New York is losing its grip as an American financial capital: a study

subway

by Carl Campanile

The Empire State is losing its grip as the nation’s financial services capital.

New York’s financial services industry — a major contributor to the state’s gross domestic product — has been imperiled by a decline in the number of high-income residents, who are fleeing amid high taxes and rising housing costs, according to a new study.

“While other states are attracting talent and investment in this sector, there is no guarantee of future success,” the New York State Business Council report said.

“Addressing the state’s tax burden, business climate, and cost of living can help ensure New York’s position as a national and global leader in finance.”

Over the past three years, the top four states with new high-paying financial services and insurance jobs over the past three years were Texas, Florida, North Carolina and Georgia, the analysis by the business council found.

New York ranked 36th in terms of growth rate – a rate of two-tenths of 1%.

“North Carolina and Florida have rapidly added jobs in the finance and insurance sectors, while employment in New York has remained below national growth trends,” the report said.

The study indicated that each employee in the financial sector generates approximately three additional jobs in other sectors – so any job losses affect the entire economy.

“This report should serve as a call to action for leaders across New York to address competitiveness issues that threaten one of our most valuable and important economic forces, the financial industry,” the study said.

The average compensation package in the New York financial services industry is $309,000 per year – $275,800 in salary plus $34,000 in other benefits.

The numbers showed continuing population decline trends in New York — with a 2.7% decline from 2019 to 2022 — representing the worst loss among the 50 states during the COVID-19 pandemic.

Most of the population losses occurred in New York City and its suburbs, home to most of the state’s wealthiest residents.

A review of net population migration showed that the largest migration of total income was from Manhattan at about $11 billion.

“Data confirms the flight of the wealthy from the New York City area,” the business group’s review found.

In 2021 alone, the Empire State saw a net decrease of $9.8 billion in income that migrated to Florida, according to the report.

That’s no coincidence, the study said, noting that the Tax Foundation ranks New York as having the highest state and local tax rate on residents, while the Sunshine State has the lowest.

“That’s the only competitive factor [taxes] “It is likely to play an influential role in the migration of high-net-worth individuals, as they will stand to gain the most by leaving a high-income tax country for a low- or no-income tax country,” the study said.

She noted that New York is also one of a small group of states that imposes an estate tax, derisively referred to as the “death tax.”

“High-net-worth individuals are more likely to take this tax into account when making their location decisions,” the report said.

“Strong action is necessary,” the analysis concludes. “The state will need to address the tax burden, business climate, and cost of living that are hurting the state’s competitiveness.

“If the state does not address these issues, it risks losing its dominance in the finance and insurance industry and, ultimately, jeopardizing the health and prosperity of New York’s economy.”