(MENAFN) Despite its iconic Wall Street towers, New York City is quietly losing ground in finance, a trend experts label “definancialization,” which threatens the city’s high-tax-funded welfare system and draws both jobs and the ultra-rich to other states.

According to data analyzed by The Economist, drawing on official sources, the proportion of city workers employed in finance and insurance has fallen from 11.5% in 1990 to 7.7% as of August 2025.

Of the 233,000 U.S. finance jobs created over the past five years, New York State captured only 19,000, trailing behind Texas, Florida, North Carolina, and Georgia. Even JPMorgan, despite its gleaming New York headquarters, employs more staff in Texas than in the city.

Kathryn Wylde, head of the business group Partnership for New York City, attributes the trend to a “double-whammy” of high costs and taxes. She explained, “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%.”

Regulatory burdens also weigh heavily, including mandates for independent audits on AI hiring tools and bans on questions about criminal or salary histories, driving companies to relocate.

Global investment firm Goldman Sachs has shifted managers to Dallas and Salt Lake City. Morgan Stanley now lists Alpharetta, Georgia, a suburb of Atlanta, as its largest employment hub. In July, Citigroup announced plans to hire 510 staff in Charlotte, North Carolina.

High living costs compound the exodus
The flight of talent extends beyond corporations. From 2010 to 2024, New York’s metro area added 32% more college graduates, reaching 3.6 million—the nation’s largest concentration of skilled workers—but the nationwide increase was 44%, with Miami and Dallas growing over 60% and Charlotte and Austin doubling.

Skyrocketing costs deter residents. The city’s median rent hit $3,600 per month—more than twice the $1,700 average across the 50 largest U.S. cities. Nursery care costs surged 43% since 2019 to $26,000 annually, while basic car insurance averages $1,729 per year—$400 higher than the next priciest state.

The Tax Cuts and Jobs Act capped state and local tax deductions at $10,000, further raising effective rates for high earners in already expensive New York.

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

As a result, New York’s share of U.S. 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 that 10% of households earning over $10 million left the city between 2018 and 2023.

Meanwhile, job growth has been concentrated in low-wage sectors: since late 2019, New York added 268,000 healthcare and social assistance roles—mostly home care—exceeding the city’s total employment growth of 220,000. Inflation-adjusted private-sector wages have dropped 9% since January 2020, compared with a 3% national rise, fueling voter frustration over the city’s high cost of living.

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