, introduced this week by L. Harvey Smith, D-Hudson, Ruben Ramos Jr., D-Hudson, and Nelson Albano, D-Atlantic, would prevent the government from having business relations with companies that have sent jobs overseas, by barring them from receiving state contracts. Also, the bill would prevent the state Department of Treasury from investing in such companies.
Again, keeping domestic businesses and jobs in New Jersey is generally a good idea, but any thoughtful person can see there are multiple ways this legislation could be a stinker.
Two are immediately discernible.
First of all, in an increasingly globalized economy many larger corporations that provide valuable and crucial services have moved some operations overseas, simply because costs are reduced and it allows them to be more competitive, healthy businesses. Those cost reductions get passed on to the consumer – the state in this case – resulting in lower contract costs and consequently, less of a need for state revenue that comes from the pockets of taxpayers.
But under this bill, companies that maintain lower costs and stay efficient would be penalized in favor of high-cost, inefficient firms suffering from the costs of paying a workforce that lives in the most expensive part of the country. And that suffering will get passed right to the government, and then the taxpayer.
Also, it appears there has not been any discussion on exactly what it will cost to have someone in the state government, who will no doubt earn a high salary and state pension, investigating companies that answer state Requests for Proposals to see if they have shifted jobs overseas. One can only state that because, in what was slightly suspicious, there was no copy of the bill available as of Monday night.
Usually when a bill has been introduced into the legislature the state makes available online copies of the bill, a synopsis, and a cost-impact study done to show what kind of effect the legislation would have on state coffers.
But there was no documentation whatsoever with this bill, despite a plethora of press releases trumpeting three legislators looking out for the people of the state, by forcing the state to do business with companies that keep their staff here, in expensive New Jersey.
Perhaps doing so will provide an economic boon to the employees of companies that brave higher costs and inefficiencies out of some moral consideration for New Jersey, but for taxpayers, such a policy will likely result in higher government contract costs and thus, higher taxes.
Thanks legislators, but no thanks.