N.J. Gov. Murphy: Modernizing Through AI Hub, Liquor License Laws, and Organized Labor

Gene Marks (00:00:00 to 00:00:19)

Is the idea here for this task force, though, to sort of oversee the use of AI tools within the government of the state, and then through that, you just become smarter about it and you also recognize the risks, so therefore you can leverage that to write protections around it. Does that make sense?

Gov. Murphy (0:00:19 to 0:01:34)

It's that and more so it is certainly that to deliver government services for our residents in a responsible, more hyper-efficient way. But it's also broader in terms of where's the regulatory headed? What are we going to do to attract research and companies and jobs. On that one, I mentioned Princeton University. We announced in December that we're going to form basically a generative artificial intelligence hub co-sponsored by Princeton University.

One of the great research and one of the great universities, period, anywhere along with the state of New Jersey, through our economic development authority. We think a real key here is talent. And the talent right now is overwhelmingly located in the Bay Area in California. And we think there's no reason why we can't become again, alongside Princeton, a second talent hub for generative artificial intelligence, which will have huge positive impacts on our ability to attract the right research, the right talent, obviously the right companies that will plant their flag here in Jersey.

Announcer (0:01:34 to 0:01:48)

Welcome to Paychex THRIVE, a Business Podcast where you'll hear timely insights to help you navigate marketplace dynamics and propel your business forward. Here's your host, Gene Marks.

Gene Marks (0:01:53 to 0:02:40)

Hey, everybody, it's Gene Marks. And welcome back to another episode of the Paychex THRIVE podcast. We have a very, very special guest here, the governor of New Jersey, Phil Murphy, who we are. You have something in common in the sense that I do have a house in New Jersey, so I do pay taxes to you, governor. I want to be on record of that, although I do live in Philadelphia, and we have some topics to talk about.

I mean, as I said before we even started recording this conversation, our audience are business owners. And I think this conversation appeals to people, obviously, not just in the state of New Jersey, but all around the country. You have made some announcements and some initiatives regarding AI. So, let's talk a little bit about that. First of all, have you played at all with ChatGPT, or any AI tools?

Gov. Phil Murphy (00:02:40 to 00:03:23)

A little bit. I was having a conversation with one of my colleagues, the attorney general, Matt Platkin, yesterday, and he noted that it's not quite, in his opinion, ready for prime time. He either fed my name in or his name in, and it came up with some misfires in terms of biography. But yeah, more importantly, our administration is all over it right now. And in fact, we had a cabinet meeting recently, and we decided we're all going to take a deep dive training course in January. It's transforming and it will transform all aspects. Forget state government, it'll transform all aspects of society over the next number of decades.

Gene Marks (00:03:23 to 00:03:57)

Yeah, it really will. And I'm glad to hear that you're doing that. And I do strongly recommend that everybody does take a deep dive into it if you want to cough up the extra $20 a month, the GPT-plus version, which is not the free version, it's better, and I can't describe why. It's just better and more accurate. But you're not going to be writing legislative policy using ChatGPT yet. But it's a great tool. It's scary, though, right? And a lot of people have concerns. So, tell us a little bit about what some of your initiatives are. One is a task force.

Gov. Phil Murphy (00:03:57 to 00:04:38]

So, I want to tell you, your listeners, Gene, about both the task force and what we're doing with Princeton University on the task force, which we announced several months ago. We're bringing together sort of a whole of government approach. And it's a mistake to think about artificial intelligence, either a, as a technology or b, just the purview of our techies. This is a realm more than a technology, number one. And number two, it infiltrates, as we said a minute ago, all elements of society. And we said, listen, when we put the task force out, we said we have a three-legged approach to this realm.

(00:04:38 to 00:05:04)

Number one, there's an economic development opportunity; jobs, companies, the research getting done in New Jersey. I'll come back to that. Two is how we deliver government services responsibly but more efficiently. You think of call centers, you think of applying for your unemployment insurance benefit. Artificial intelligence can impact both of those in a dramatic way.

(00:05:04 to 00:05:29)

And then thirdly, the regulatory/ethics side of this. As you rightfully point out, if it's in the wrong hands, it can be scary. So, what are we going to do to put the guardrails around this? It's our current guess that Congress won't act – if we had to predict – so, this will default to states acting, and we'll see how this looks over time.

Gene Marks (00:05:29 to 00:05:51)

Is this the idea, if I can interrupt, is the idea here for this task force, though, to sort of oversee the use of AI tools within the government of the state? And then through that you just become smarter about it and you also recognize the risks, so therefore you can leverage that to write protections around it. Does that make sense?

Gov. Phil Murphy (00:05:51 to 00:06:16)

It's that and more. So, it is certainly that to deliver government services for our residents in a responsible, more hyper-efficient way. But it's also broader in terms of where's the regulatory headed? What are we going to do to attract research and companies and jobs? On that one, I mentioned Princeton University.

(00:06:16 to 00:07:07)

We announced in December that we're going to form basically a generative artificial intelligence hub co-sponsored by Princeton University, one of the great research and one of the great universities, period. Anywhere along with the state of New Jersey, through our Economic Development Authority. We think a real key here is talent, and the talent right now is overwhelmingly located in the Bay Area in California. And we think there's no reason why we can't become, again, alongside Princeton, a second talent hub for generative artificial intelligence, which will have huge positive impacts on our ability to attract the right research, the right talent, obviously the right companies that will plant their flag here in Jersey.

Gene Marks (00:07:07 to 00:07:19)

So, lots of questions about this. So, back to the intelligence hub. So, what will be the role of the government in this? Are you providing funding? Are you providing other resources or merely guidance?

Gov. Phil Murphy (00:07:19 to 00:08:08)

Yeah, as they say, we have skin in the game. To be determined what that specifically looks like, but this is not the first hub that we've formed. We've got a big one getting built out in New Brunswick. We'll have another one in Jersey City, another one soon, I think, in Hoboken with different one in Newark with different approaches. But if you look at our prior investments through the Economic Development Authority, they tend to be in the $20 to $25 million range. So, we're putting real money in this, as will Princeton. And this will be, under the theory, in this realm, we don't know what, we don't know. Its charter, if you will, will be very much wide open.

Gene Marks (00:08:08)

Right.

Gov. Phil Murphy (00:08:09 to 00:08:25)

One other thing I'd say, Gene, is we, along with Princeton, announced that we'll have a kick-off symposium on April 11 on campus at Princeton University, all around this hub and the formation and where this is going forward.

Gene Marks (00:08:26 to 00:08:38)

When you talk about hubs, are we talking about actual physical structures? Like, you will be building buildings to house this, or is it more resources to help fund startups and research?

Governor Phil Murphy (00:08:38 to 00:09:18)

No, I think it's fair to say it'll ultimately be bricks and mortar temporary headquarters either on or near the Princeton campus to begin with. But I would be surprised if this does not turn into a newly constructed entity down the road. We definitely, both Princeton and we, I think, want to put a bright light and stark relief around this, that this is its own entity. It'll feed on all aspects of Princeton's storied schools and departments, just as it will on all aspects of state government and society, but it'll be its own entity.

Gene Marks (00:09:19 to 00:09:36)

Governor this is great stuff, right? I mean, it really is good. And it's nice to see you take initiatives on this. Is this based on any other states? Are you working with any other of your colleagues that are running states that are doing something similar, or is New Jersey one of the first to do something like this?

Gov. Phil Murphy (00:09:36 to 00:10:00)

I think we're one of the first, Gene. I mean, I mentioned the Bay Area. To give you an idea how dominant this is, since 2019, venture capital money into artificial intelligence and how that broke down geographically; the Bay Area, $23 billion into generative AI. Number two was New York City at a billion.

Gene Marks (00:10:00 to 00:10:01)

Right.

Gov. Phil Murphy (00:10:02 to 00:10:53)

And then you ask yourself, well, why is that the case? And I went out there and had sort of a seminal dinner in the Bay Area early in 2023, and I asked, why are you all here? And the singular reason was talent. So, you can't ignore the influence that Stanford and University of California, Berkeley, in particular, have had on that region. There's no reason. By the way, Princeton is almost to the mile, the same distance from New York City as Stanford is from San Francisco. There's no reason, with Princeton's extraordinary talent heritage and New Jersey's deep innovation economy, there's no reason why we can't come up with that second hub. So, we're not mimicking anybody in as much as we're divining why the Bay Area is such a locus for that talent.

Gene Marks (00:10:53 to 00:11:26)

Okay, that's exciting. Let's switch back to this task force, though, that was established earlier this year. Can you give us an update on that? I mean, to me, it's all about the people that are going to be on this task force, and the hope is that they're smart and experienced and good people that are going to be coming up with some of these - I don't know if regulations is the right word - but overseeing some of the developments in AI within the state. Talk to me a little bit about who you've got in mind or who is already in place.

Governor Phil Murphy (00:11:26 to 00:12:14)

Yeah, it's a group that exists and will only get bigger. It's chaired by our Chief Innovation Officer Beth Noveck, who has had experience on both sides of the Atlantic in the Obama administration. She advised Angela Merkel, where I was the U.S. ambassador many years ago, and she's been in my administration from day one. She's a renowned expert in innovation and increasingly regenerative artificial intelligence, and it's also populated with folks from across government, from the attorney general to the commissioner of the Department of Labor and workforce Development, and many spots in between, under the theory that it will impact all of us. So, let's make sure we have those folks at the table.

(00:12:14 to 00:13:02)

Similar approach, by the way, that Princeton – back to the hub – is taking. It's wide open in terms of the schools that will have some amount of involvement in this hub, because, again, big mistake to think of this as just the purview of the techies. This has got to be all of us, particularly given what's at stake, both the challenges as well as the enormous opportunities, when you look at incurable diseases or climate change, or you pick the challenges that face mankind, is there enormous danger and concern? Yes, there's enormous, likewise, opportunity for the planet. So, that'll give you a sense of how we're thinking about it.

Gene Marks (00:13:02 to 00:13:52)

That’s helpful. And please don't take this the wrong way, but when I watch some of the Congressional testimony over this past year of some of the technology people testifying in front of Congress, the Mark Zuckerbergs and the Sam Altmans and some of the other leaders in AI, and they're testifying to layman, Congress people who are Luddites about this stuff. It's a little terrifying as an individual saying like, oh, my God, I don't know if these politicians are even going to get this stuff, like these tech guys are going to run all around them. And I do have that same fear with the intelligence task force to be. So how do you address that? How do you answer that question of, can we rely on you and the government to be smart enough as those tech people are?

Gov. Phil Murphy (00:13:52 to 00:14:08)

Yeah, I mean, the European Union put out a huge master regulatory plan in December, but then said it'll take a year and a half to two to implement. That might as well be 100 years for generative artificial intelligence.

Gene Marks (00:14:08 to 00:14:09)

Right.

Gov. Phil Murphy (00:14:09 to 00:15:07)

You have to start somewhere. I'm not a tech guy. So, you have to have a mix of folks who are common sense, folks you trust, but folks who really understand the technology, as well. So, you've got to have a mix of folks on something like this. It is akin and I think then some, and I say then some with a big uppercase. If you and I were having this conversation 30 years ago about the internet, it would have been very early days. And I'll speak for myself, Gene, I don't want to splash any mud on you. I wouldn't have known what I didn't know. Of course, that's something where you've got to that requires you to have the right mix of people, including the folks who understand the technology, but also the folks who understand the implications of that technology. And that's what we're striving for.

Gene Marks (00:15:08 to 00:15:31)

Final question on that, and then we'll turn to some other topics, but long after you've retired from politics and you're out playing golf somewhere and you look back on this AI hub with Princeton, and you look back on this AI task force, what would make you say in the future, as you're looking back like, this was a really good thing. This turned out to be what I wanted it to be. What would make you feel that way?

Gov. Phil Murphy (00:15:31 to 00:15:35)

If I'm playing golf, I would have had to learn how to play golf. Let me just say that.

Gene Marks (00:15:35 to 00:15:38)

Fair enough. I'm a squash player myself.

Gov. Phil Murphy (00:15:40 to 00:16:15)

I think you would have seen success on the three legs of the stool that we outlined when we formed the task force. One, that, in fact, we were right that New Jersey, with Princeton's help, but not just Princeton; Bell Labs, just renewed its commitment to New Jersey in December as well, which is a huge deal. And that's in New Brunswick, and then the AI hub is in Princeton. You're going to have that Route 1 Corridor. So, one, that we were right about the talent hub and that we attracted the great minds and businesses big and small.

(00:16:16 to 00:16:59)

Secondly, that we delivered government services responsibly and in a hyper-efficient way, particularly the retail aspects of our government, things like motor vehicles, unemployment benefits at Department of Labor, just to pick two examples. And thirdly, that we got the area where you're concerned, as am I, I have to say; that we got the regulatory aspect of this right. And when I say we, I would hope as a nation, I would hope as a planet, but I mean, more specifically, that New Jersey figured out how to both get our arms around it, but also not constrain the upside opportunity.

Gene Marks (00:17:00 to 00:17:44)

It's a great answer, and I really do hope it serves as a model for even the federal government to take on because it's a national issue. So, I thank you. It's great work, and we'll keep a close eye on that. Let's move to a few other topics that I wanted to run by you. This one has to do with liquor. And, no, I'm not inviting you out for a shot and a beer, but I understand that you recently held a roundtable discussion, or this year, and you've been having discussions about modernizing New Jersey's liquor licensing laws. Other states have similar issues. New Jersey obviously needs some help. Tell us what you mean. Though, about modernizing the laws. What's the problem?

Gov. Phil Murphy (00:17:44 to 00:18:55)

Well, the problem is a big one and I'm hoping this will be airing, I believe, in January. I'm hoping that we're going to be making real progress in the month of January. So, the problem is the following: We're still operating under prohibition era liquor license reality in New Jersey, meaning that it's capped at one license per, I think, 3,000 residents. And depending on the town you're in, these licenses have become so expensive that they are: a) there are too few of them and b) they're way out of the reach of the mom-and-pop bar or restaurant. So, the notion is to responsibly over time open up that reality. If you look at other states that have done this, they've transformed their main streets and that's what this is all about. So, that's the sort of problem as well as the hope. I think we're going to end up doing this in stages, if I had to predict. So, I'll give you an example of what I think is achievable in this current time frame.

(00:18:55 to 00:19:38)

I think we'll be able to unburden breweries, wineries, distilleries from some silly restrictions that they're under. Secondly, I think we'll be able to be much better with licensed liquor licenses in malls, where it's artificially constrained. And then thirdly, I think achievable now: There are what they call pocket licenses, many hundreds of them, which are not active, which are sort of in suspension. So, getting them freed up and distributed in a smart way. I think those three steps in the near term are achievable.

(00:19:38 to 00:20:09)

And I think ultimately we can do the whole shooting match, which is ultimately raise if not eliminate the caps. But you have to do it responsibly. That's the last thing I'd say, Gene, because in fairness, there are mom and pops out there who actually bought these licenses 40, 50 years ago, and you're in a town like Montclair that's worth a million dollars right now. So, we have to make sure as we open this up we deal with that group of folks responsibly. And I'm confident that we can.

Gene Marks (00:20:09 to 00:20:54)

And you know, there's a guy near my house in Margate that he has the liquor store there in Margate. And I mean, it's a goldmine for him. I can't imagine him being thrilled that this happens. You have to take that into consideration. I have to ask you about this. It's a controversial issue to pick up there's a lot of debate about drinking and liquor. Ocean City is a dry town still. And of course, it's a mob scene at the liquor warehouses before you get over the bridge. And this does have a big impact on a lot of mom and pops and a lot of businesses. Why did you choose this issue? Why was this an important one for you?

Gov. Phil Murphy (00:20:54 to 00:21:25)

Well, remember, we've chosen a lot of issues over now. We're starting our seventh year at this point. This is not the only fight that we've picked up. It's the overwhelming evidence in places that have done it before us in terms of the transformation of Main Street. And by the way, Ocean City is a good example. I grew up in a dry town. It was referred to, I'm dating myself, by Johnny Carson on "The Tonight Show", as the wettest, driest town in America.

Gene Marks (00:21:26 to 00:21:27)

Sounds like Ocean City.

Gov. Phil Murphy (00:21:27 to 00:21:52)

Actually, you might say the same thing about Ocean City. I agree with, you know, towns like that have every right to be dry or not, as they choose to. But we're artificially holding back Main streets around the state. We are the quintessential small-town state. We've got 565 municipalities spread across 9.3 million people.

(00:21:52 to 00:22:32)

Our biggest town, Newark, has 330,000 people. So, we're very much not like New York with New York City or Massachusetts with Boston. So, those Main streets matter. Whether you're down by Philly in a Haddonfield, or you pick a boardwalk town that does have liquor, or Montclair I mentioned, or Westfield; those towns are quintessential small. Collingswood down by you. These are quintessential American Main Street towns. And let's make sure that we can give them everything they need to punch at the weight they deserve to punch at.

Gene Marks (00:22:32 to 00:22:50)

Okay, fair enough. Fair enough. We only have a few minutes left, but I did want to ask my final question. Has to do with unions and unionization. There's no question that on a federal level, it is definitely more of a pro-worker environment than I've seen in recent memory.

(00:22:50 to 00:23:34)

The NLRB is very active. It's a first instinct for a lot of our listeners, a lot of our audiences, to sort of like a knee-jerk reaction to unionization. Oh, it's going to cost us more money or lose us control or make a more confrontational environment between us or our employees. But you've been a longtime supporter of unions, and there are a lot of good that unions not only bring to the economy, but also to businesses of all sizes. And I just want to give you the chance to give a pitch. Why have you been such a longtime fan of unions? And speak to me as a business owner and our audience that runs businesses. Why? Why should we also look at the bright spots of unionization.

Gov. Phil Murphy (00:23:34 to 00:24:24)

So, it turns out in New Jersey's living proof of this. You can have it both ways. You can have your cake and eat it, too. Meaning we can be on the one hand, and I'll come back to why I believe in this so much, the quintessential organized labor state in America. I don't think there's any state that has got a stronger labor tradition than we have - organized labor. And at the same time, as we sit here, we are at an all-time high in the amount of small businesses that exist in New Jersey, up dramatically since the end of the pandemic. And both of those can exist side by side. Why am I a bull on unions? And by the way, you're absolutely right. The support for unions nationally is as high as it's been since the mid-1960s, since the Johnson administration.

(00:24:24 to 00:25:02)

It's pretty stunning. And unions went through decades where folks were afraid to say the U word. But that's no longer the case. The big reason why, I get to it, and it's an overwhelming reason, and the data is unambiguous, that the ebbing and flowing of organized labor matches 100% with the ebbing and flowing of the strength of our middle class. It is the door through which millions of families have walked through into the middle class.

(00:25:02 to 00:25:54)

There are many other reasons. Your reliance on quality health and benefits, pensions, and when you've got someone who's getting paid the proper amount for their day's work and they're getting the benefits that give them security and their family, guess what? They're a much stronger contributor to the economy, to society, and to the very small businesses that are also flourishing in New Jersey. So, you can have it both ways. And by the way, folks know this, there are different types of union; there are the public sector unions, there are the service unions, there are the building trades. So, there are subcategories across the spectrum, but they all contribute mightily to the security, strength, and growth of our middle class, as do small businesses. It is both, not either or, by the way.

Gene Marks (00:25:54 to 00:26:22)

Great answers. I mean, living in Philadelphia, it's very strong building trades unions, labor unions around here, and contractors and my clients in the construction industry, they lean heavily on the unions to provide experienced skilled workers as well. So, it depends on the union that you're dealing with. But there's upsides to businesses because they get a better-quality employee, if I can say that.

Gov. Phil Murphy (00:26:22 to 00:26:35)

If you're building something, it gets built right, and it will last. And ultimately, the investment you make, the so-called investment you make in paying up for union labor more than pays off for itself over the life of that project.

Gene Marks (00:26:36 to 00:26:52)

And it's the same concept, I guess, with minimum wages. I know that you've also been very much of a leader in asking for and getting higher minimum wage for workers in the state. And again, happy employees stay longer at jobs. And they spend money, right?

Gov. Phil Murphy (00:26:52 to 00:27:16)

Yeah, they spend money. And when we were trying to get the $15 minimum wage, which, by the way, we finally achieved this month, a lot of folks said, hey, you're going to put a lot of people out of business. And it turns out, again, you can have an and/both reality. Now, we're over $15 an hour on the one hand, and number two, small businesses are booming like never before in the state.

Gene Marks (00:27:16 to 00:27:23)

Yeah, fair enough. Gov. Phil Murphy, thank you very much for speaking with me. You're doing great work and we appreciate you taking the time.

Gov. Phil Murphy (00:27:23 to 00:27:25)

Thanks for having me, Gene.

Gene Marks (00:27:25 to 00:27:40)

Everyone, you've been watching and listening to the Paychex THRIVE podcast. My name is Gene Marks. Thank you so much for joining us. If you need any advice or tips or want to suggest a guest for a future episode, please visit us at payx.me/thrivetopics. Again, thanks for watching or listening. See you again soon. Take care.

Gene Marks (00:27:41 to 00:28:05)

Do you have a topic or a guest that you would like to hear on thrive? Please let us know. Visit payx.me/thrivetopics and send us your ideas or matters of interest. Also, if your business is looking to simplify your HR, payroll, benefits, or insurance services, see how Paychex can help, visit the resource hub at forward paychex.com/worx. That's WORX.

(00:28:05 to 00:28:16)

Paychex can help manage those complexities while you focus on all the ways you want your business to thrive. I'm your host, Gene Marks, and thanks for joining us. Till next time, take care.

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