New York remains the hub of the nation’s financial industry, but over the past few years, the city has been losing ground to a collection of cities across the country, including Salt Lake City, Columbus, and St. Louis. As the Wall Street Journal notes, the reasons are all too familiar: Banks are fleeing the high taxes, high cost of living, and endless red tape of the city for greener pastures elsewhere:
Smaller cities around the nation have emerged as unlikely hives of financial-services hiring, thanks to lower wages, municipal-tax incentives and the misfortunes of older hubs that are home to companies ravaged by the 2008-2009 financial crisis.
The beneficiaries are spread across the U.S., according to an analysis of data by The Wall Street Journal. In St. Louis, the 19th-largest U.S. metropolitan area, securities-industry employment surged 85% between January 2007 and September 2012 to a recent 12,190, according to figures compiled by Moody’s Analytics. New York lost 9% of its jobs in the securities, commodities, asset-management and fiduciary-trust areas over the same period, leaving it with 195,000.
A financial sector with more geographic balance is almost certainly a good thing for the country, but it’s bad news for New York, where the city’s recent revival has been financed largely through taxes on businesses and employees of the city’s high-powered banking sector. New York has managed to pursue blue policies longer than many of its peers due to its cash cow Wall Street banks. If these banks leave, their tax revenue will leave with them, and the city’s current policies will begin to look much less affordable.
But then again, it is these very policies that are causing the banks to leave in the first place. If it weren’t for big banks, there could be no Big Blue.