New York is dangerously close to losing its leadership status as the financial hub of the United States, new research shows.Julia Demaree Nikhinson/The Associated Press
Gus Carlson is a U.S.-based columnist for The Globe and Mail.
It’s been more than three decades since fictional characters like Tom Wolfe’s Sherman McCoy and Oliver Stone’s Gordon Gekko defined an era of excess on Wall Street and fueled a stampede of young Turks eager to make their fortunes in the fabled canyons of lower Manhattan.
Now, real-life masters of the universe are fleeing New York in record numbers for unlikely but increasingly popular financial services hotbeds such as Texas, Florida, Tennessee and North Carolina.
That shift is “scary” for New York’s economy and its competitiveness in the market for top talent, according to Kathy Wylde, president and CEO of the Partnership for New York City, the high-profile financial services advocacy organization.
The group released new research last week that shows New York is dangerously close to losing its leadership status as the financial hub of the United States.
The reasons: High taxes and an increasingly onerous regulatory environment are driving companies to low-tax, business-friendly southern states, particularly Texas and Florida.
And fears are rising that the situation could get worse. The report throws fuel on the fiery mayoral race in New York with the election only weeks way.
In that contest, democratic socialist candidate, Zohran Mamdani, the current leader at the polls who has made no secret of his disdain for billionaires, has vowed to raise taxes on corporations, high earners and what he calls “richer white neighbourhoods” where many Wall Streeters live.
He has been endorsed by New York Governor Kathy Hochul, a Democrat, who has watched the continued drain of companies from the state’s rolls on her watch.
New York has lost nearly 160 companies to low-tax states in the past five years. Among them are big names in financial services such as Icahn Capital Management, Elliott Management, Alliance Capital and ARK Investment Management, which have taken with them more than a trillion dollars in assets and high-paying jobs.
The exodus is not simply about bragging rights, as Ms. Wylde said on a media tour to promote the study. In an interview on WABC radio, she said “the financial services industry, they’re our biggest taxpayers and major employers – and that industry is shrinking in New York."
“We have to stop the drain,” she said. “The only way we can do that is we’ve got to manage our budget in a way that we control spending and control taxes and keep public safety and improve affordability.”
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She added in an interview with Fox Business: “We are seeing an acceleration of financial services jobs relocating to states where the cost of living and doing business is far lower than New York. Low taxes are the biggest competitive advantage of other states, allowing financial professionals to go from giving 55 per cent of their earnings to government in New York City to 38 per cent in Texas or Florida.”
The study by Ms. Wylde’s group shows Texas’s financial services sector has surpassed New York’s in terms of size. Texas had 519,000 people in banking and finance roles; New York had 507,000.
People pass the New York Stock Exchange, in November, 2024.Peter Morgan/The Associated Press
New York’s financial services sector shrank by 8,400 jobs from January through August of this year, after adding more than 6,000 in the same period a year ago.
Since 2019, New York’s financial services work force grew by 4 per cent, a much slower rate than in Austin, Tex., which grew 27 per cent, Charlotte, N.C., which gained 21 per cent, and Dallas, which increased 11 per cent.
Adding anecdotal insult to injury, the study showed that Wall Street stalwart JP Morgan now employs more workers in Texas – about 31,500 – than in the state of New York. Texas also now has more Fortune 500 companies headquartered in the state than New York.
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New York is not alone. Illinois has seen a rush of businesses move out of town, many of them iconic names such as Boeing, Caterpillar, Citadel, Tyson Foods and Morton Salt, amid crushing tax burdens, tight regulation and high crime.
In California, where the state’s 9-per-cent corporate tax rate is among the highest in the U.S., the flight of both capital and jobs has been significant. Since 2020, well-known companies such as Tesla, Chevron, Oracle and Charles Schwab have left.
As for the sector’s concerns about Mr. Mamdani, Ms. Wylde said she is trying to assure people that New York “is bigger than one person.” She’s right, though few mayors of any political stripe, including former Republican Rudolph Giuliani and the party-fluid Michael Bloomberg, have found a silver bullet to stop the outflow.