Here is the problem with New York. Payroll taxes and healthcare benefits. The big global Financial centers currently are London, Singapore/Tokyo, & New York. Now that the dollar is depreciating fast against both European and Asian currencies, New York should be a lot more competitive versus these centers. However, Payroll taxes plus healthcare costs are going to put NY at a permanent disadvantage versus these other centers. This is not going away anytime soon. These costs add up to atleast a 50%+ additional cost to hiriing US employees versus its global counterparts. This is not fair to some extent because healthcare is subsidized by the state in these other economies, that does not get recognised as a direct cost for the company. Anyway, when did any of these businesses consider fairness in the equation?
So, for a multinational bank, it will always make sense to keep most of their support functions (which is the major job creator) in one of the other regions. The only people that need to stay in New York are the Sales people. This is just to service the rich clients and big corporations in NY. If these clients and corporates were to leave, to lower tax jurisdictions, that would be the end of the NY financial industry. Trading has already moved to the electronic world and traditional Traders are anyway giving way to machines. Sales can pretty much be done from anywhere. So long term, I can only see decline and urban decay, if New York continues to rely on the financial indsutry for its existence. The city will need to reinvent itself drastically if there is any long term plan to stay in business.
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