Groundbreaking Report by Partnership for New York City & GLG (Gerson Lehrman Group) Shows Accelerated Trends toward Downsizing and Relocation of Banking & Insurance Jobs to Cheaper, Lower Taxed Jurisdictions
NYC Saw a Net Loss of 50,000 Financial Services Jobs From 2000-2013; Middle Class Jobs are Hardest Hit
New York Times Op-Ed By Partnership President & CEO Kathryn Wylde Details Importance of Wall Street to all New Yorkers
New York, New York – The Partnership for New York City today released the first comprehensive report on New York’s financial services industry since the 2008 financial crisis. The report is based on a survey of a broad cross section of the industry, prepared by the Partnership with GLG (Gerson Lehrman Group). It details industry status and trends in terms of its contributions to jobs, tax revenues and economic activity in New York City and suggests what will be needed to maintain the city’s position as the global financial capital. The full report can be found here.
The report, titled At Risk: New York’s Future as the World Financial Capital, concludes that New York City remains the headquarters of global finance. Among the largest employers, however, there is both global downsizing and a growing trend to move jobs and business operations out of New York City to lower cost, more business-friendly locations. Absent public actions to address high costs, high taxes, aging infrastructure and a hostile political and regulatory climate, the global institutions that directly or indirectly employ more than a million New Yorkers, mostly in mid-level jobs, will shrink its New York City presence, with serious consequences for the city’s economic and fiscal health.
“Finance has been the foundation of New York’s economic greatness since the 17th century and no industry can replace it,” said Kathryn Wylde, President & CEO of the Partnership for New York City. “New York will remain a global financial headquarters, but the tens of thousands of good jobs that Wall Street provides for city residents are very much at risk as a result of rising costs and a regulatory and political environment that is hostile to big, international institutions.”
“This landmark study gives public and private sector leaders the data and insight needed to drive decisions about New York’s future as a financial center,” said Alexander Saint-Amand, CEO of GLG and a Board Member of the Partnership for New York City. “We were proud to have GLG’s unique learning resources inform this critical civic debate.”
The report provides insight into the makeup of the city’s financial services sector and the profile of its employees:
- Most of the estimated 310,000 financial services workers in New York are in the middle class. Fifty-one percent make less than $100,000 a year.
- Two-thirds are residents of the five boroughs. Among the city residents, about a third live in Manhattan, and another third in Brooklyn and Queens.
- The industry directly and indirectly is responsible for one million New York City jobs, 62% of all private sector wages, and more than a third of the city’s $700 billion economic output. Aside from direct industry employment, 700,000 jobs in fields like hospitality, health care, law and accounting, construction and technology exist because of the financial services industry.
- The industry contributes about $8 billion a year to the city’s tax rolls, which is equivalent to the combined budgets of the city’s police, fire and sanitation departments.
The report identifies some troubling industry trends:
- Since 2000, the industry has grown 6% in terms of economic output, which is less than half the rate of the growth in economic output of the private sector in New York State.
- Fewer financial services firms are planning to expand operations in New York City in the next 3-5 years than have expanded in the last 3 years.
- The city has experienced a net loss of about 25,000 financial services jobs over the last five years and is down 50,000 jobs from 2000. Losses have been largely middle wage jobs.
The report concludes that New York City’s competitive advantages are being eroded by high costs of doing business; high costs of living; high taxes at the federal, state and local levels; inconsistent regulations between states; aging infrastructure; and an increasingly hostile regulatory environment. Other cities and states in the U.S. and around the world are competing to draw financial operations out of New York – and are succeeding – by offering lower costs and incentive packages.
The Partnership for New York City provided recommendations to help sustain the city’s future as a job-intensive global financial cap:
- Develop a more consistent and competitive legal, regulatory and tax environment.
- Upgrade the region’s transportation, telecommunications and broadband infrastructure.
- Expand incentives that encourage retention of middle wage jobs, including public-private initiatives to expand affordable housing.
- Scale up programs that prepare the city’s public high school students to prepare for jobs in the industry.
- Promote the city’s role as the center of financial innovation and support the growth of “fintech” startups.
The findings and conclusions of At Risk were based off of a survey of fifty financial services firms conducted on a pro bono basis by GLG, including large banks, insurance companies and asset managers, as well as private equity firms, hedge funds and financial technology startups. Survey respondents provided detailed data on their current status and future plans. Collectively, survey respondents represent nearly one-third of total industry employment in the city.
In conjunction with the release of the report, Kathryn Wylde, President & CEO of the Partnership for New York City, published an op-ed in today’s New York Times highlighting key findings. The op-ed can be found at: http://nyti.ms/1QytJg5