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The basics:

• NYC bill targets last-mile delivery and warehouse operations
• President of the CIANJ writes these mandates could limit staffing flexibility and raise costs
• Businesses may shift operations to New Jersey or cut services
• Potential ripple effects on jobs, consumers and regional economy

The New York City Council recently held a hearing on a proposed bill, the “Delivery Protection Act,” aimed at regulating last-mile delivery facilities – locations where goods are stored, packaged, and dispatched for delivery to consumers – and the companies that operate them. And while the Council’s intent may be to improve conditions within New York City, the reality is this will do much more harm than good, and its impacts could extend well beyond city limits.

As written, the bill will make it harder for businesses to operate in New York City while creating new incentives for businesses to shift operations to neighboring states like New Jersey.

At a high level, the bill would require certain operators of warehouses and storage facilities that serve New York City consumers to obtain a license from the Department of Consumer and Worker Protection and comply with new safety, training, and employment-related requirements. These requirements are backed by expanded enforcement tools available to both the city and workers.

While these goals are important, the approach taken in the bill raises concerns. It relies on sweeping, one-size-fits-all mandates that attempt to regulate complex logistics operations through rigid labor-model requirements rather than more targeted or tailored safety solutions.

For example, the bill requires that workers performing “core warehouse services” at covered facilities be directly employed, and it imposes similar requirements for certain delivery workers. It also restricts the use of third parties, including staffing agencies and subcontractors, for core services.

These types of mandates do not reflect how logistics and delivery networks operate in practice. Moreover, they fail to account for important differences in business models, operating practices, seasonal considerations, and just about any other nuances that permeate such a complex industry. The reality is that many facilities rely on a mix of full-time employees, part-time workers, and third-party support to meet fluctuating demand, maintain service levels, and create entry points into the workforce. Limiting that flexibility risks making some operations significantly more expensive or difficult to sustain.

Businesses have options

When that happens, businesses respond. And in a region like the New York metropolitan area, they have options.

For one, some may pull back on their services or curtail them to account for new increases in operating expenses. Or worse, they could pass rising costs to consumers, at a time where working families are already struggling to get by.

Alternatively, companies may explore moving their operations to other locations, where possible. In either case, businesses, consumers, and workers suffer when demand disappears and jobs, investment, and economic activity shift elsewhere.

For New Jersey, a worsening business environment in New York City may create opportunities to attract businesses seeking more flexible and economically viable places to set up shop.

Of course, this is not a threat. But it is about recognizing how businesses make decisions. Investment flows toward places where policy is stable, predictable, and aligned with how industries actually operate.

For New Jersey, a worsening business environment in New York City may create opportunities to attract businesses seeking more flexible and economically viable places to set up shop.

New Jersey has long been a hub for logistics and commerce supporting the broader metropolitan economy. If New York City adopts a new bill that materially increases costs and limits operational flexibility, it should not be surprising if companies look to move elsewhere.

There is still time for the Council to change course and pursue realistic and reasonable initiatives to improve safety and working conditions without creating unintended – but predictable – consequences for the local economy.

Anthony Russo is president of the Commerce and Industry Association of New Jersey.