ISTANBUL 

Despite financial giants' towers placed in Wall Street, New York City is grappling with a quiet erosion of its financial supremacy, a trend experts call "definancialization" that threatens its high-tax-funded welfare system and lures jobs and the ultra-rich elsewhere.

The share of city workers in finance and insurance jobs has plunged from 11.5% in 1990 to 7.7% as of August 2025, according to data analyzed by The Economist, based on official figures from various sources.

Of the 233,000 US finance jobs created in the past five years, New York State captured just 19,000—trailing Texas, Florida, North Carolina and Georgia—and even JPMorgan, despite its gleaming tower in New York, employs more people in Texas than the city.

Kathryn Wylde, head of a business group named the Partnership for New York City, pins the blame on a "double-whammy" of steep costs and taxes; New York State's 7.25% corporate income tax is compounded by the city's own levy plus a regional transit fee, pushing some businesses' local tax rates above 18%.

Stringent regulations — including mandates for independent audits on AI hiring tools and bans on inquiring about criminal or salary history — further inflate expenses, prompting firms to relocate.

Global investment group Goldman Sachs has steered managers toward Dallas and Salt Lake City. Morgan Stanley now counts as the top employer in Alpharetta, Georgia, a suburb of Atlanta. In July, Citigroup unveiled plans to hire 510 workers in Charlotte, North Carolina.

- High living costs

The exodus extends to workers and the wealthy; from 2010 to 2024, New York's metro area added 32% more college graduates, reaching 3.6 million — America's largest skilled workforce concentration—but nationwide, the figure swelled 44%, with faster growth in Miami and Dallas (over 60%) and doubling in Charlotte and Austin.

High living costs deter talent; the city's median rent hit $3,600 monthly, more than double the $1,700 average in the nation's 50 largest cities. Nursery care averages $26,000 annually, up 43% since 2019, while basic car insurance runs $1,729 yearly — $400 above the next priciest state.

The Tax Cuts and Jobs Act capped state and local tax deductions at $10,000, hiking effective rates for high earners in tax-heavy New York.

Hedge fund titans Paul Singer of Elliott Management and Carl Icahn of Icahn Enterprises fled to Florida, as did former President Donald Trump in 2019.

New York's share of US million-dollar earners dropped from 12.7% in 2010 to 8.7% in 2022, according to the Citizens Budget Commission, costing the city $13 billion in lost income tax revenue that year.

Goldman Sachs estimates 10% of city households earning over $10 million changed residency from 2018 to 2023.

Since late 2019, New York has added 268,000 health care and social assistance roles — mostly low-wage home care — outpacing total employment growth of 220,000.

Inflation-adjusted private-sector hourly wages fell 9% citywide since January 2020, versus a 3% national rise, fueling voter frustration over living costs.

- Hard to spend on welfare and education

Technology employment surged 64% from 2014 to 2024, as per the Center for an Urban Future.

Google opened a Hudson River campus in 2022, joined last year by OpenAI and Anthropic offices. Amazon, rebuffed in a 2019 headquarters bid, now staffs 2,000 in Manhattan and leased 330,000 square feet of former HSBC space in April.

Still, tech's 84,000 workers in computer systems design pale against 383,000 in finance — and face similar cost barriers.

The strain hits hardest at City Hall. New York spends $9,761 per capita on welfare and education — 72% above Texas, 130% over Florida — bankrolled by finance's elite growth, notes Bard College historian Daniel Wortel-London, author of "The Menace of Prosperity."

- Low-income renters

Enter Zohran Mamdani, the Democratic socialist frontrunner for mayor, whose platform eyes $6 billion annually for universal child care, funded by hiking the state corporate tax to 11.5% and adding a 2% levy on million-dollar incomes; Governor Kathy Hochul has vowed to block tax hikes, but Mamdani's cost-of-living focus resonates.

His housing agenda includes freezing rents on one million stabilized units and building 200,000 more over a decade, alongside easing red tape for all developers.

The city council's December "City of Yes" zoning reforms — easing office-to-housing conversions and height limits near transit — spurred a 60-year high of 34,000 new apartments last year, though momentum may fade without tax incentives.

For low-income renters earning under $70,000 — near the tenant median — rent now devours 54% of income, up from under 40% for equivalent earners in 1991, as per the city housing survey.

Even well-paid locals need $151,600 yearly to cap studio rent at 30% of income, according to the Economist's Carrie Bradshaw index — 50% pricier than Boston or San Francisco.

Without a finance rebound and housing boom, Wylde warns, New York risks fading into an "economically ordinary" US city, burdened by soaring rents and unchecked welfare ambitions — especially if national markets sour, saying: "I'm afraid we're going to find out."