Cities Stealing Financial Jobs from Wall Street


By Joel Kotkin and Michael Shires

Over the past 60 years, the share of financial services in the economy exploded from 2.5% to 8.5% of GDP. Even if you think, like us, that financialization is not a healthy trend, the sector has a high number of relatively well-paying jobs that most cities would welcome.

Yet our list of the fastest growing financial economies is surprising, and includes many “second tier” cities that most would not associate with banking. To identify the cities with the largest gains, we ranked the employment growth of metropolitan statistical regions in the long-term (2001-12), medium-term (2007-12) and the last two years, as well as the dynamics.

Gallery: Cities Winning the Battle for Finance Jobs

11 photos

New ruffles

Topping our list among the 66 largest metropolitan areas is Richmond, Virginia, where financial sector employment has grown an impressive 12% since 2009. This reflects the presence of major banks such as

Capital One Financial
, the region’s leading private employer with 10,900 jobs, and

SunTrust Banks
, which employs 4,400. The insurer

Genworth Financial
is based in Richmond, and

Wells fargo
and

Bank of America
there are also important operations. Along with the Northern Virginia Metropolitan Statistical Area (an area encompassing the suburbs of Washington, DC, including the counties of Fairfax, Arlington, Loudoun, and Prince William), which is # 7 on our list, the Old Dominion is slowly becoming a major Power financial center.

In once rough Pittsburgh, which ranks second on our list, financial services are now the largest contributor to regional GDP, according to the Allegheny Conference. Long seen as a lost hole, the region has started to attract the kind of highly skilled workers employed by financial firms, according to local analyst Jim Russell. to joke, “Pittsburgh is becoming the new Portland. Financial employment has increased by almost 7% since 2009. strongly revive the local economy covers everything from energy to medical technology.

Like Pittsburgh, some of the areas that are doing well in financial services are also thriving in general. These include stars from Texas such as the No. 3ft. Worth-Arlington, where employment in financial services has grown more than 12% since 2007, as well as No. 4 San Antonio-New Braunfels. And it’s not real estate that is causing this boom – in Fort Worth, for example, the financial services real estate and rental and leasing subsector has lost jobs over the past five years. years while the “finance and insurance” sub-sector has developed. almost 20%.

Some metropolitan areas that don’t really set the world on fire are scoring points in financial jobs sweepstakes. Jacksonville, Florida is fifth on our list and St. Louis, MO-IL is eighth. In Saint-Louis, employment in the financial sector has increased by 6.4% since 2007 according to our tally, and the number of jobs in the securities sector has increased by 85% to reach 12,000 over the past year. this period, according to the the Wall Street newspaper.

Complete list: cities winning the battle for finance jobs

What is driving the dispersion of financial services?

The largest traditional financial centers seem to be losing their advantage. New York, home by far the largest banking industry with 436,000 jobs, ranks 52nd on our list of cities with the most new jobs in the industry. A lot of money can still be minted in Gotham, but jobs are not. Since 2007, financial employment in the Big Apple is down 7.4%.

The following four largest financial centers are also doing poorly. San Francisco-San Mateo ranks 37th – remarkably poor considering San Francisco ranked first overall on our 2013 list of Best Cities for Jobs. Meanwhile, Boston-Cambridge-Quincy ranks 44th (despite a solid 17th place overall), Los Angeles-Long Beach is 47th and Chicago-Joliet-Naperville is 57th.

So what gives here? A key factor is cost reduction. As businesses seek to move the back office and some sales functions to cheaper locations, traditional financial centers are losing out. Between 2007 and 2012, New York, Boston, Los Angeles, Chicago and San Francisco lost a total of 40,000 jobs in finance.

In addition to the lower rents in the cities that feature high on our list, workers are also cheaper: the average annual salary for securities jobs in St. Louis is $ 102,000, according to the the Wall Street newspaper, compared to $ 343,000 in New York.

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This trend is not limited to leading investment banks and brokerage firms. Insurance, the quieter and more tame part of the financial services industry (it has about the same number of jobs today as it did in 2001 and 2007), has also seen a job exodus to these regional markets at a lower cost. Illinois-based insurance giant State Farm, for example, recently signed mega-leases in Dallas, Phoenix and Atlanta.

Manufacturing and energy drive change

the relaunch of manufacturing in the Rust Belt and the Midwest creates jobs in the financial sector in mid-sized cities (those with total employment of 150,000 to 450,000). The leaders are Ann Arbor, Michigan, followed by Green Bay, Wisc., # 16 Grand-Rapids-Wyoming, Michigan, and # 19 Madison, Wisc. Among small towns, Owensboro, Ky., Takes the top spot, followed by No. 3 Kankakee-Bradley, Illinois, No. 5 Clarksville, Tenn.-Ky., No. 11 Bloomington-Normal, Illinois, and No. 13 Michigan City-La Porte, Ind. With low commercial and industrial market costs and an available workforce, these regions could prove attractive to manufacturers relocating their operations to the United States.

The top of the financial services rankings for medium and small cities is also generously dotted with places where hot energy savings boost employment across industries. The mid-size list includes Bakersfield-Delano, Calif. In third place, the Texas towns of El Paso and McAllen-Edinburg-Mission in fifth and ninth place, respectively, and No.10 Lafayette, Louisiana. Our small town ranking includes the Texas cities of Odessa (2nd), Midland (fourth) and Sherman-Denison (10th), and Cheyenne, Wyo. (14th). More economic activity will continue to flow to these regions both as they develop and as their suppliers come together to reduce costs.

What the future holds

Historically, financial services were concentrated in large cities, but their increasing cost is leading financial institutions to focus on small metropolitan areas. With internet connectivity and the growth of educated workforce in many small metropolises, it has become increasingly possible for financial companies to locate many key functions outside of traditional financial centers.

Some places can boast of benefits beyond just lower costs. Jacksonville and Miami-Kendall (# 13 on our list of major cities) benefit from the huge demand for financial advisors in Florida. The state of the sun ranks fourth in the number of financial advisers, and this looks likely to grow as at least some of the growing ranks of backsliding baby boomers – some with decent nuggets – head south to retire or start a second career . This demographic trend could also benefit Phoenix, which already hosts major operations of Bank of America, JPMorgan Chase, and Wells Fargo.

Perhaps no low-cost metropolitan area has greater long-term benefits than Salt Lake City, No. 12 on our list. The unique language skills of the largely Mormon workforce have attracted large financial firms such as Goldman Sachs, which need people who can converse in Lithuanian, Chinese or Tagalog. Salt Lake City, with 1,400 employees, is the sixth largest investment banking site in the world.

“We see Salt Lake as a highly leveraged location,” notes Goldman Managing Director David W. Lang. “There is a huge cost differential and you have a very talented environment. “

As we have seen in the manufacturing and information industries, the financial services industry appears to be undergoing a profound geographic shift. Once identified largely with historic places such as Wall Street, LaSalle Street in Chicago or Montgomery in San Francisco, the financial sector – like much of the economy – is dispersing, perhaps even faster. Over time, this could accelerate the process of economic decentralization which has been taking place, quite regularly, for almost half a century.

Complete list: cities winning the battle for finance jobs


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