Is New York Losing the Financial Sector?

June 23, 2020
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Author: Glenn Hunter

New York City has long been the center of the U.S. financial industry, the home of preeminent commercial banks, investment banks, insurance companies, securities firms, private equity funds and stock exchanges. But after being hit especially hard by COVID-19, the Big Apple recently has lost much of its shine.

Alongside other economic sectors, its financial industry felt the sting of the pandemic, with finance jobs in the New York region plummeting from 802,400 in August 2019 to an estimated 743,200 in May. And, according to an analysis by Labor IQ® by ThinkWhy, the region’s financial industry won’t recapture the jobs it has lost until 2026, at least.

Though the Big Apple remains the U.S. hub for the finance sector, the industry has expanded to other U.S. locations.

Such a tepid recovery is nothing new for the city, though. While the New York metro remains a finance powerhouse, with the lion’s share (among metros) of the country’s 8.6 million jobs in the Financial Activities supersector, ThinkWhy research shows that New York has consistently shed financial jobs – and found it tough to recoup them – in every recession over the last 30 years.

Meantime, other U.S. metros have picked up the slack.

Ups and (Mostly) Downs

Consider that in January 1990, the New York metro (New York-Newark-Jersey City, NY-NJ-PA) boasted a whopping 870,100 jobs in Financial Activities, a category that includes the likes of securities, banking, insurance, leasing and real estate. But following the relatively mild, eight-month U.S. recession that ended in March 1991, by April of 1993 the region had lost more than 93,000 of those jobs. Employment in the sector didn’t really start accelerating again until 1996, when it began a steady climb from 776,600 jobs in January of that year to 842,100 by June 2000.

New York Metro Financial Activity Jobs
Job gain and job growth for the New York City metro finance sector.

Then came the devastating events of September 11, 2001, and financial employment in the region sank back – to 777,800 jobs in April 2002 – before beginning to embark on another gradual recovery. In July 2007, just prior to the start of the 2007-2009 Great Recession, New York touted 814,500 financial jobs. But by January of 2010, the city’s Financial Activities employment had plummeted again, this time to 724,500 jobs. Then, like before, things began looking up a little. By last summer New York’s financial employment had rebounded to the 802,000 figure – only to fall off the table again because of COVID-19. Notably, the estimated 743,200 finance jobs the region recorded in May was 126,900 fewer than it had three decades earlier.

In sharp contrast, the New York metro as a whole gained 1.8 million jobs during the period.

Gains and Losses

While the New York region has been losing financial jobs over time, other metros have made substantial gains in these jobs, in part because of companies’ efforts to cut costs and diversify geographically.

According to a Labor IQ by ThinkWhy analysis, the biggest beneficiary among these metros has been:

Dallas-Fort Worth averaged 318,200 Financial Activities jobs in 2019, up from an average of 162,300 jobs in 1990, for an increase over three decades of 155,900.

Phoenix metro added 123,000 financial jobs over the same period, while the Charlotte, North Carolina region picked up 58,000.

Other metros enjoying significant financial-industry gains since 1990 include:

  • Tampa, FL (53,200 jobs)
  • San Antonio, TX (50,900)
  • Philadelphia's suburb of Montgomery County-Bucks County-Chester County (27,200)
  • Jacksonville, FL (26,700)
  • Boston, MA (22,200)
  • Richmond, VA (16,300)

To be sure, most of these metros have also shed some finance jobs since COVID-19. The losses range from Tampa and Jacksonville – which dropped an estimated 4,400 and 3,200 jobs, respectively, between February 2020 and May 2020 – to Richmond, which lost 800 during the period. Charlotte, on the other hand, picked up 800 finance jobs.

Salary Differences Highlighted

When salaries are considered, it’s little wonder that other regions have flourished with these jobs, while New York financial employment has declined. Wall Street has long been known for its high-flying, highly paid Masters of the Universe, with generous bonuses pushing annual average salaries for some key finance positions to the mid-six-figures.

For a head-to-head comparison, consider the recommended annual salary - which differs from median salary - for an investment banker with a bachelor’s degree and six to eight years of experience in some of the metros identified above. According to LaborIQ by ThinkWhy, this banker would earn $216,226 in New York, $214,127 in Boston and $198,457 in Charlotte. But the farther west and south you go, the recommended salary declines substantially, with Dallas-Fort Worth offering $174,734, Phoenix $155,166, San Antonio $151,130 and Tampa $145,506.

Recommended salaries for investment banker

Because New York City, with its dense population and reliance on mass transit, was so ravaged by COVID-19, in recent months middle- and upper-income residents of the Big Apple have reportedly been fleeing the city for presumably safer, less-dense locales at an unprecedented rate. While the growing popularity of telecommuting has made leaving New York more feasible, it’s too early to tell what lasting impact, if any, this exodus might have on the city’s financial industry as it tries – one more time – to recover its lost jobs.

ThinkWhy continuously monitors and forecasts labor data at all levels, measuring impact to MSAs, industries, occupations and businesses across the U.S.