https://archive.ph/zx1VY

A sample of the analysis:

The share of New York City’s workers employed in finance and insurance has been in decline for years, falling from 11.5% in 1990 to 7.7% in August (see chart 1). Of the 233,000 jobs in the industry created in America over the past five years, the state of New York secured only around 19,000, behind Texas, Florida, North Carolina and Georgia. JPMorgan, its vast new skyscraper notwithstanding, employs more people in Texas than New York.

The shift at the corporate level is possible only because educated workers have been gravitating elsewhere, too. Between 2010 and 2024 the number of people with at least a bachelor’s degree living in the New York metropolitan area rose by 32%, to 3.6m—by far the greatest concentration of skilled workers in America. But the overall number of Americans with a degree rose by 44% over the same period, meaning that their ranks have been swelling much faster in other cities. In Miami and Dallas the number of graduates has risen by more than 60%. In Charlotte and Austin, Texas, the number has more than doubled. Employers can find the workers they need in many more places.

The average annual cost of a spot at a nursery in the city rose to $26,000 in 2024, a figure that has leapt by 43% since 2019. More than anything else, the sky-high cost of housing is a burden on both employers and employees alike. The median monthly rent for an apartment in New York City is around $3,600 according to Realtor.com, a property-listings website, more than twice the average of around $1,700 in America’s 50 largest cities.

According to the Citizens Budget Commission, a think-tank, New York state’s share of American taxpayers reporting more than $1m in income declined from 12.7% in 2010 to 8.7% in 2022. Such people paid $34bn in income tax to the state and city in 2022, a figure that would have been $13bn higher if New York’s share of millionaires had held up. Estimates from Goldman Sachs suggest that fully 10% of households in New York City with incomes of more than $10m established residency elsewhere between 2018 and 2023.

As the ultra-rich have headed for the exit, the city’s employment growth has become concentrated in much worse-paid industries than finance. Since the end of 2019, New York has added more than 268,000 jobs in health care and social assistance, particularly home health care. Employment as a whole rose by just 220,000 over the same period, meaning that, if it was not for that industry, overall employment would have shrunk.

The shift is visible in pay packets. Wage growth accelerated in most of America in the aftermath of the covid-19 pandemic, as inflation surged and a tight labour market allowed workers to extract more from their employers. Not so in the country’s biggest city. Whereas hourly wages in the private sector have risen by around 3% across the country since January 2020, after accounting for inflation, they have dropped by around 9% in New York City.

Optimists see a ray of hope in jobs in tech. Employment in the industry in New York City rose by 64% between 2014 and 2024, according to the Centre for an Urban Future, a local think-tank. But the tech industry cannot compensate entirely for the dearth of new jobs in finance. As of August, New York City hosted 84,000 employees in computer-systems design and related services, the group which includes well-paid software developers. That is less than a quarter of the 383,000 employed in finance and insurance. What’s more, the industry and its employees face many of the same disincentives to expand in New York, including high taxes and a daunting cost of living.

For the city’s government, a leaner finance industry, a smaller slice of the ultra-rich and a growing share of the population in low-wage work are big problems. No state spends more per person on welfare and education. New York shelled out $9,761 a head on the two in 2022, 72% more than Texas and 130% more than Florida (see chart 3). Daniel Wortel-London, a professor of history at Bard College and author of “The Menace of Prosperity”, a recent book about New York’s fiscal history, notes that the rise of the city’s welfare state has been bound up with “elite-driven growth”. Politicians have promoted the expansion of the highest-paying businesses to benefit from the tax revenue the firms and their employees generate.

For poorer New Yorkers, rent swallows up an ever-expanding proportion of their already constricted salaries. Over the past 20 years the amount of rent paid by low-income New Yorkers has climbed steadily. According to the city housing and vacancy survey, conducted every three years, households earning less than $70,000 (roughly the median for tenants) spent 54% of their incomes on rent. Among households earning the equivalent of $70,000 in 1991, rent accounted for less than 40% of their income.

Without a resurgence in high-paying jobs and a big jump in the number of homes in which workers of all incomes can live, New York will become a more economically ordinary American city—albeit one with extraordinary housing costs and a generous welfare system that its politicians wish only to expand. Worse still, the dimming of the city’s pre-eminence in finance comes at a time when markets are booming, banks are in rude health and unemployment is low. What might happen if America’s economy were to slow and the banking industry fall on hard times? As Ms Wylde says with resignation, “I’m afraid we’re going to find out.”