New York City, Chicago, San Francisco … when you think of industries like banking or financial services, these cities usually come to mind as the center of activity. While Lower Manhattan’s Wall Street or Chicago’s La Salle Street both still wield a significant amount of influence in this sector, they no longer monopolize it, especially when it comes to job growth.
Following the money in this niche leads Midwest to cities like St. Louis, Dallas-Fort Worth and Phoenix, where jobs are being added by the thousands. Conversely, the East and West Coast giants of the business have shed jobs by the thousands since the financial crisis of 2007-2008, according to a recent study published on NewGeography.com.
Between 2007 and 2012, the top five financial markets — New York, Chicago, Boston, Los Angeles and San Francisco — lost a total of 39,000 jobs. Of these, 19,000 (9 percent) were in the New York metro area, where one-third of jobs in the sector were concentrated in 2007. The losses were even greater in California, peaking at 21 percent in Los Angeles and 17 percent in San Francisco.
Outside these “big five” markets, the number of financial sector jobs has increased modestly by 12,000 over the past five years. Many have landed in Texas, where the state’s four biggest metros — Dallas-Fort Worth, Houston, San Antonio and Austin added 5,400 jobs to its financial services industry — a 14 percent increase.
Other big gains have occurred in St. Louis, which added the most financial sector jobs at 5,600, followed by 2,600 in Washington, D.C., and 3,900 in Phoenix. Des Moines holds the record for the biggest jump, with a 96 percent gain in financial services.
Economist Wendell Cox identifies two key trends behind the shifting job patterns in this industry. The first is the dispersion of jobs from concentrated urban cores to less dense suburban areas. Cities with less dense cores gained 9,000 financial sector jobs, while those with high density historical cores suffered losses of 8,000 more than the national average. An example of this is Bridgeport, Conn., a suburban enclave of the New York combined statistical area, which added 2,000 jobs, even as the area around it lost jobs in the sector.
Another trend is the correlation between housing affordability and job gain in financial services. Cities rated as affordable gained more than 6,000 more jobs in this sector than those classified as moderately unaffordable. Not surprisingly, the biggest losses occurred in cities with the most unaffordable housing.
What’s your take on this study? What trends do you see in the financial services or banking industry in your region? What factors are key to a healthy financial sector in the economy today? Please share your thoughts below.