Escape from New York
The Nashville Tennessean had some good news for its readers this week: AllianceBernstein (AB), a global money-management firm with nearly 3,500 employees and half a trillion dollars in assets, will bring 1,050 well-paying jobs to the capital of the Volunteer State. New Yorkers, though, could be forgiven for not realizing that Nashville’s gain was their loss; no New York newspaper prominently featured the story of a major investment firm forsaking Gotham for Music City. New Yorkers’ natural reaction, if they did hear of the news, might be: who needs ‘em, anyway? The city is already straining under a record population, record employment, and record tourism. Yet the reasons AB executives cited for the move should worry New York. New York is no longer a high-cost city with high-value amenities; rather, it is increasingly a high-cost city with low-value public services, most notably transportation infrastructure.
New York has been losing its Wall Street jobs for decades—to automation, to financial crisis, and to cheaper cities. In 1998, employment in the city’s “financial investments” industry totaled 181,200; today, it stands at 176,400, according to the federal Bureau of Labor Statistics. In the past, New York’s loss might have benefited New Jersey, a lower-cost option for back-office jobs. But the Garden State has fared two and a half times worse than New York, percentage-wise: it has 38,100 such jobs, compared with 40,800 two decades ago.
The jobs that are leaving are no longer lower-paid clerical and processing jobs, as Tennessee’s governor, Bill Haslam, helpfully reminded Nashville reporters this week. “This is not somebody’s back-office operations,” he noted. “This is literally the global headquarters of a major financial firm.” According to Jim Gingrich, AB’s chief operating officer, the jobs will pay an average of $150,000 to $200,000 in areas such as finance, IT, law, and compliance. New York State could lose about $11 million in personal-income taxes thanks to this transfer, according to the Empire Center’s E.J. McMahon, and the city will lose more, depending on where each relocating employee had lived.
Yet the revenue loss is not as important as the fact that the flight of these jobs makes New York even more dependent on the super-wealthy. These AB positions still aren’t Wall Street’s top-paid jobs. AB’s portfolio managers and research and trading jobs will stay in New York. As the state comptroller noted earlier this year, the average Wall Street salary (including bonus) is about $375,000, five times higher than in the rest of the city’s private sector. Without AB’s solid upper-middle-class jobs, the average salary will be even higher, widening the city’s income divide. New York needs middle-affluent earners who have a stake in public services, from education to public transportation.
Indeed, AB leadership cited its workers’ dependence on such services as a key reason in the company’s move. “Moving our corporate headquarters allows us to offer advantages to employees we just simply couldn’t do in the New York metropolitan area,” said CEO Seth Bernstein. Bernstein cited another Nashville advantage: the state has no income tax on wages, an important consideration, especially now that President Trump’s tax law has curtailed individual filers’ ability to deduct what they pay at the state and local level.
Bernstein also implied that New Yorkers aren’t getting their money’s worth for their high taxes, specifically mentioning Nashville’s shorter commute times. The average Nashville-area resident spent 27 minutes commuting to work one way in 2016, according to the Census; the average New York metro resident spent 35.9 minutes. AB is taking these jobs down South in large part because its employees are fed up with their rides to work—and with only 61.7 percent of the Metropolitan Transportation Authority’s subway trains arriving on time in March, unpredictable, crowded, unpleasant commutes are likely impacting their productivity. Nashville commutes, though, are getting longer as the population grows, and city residents just voted down a transit plan, posing a risk: poor planning for growth portends a future of sprawl and snarled traffic.
In at least one critical area, New York should beat Nashville handily. Nashville is in the middle of a crime wave; last year, 107 people were murdered there, the most since a record 112 people lost their lives to violence in 1997. As homicide soared in Nashville, it continued to reach record lows in New York, with fewer than 300 people murdered last year for the first time in decades. With fewer than 700,000 residents, compared with 8.6 million in New York, Nashville’s murder rate is nearly four and a half times Gotham’s. The situation hasn’t improved this year, but AB’s executives didn’t even bring it up. That a major corporation is embracing Nashville rather than fleeing it is a stark warning to New York’s urban thinkers: crime is important, but it isn’t everything.
New York should take AB’s decampment as a warning that if it can’t cut taxes, it must spend the money it has far more competently—improving middle-class and upper-middle-class residents’ quality of life, especially commutes—or else.
