The Empire State is losing its grip as the nation’s financial services capital.
New York’s financial services sector – a major contributor to the state’s gross domestic product – is imperiled by the falling population of high-income residents, who are fleeing due to high taxes and housing costs on the rise, according to a sobering new study.
“While other states are attracting talent and investment to the 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 secure New York’s position as a national and global leader in finance.
Over the past three years, the top four states landing new high-paying jobs in financial services and insurance were Texas, Florida, North Carolina and Georgia, according to analysis by the Business Council .
New York ranks 36th in percentage growth – at a rate of two-tenths of 1%.
“North Carolina and Florida quickly added jobs in the finance and insurance sector, while employment in New York remained below national growth trends,” the report said.
Each employee in the financial sector generates almost three additional jobs in other sectors – so any job loss ripples through the entire economy, the study notes.
“This report should serve as a call to action for New York’s leaders to forcefully address the competitiveness issues that threaten one of its most valuable and critical economic strengths, the financial”, indicates the study.
Average compensation in New York’s financial services industry reaches the national level of $309,000 per year, or $275,800 in salary plus $34,000 in other benefits.
The numbers show a continuing trend of population decline in New York – with a 2.7% decrease from 2019 to 2022 – marking the worst loss among all 50 states during the COVID-19 pandemic.
Most of the population loss has occurred in New York City and its suburbs, which are home to most of the state’s wealthiest residents.
A review of net resident migration showed that the largest leak in gross income came from Manhattan, at nearly $11 billion.
“The data confirms the flight of the richest from the New York region,” the business group’s study said.
In 2021 alone, the Empire State saw a net decline of $9.8 billion in revenue that migrated to Florida, according to the report.
That’s no coincidence, the study says, noting that the think tank Tax Foundation ranks New York as having the highest combined state and local tax rate for residents, and the Sunshine State the lowest.
“This competitive factor alone (taxes) likely plays an influential role in the migration of wealthy individuals, because they have the most to gain by moving from a high income tax state to a low income tax state weak, or even zero. ” says the study.
He also pointed out that New York is also among a small group of states that levy an inheritance tax, derisively called the “death tax.”
“Wealthy individuals likely factor this tax into their location decisions,” the report said.
“Strong action is needed,” the analysis concludes. “The State will have to tackle the problems linked to the tax burden, the business climate and the cost of living which harm its 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 . »