Don’t believe the hype.
Contrary to a New York Times op-ed from the Partnership for New York City. Wall Street doesn’t need “help” on the jobs front.
The financial services industry hasn’t needed “help” since 2008 — and to hear some of the ex-CEOs of the banks that failed speak publicly now, it’s not even clear they ever did.
The reason Wall Street isn’t in need of any help is because the best-paid people are making more money right now than they were before the crash. It’s hiring and retention of the rank and file at banks that isn’t keeping pace.
On Wall Street, the rich keep getting richer and the middle class is being slowly eroded. The jobs most frequently lost were the ones paying $US75,000 and less, according to a survey by the Partnership for New York City.
Those lower paying jobs being cut in New York City are being eliminated not through secular pressure, but through technological advancements.
Back to why we’re worried about Wall Street jobs at all.
The Partnership study contrasts two timeframes: 2005-2007 and 2011-2013. That is: pre-crisis, and post-crash. Despite the fact that NYC’s financial sector jobs make up 9% of overall employment, the sector’s pay represents 18% of the city’s annual tax revenue.
But here’s the thing. That revenue will be just fine in NYC. Wall Street may be losing headcount, but it’s growing talent. That should have been the lede of the report.
Since the crisis financial services firms have actually added staff at senior levels. The key areas where banks have been adding more employees in New York are in the legal and risk departments. These employees tend to cost more, owing to the fact they have to recruit senior managers. They’re making north of $US300,000 a year or between $US150,000 and $US300,000.
People who are based in New York City tend to cost the most too. This is one of the reasons jobs that pay less are relocated to other areas.
Many lower-cost employees have been either laid off or jettisoned to places like Florida, New Jersey and Delaware. The jobs that pay the absolute least on Wall Street are the ones being eliminated with the greatest frequency. But there’s still plenty of work to go around for seasoned professionals.
And, thanks to regulation, for the foreseeable future, anyone working in compliance or interacting with regulators will be in demand on Wall Street.
So as long as big banks continue to find a need for new senior staff, reports like the one from the Partnership for New York City shouldn’t be taken with a sense of alarm so much as they should be consumed with a few grains of salt. New York City and its tax base should be just fine.