No one knows how long it will take but the decline of New York City seems inevitable.
A city that perfectly embodies the blue state principle, “from each according to his ability [to pay], to each according to his need” depends largely on the ability of the financial services industry to pay the taxes that support big city government and social welfare programs.
The result: in important segments of the labor market New York is no longer competitive.
This morning The New York Times reports on an important trend: mid-level Wall Street jobs are being sent out of New York in what is now being called near-sourcing.
The banks are hiring again, but they are hiring fewer people in New York. Because it costs too much… first, for the banks, and second, for the employees.
It’s an important trend. More and more it is making New York a city that is divided between the rich and the rest.
For the very rich high taxes and a high cost of living do not make much of a difference. The poor do not pay taxes anyway; they are increasingly wards of the government.
For a banker it makes sense? Given the wonders of the internet, why pay more to keep your staff in New York City when you can send it to North Carolina or Utah or Florida and spend less for office space, less in taxes, less for supplies, less for everything.
Since the cost of living in other states is significantly lower than in New York you can pay less and your employees can have as good, if not better quality of life.
The result: New York’s middle class has become an endangered species.