From Comptroller Thomas DiNapoli’s new report on the financial meltdown’s economic impact on New York, there’s this chart comparing the drop in Wall Street jobs during the “current downturn” (dated back to the summer of 2007) to losses following the crash of 1987 and the “Dot-Com and 9/11” decline beginning in 2001:

picture-2-7640162

So far, the trend is closely following the 1987 track, during which securities industry employment took four years to hit bottom.   But this chart, and others like it, may actually understate the problem. This is not just another “downturn” but a massive upheaval in a sector whose business model is, basically, broken.   The financial sector that emerges from the ashes will be far leaner and more heavily regulated than Wall Street used to be.   Beyond the budget cuts needed to close next year’s gap, both the state and city budgets must be fundamentally restructured to reflect this new economic reality.

Another key finding of the comptroller’s report: Hedge funds and private equity firms are the strongest remaining players in New York’s securities industry.  It’s vitally important for New York to hold onto these businesses in the years ahead, obviously.  But state officials need to recognize that the largest and most profitable of these firms tend to be small, employing just 100 people on average.   The typical investment boutique is far more nimble and mobile than a big old-fashioned investment bank.   Small hedge funds and private equity firms will find it easier to pick up stakes in search of friendlier business climates if the state and city respond to the budget crisis by hammering investment managers with income tax increases.

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

You may also like

As leaves turn, NY’s post-pandemic recovery still has very far to go

Entering the second autumn since the COVID-19 outbreak of March 2020, the pace of New York State's pandemic economic recovery has been abysmal by almost any standard. New York was the national epicenter of the pandemic, and Governor Cuomo's "" business Read More

More NY job gains in August—but employment needs to rise a lot further

New York's jobs report for August looked relatively strong—but only by comparison, that is, with . On a seasonally adjusted basis, New York gained 28,000 private-sector jobs last month—a growth rate of 0.4 percent, according to . This was double th Read More

New York’s Hospital Industry Ranks Near the Bottom of Two Quality Report Cards

New York's hospitals remain near the bottom of two quality report cards. The state's hospitals received the lowest rate of any state except Nevada and DC. Read More

NY Post-Pandemic Employment Tide Stopped Rising At Year’s End

New York's post-pandemic employment recovery came to a halt and moved into reverse in December, according to the state's for the final month of COVID-wracked 2020. Private payroll employment in December was 966,000 jobs below the level of the previous Read More

As a Supreme Court Ruling Loomed, Cuomo Bent His Own Rules on COVID ‘Clusters’

In the midst of the constitutional showdown over his pandemic policies, Governor Cuomo made changes to a disputed Brooklyn 'cluster zone' that seemed to contradict his own declared guidelines. Read More

Fewer Workers, Not More Jobs, Explains NY’s September Unemployment Rate Drop

New York State's unemployment rate has fallen sharply since the economically devastating pandemic lockdown last spring. But as state Comptroller Thomas DiNapoli points out in  his latest economic report, the jobless rate doesn't tell the whole story. Read More

In Pandemic Recovery, New York’s Tax Base Is More Fragile Than Ever

New York's exceptionally wealthy state tax base is also exceptionally fragile, due to its heavy dependence on the highly volatile (and portable) investment-driven incomes of Wall Street workers and fund managers. Read More

De Blasio’s (Apparent) Good Move Dissolves Into Phony “Savings”

Late Thursday, as hailed in this space, Mayor de Blasio finally made a decisive move—or at least seemed to make a move—in the direction of actually saving some money on labor costs by getting tough with a powerful (and powerfully self-entitled) municipal union. Read More

Subscribe

Sign up to receive updates about Empire Center research, news and events in your email.

CONTACT INFORMATION

Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100

General Inquiries: Info@EmpireCenter.org

Press Inquiries: Press@EmpireCenter.org

About

The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.

Empire Center Logo Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!