Posted on July 11th, 2012
Over eating leads to indigestion – and it applies to the financial world as anywhere else. The leftovers of the foreclosure crisis are ultimately catching up with Wall Street.
The mega financial entities are now exiting from the legendary Wall Street area and moving to cheaper zones. It is jeopardizing the positions of the middle section – the backbone of the employment scenario in Wall Street.
The shifting has come at the time when the banks are mulling over cutting down staff strength. This in turn will gnaw into the tax base of New York State and City on a long term basis.
James Malick of Boston Consulting Group said, “Places like New York or London will remain financial centers, but most of the players are taking a much harder look and asking whether they can move large numbers of jobs”.
Experts have noted this move of near-shoring (and not off-shoring). Some time in end of May Goldman Sachs boasted before investors that by relocating jobs it can save costs. Malick explained that some of the operations have to be based in USA but not necessarily in New York City; it does not have to be close to the client either.
Relocation has become more of a tempting offer than prior to the financial mayhem. The revenue picture is anemic while regulations are daily becoming more stringent.
Jobs at the lower levels have already been shipped abroad overseas call centers and multiple back-officers while jobs relating to accounting, legalities, trading, compliance and human resources are now being sent off to North Carolina, Florida etc.
One of those caught in the move is Garry Douyon. He was happy with his work with RBS at Stamford– job load and money. But when the firm moved to Salt Lake City and offered him a lower salary he did not even pause to think but snapped up another job with a bio-fuels firm in Brooklyn. Some of his colleagues decided to move on but most opted for staying back in New York.
This migratory move has serious implications for the tax structure of New York as well as for the general economy because of the bulging financial profile of Wall Street. In 2011 this contributed to 14% of the tax revenue of New York. The contribution had reached its peak in 2007 but jobs plummeted by over 15% following the financial mayhem. It has now gone back to pre-crisis level but by contrast Delaware and Arizona have surged ahead.
Photo by Matze_ott.
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