Overregulation and an uncompetitive business climate will destroy New Jersey’s efforts to become a hub of artificial intelligence research and development that attracts students, faculty, entrepreneurs, and businesses needed to grow the state’s economy, NJBIA testified Monday.
In written testimony to the Senate Legislative Oversight Committee, NJBIA Director of Economic Policy Research Kyle Sullender said New Jersey can successfully prepare for advancements in AI and other technologies by:
- Taking action to make the state more competitive and attractive for students, innovators, and entrepreneurs;
- Avoiding policies and regulations that may slow and stifle the pace of innovation;
- Ensuring the state has the energy capacity necessary to adapt to the increasing consumption needs of the AI sector.
Attracting Students, Businesses
“If New Jersey wants to be a hub of artificial intelligence research and development then we also need to take on opportunities to attract students, faculty, entrepreneurs, and businesses to our state,” Sullender noted. “Today, New Jersey loses more students to out-of-state institutions than any other state in the country – a net loss of 28,000 in Fall 2022.”
Sullender also pointed out that NJBIA’s annual analyses find New Jersey has the least competitive business climate in the region and that studies by national organizations consistently rank New Jersey as having the worst business climate in the nation.
“If we are serious about becoming the home of AI innovation, then we have to become serious about improving the competitiveness and attractiveness of our business climate,” he said.
Workforce Upskilling
Sullender noted the utilization of AI tools and products in small and mid-sized businesses is increasing at a rapid pace and will require employees to upskill.
“Widespread integration and adoption of AI in small and medium-sized businesses is likely to mean additional training for many members of our workforce,” Sullender said. “These workers, most of whom do not consider themselves researchers, developers, or technologists, will need to learn to interact with and utilize AI systems as part of their day-to-day work activities.
“For this reason, it is critical that the State of New Jersey find ways to support the state’s higher education system and other workforce training providers to prepare workers across all sectors to understand and use AI-enabled tools,” Sullender said.
Overregulation
Overregulation of AI is also a concern, he said. In 2024 alone, 45 states introduced hundreds of individual pieces of legislation focused on the use and regulation of AI. If these bills were to be enacted, the resultant patchwork regulatory environment would simply not be conducive to innovation, as it would make it slower and more expensive to conduct research as well as bring new products and services to market, he said.
Fortunately, major developers of AI are currently working with the federal government to develop workable guidelines that will provide guardrails for high-risk AI use cases, Sullender said. Several major AI developers have already offered voluntary commitments toward safe, secure, and transparent AI development in partnership with the White House.
Energy Demands
Sullender said planning for the state’s energy demands must also be done, pointing out that a ChatGPT query requires 10 times more electricity as a Google search. Meanwhile, the data centers that house the infrastructure to execute AI technologies are expected to use 8% of all U.S. power by 2030 largely because of increases in AI utilization.
“AI has the capacity to transform our economy, but only if we have the energy necessary to power its operations,” Sullender said. “With that in mind it is important that New Jersey takes steps to ensure it has adequate energy resources to accommodate these increases in consumption, and that the burden of those increases is ultimately not borne unfairly by ratepayers.”
Go here to read Sullender’s entire testimony before the committee.
