Living in the state of New York is about to get even more expensive.
Following New York Gov. Andrew Cuomo’s lead, the Legislature is proposing stricter domestic content policies by attaching the New York State “Buy American” Act to the state budget.
The argument is that limiting government purchases solely to American-made goods would support and create jobs in the Empire State.
Reality, though, proves differently. New York already has a “Buy American” law on the books, which mandates that state agencies use U.S.-sourced and U.S.-manufactured steel products in their construction projects whenever the project costs exceed $100,000.
Despite claims that strengthening the existing law will protect and create jobs, it will actually have the following effects:
1. Increased regulatory burden on producers.
New York businesses, particularly those in the manufacturing sector, will be held back by restrictions placed on where they can purchase their products. Thousands of small businesses and large employers alike rely on cross-border supply chains.
Small businesses would face especially heavy burdens as they would be less able to create new supply chains and manufacturing networks. Additional restrictions would make it nearly impossible for many businesses to bid on state contracts.
2. Increased cost for taxpayers.
If the state Legislature passes the New York State “Buy American” Act, government project costs could increase significantly. A $6 million project could turn into a $7.5 million project or an even costlier one, before a foreign supplier could be considered. As compliance costs increase for contractors, New York taxpayers will have to foot the bill.
3. No correlation to job growth in target industry.
Employment in the New York primary metal manufacturing sector has declined despite the existing “Buy American” law meant to help it. In 2000, the sector employed approximately 16,600 New Yorkers, but by 2015, iron and steel jobs dwindled to around 10,300 workers.
>>>Read the full report: Three Reasons Why ‘Buy American’ Is Bad for New York
New York’s economy is already hurting enough as it is. The state’s tax rates are among the highest in the nation, and it is also home to some of the most restrictive labor laws, which are responsible for driving nearly 1.5 million people out of New York between 2005 and 2014.
Likewise, many of the state’s largest employers are leaving the state.
This being the case, the leaders of New York should look to increase economic and job growth through competition, rather than focusing on ways to limit a company’s ability to contract with the state.