Downstate Woes
"This may not sound like much. But Wall Street jobs generate a disproportionate share of total city income — 20 percent today, up from 5 percent three decades ago. And each Wall Street worker creates at least two more local jobs — plus another in New York outside of the city — in fields like media relations, law and high-end sales."
It is taken from an original commentary Gelinas published in the City Journal entitled:
Gelinas paints a bleak picture for middle-class job creation in the tri-state area and warns that the downstate region around New York City remains "dangerously dependent" on the financial business sector.
"Even as New York has become increasingly dependent on Wall Street's success, Gotham has steadily lost its share of national securities-industry jobs — from 43.2 percent of the U.S. total in 1958 to 22 percent today, a market-share loss of nearly half in five decades. Wall Street now employs about 170,000 New Yorkers, just 10,000 more than it did right before the 1987 crash."
The gain in profits but loss in jobs around New York City is due to many factors, not the least of which is an approach to efficiency that has not been match by City Hall or the State Capitol.
The economic exodus away from New York is nothing new but Wall Street has re-tooled and has searched for less expensive pastures.
"Over more than two decades, a diverse array of business lines on Wall Street, from stock brokerage to stock trading to debt and equity underwriting, have had their profits ground down to razor-thin margins by technology, competition and regulation. What's left are just a few spectacularly profitable lines and many low-margin businesses — and an industry that can no longer afford armies of mid-level employees in Gotham."
Gelinas detailed how the escape to other states and now other countries has only escalated in recent years.
"JPMorgan Chase announced in early December that it would create 4,500 new securities-industry jobs in Bangalore, India, by 2007, joining UBS (with 500 jobs there) and Goldman Sachs (750). Twenty-five years ago, most of those jobs would have been created in New York; 15 years ago, perhaps half, with the rest going to places like New Jersey and Florida."
The problem continues to be the cost of doing business and poorly-kept infrastructure -- with few attempts by the State Legislature or City Council to lessen the load.
"First, they can cut state and city spending and taxes — since New York's high tax rates put the city at a greater disadvantage now than they did 20 years ago, when more top earners were stuck in New York. (The income-tax cut Pataki proposed yesterday can't even be called a good start: It's so tiny that taxpayers would barely notice it even if it were to become law.)
Second, state and city officials can encourage office-space construction in Gotham, since more office space means cheaper office space, which attracts start-up businesses in other fields. (Instead, Pataki has dragged out Ground Zero reconstruction, while Bloomberg is discouraging developer Larry Silverstein from rebuilding the World Trade Center.)
Finally, Pataki and Bloomberg must remember: They have little room for error today when it comes to issues like crime and public transportation."
News Copy can vouch firsthand for the costs and aggravation of pursuing publishing in Manhattan or the surrounding suburbs. Rents are high, taxes eat up profits and insurance costs are prohibitive. Finally, the cost of living is so high -- in and around New York City -- that finding affordable middle class housing and less-than-nightmarish transportation is a magic trick in itself.
If you ask us, Upstate New York is looking better every day.
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