Wall Street as we know it may not be long for this world—though the movement that occupied its parks has little to do with it. The New York Times reports that, despite good years for America’s investment bankers, the number of mid-level financial positions on the Street is slowly dropping as banks escape the city’s regulations, high taxes, and high labor costs to open offices in friendlier states like Utah, North Carolina, and Florida.
New York city is looking more and more like a Potemkin Village these days. The middle levels of the city’s private sector are hollowing out, with fewer positions between the high wage titans and the low wage service-sector workers. Wall Street’s CEOs may still keep their high-rent digs in Lower Manhattan, but the cohort of well-paid but not super-rich employees that forms the middle class of any investment bank is quietly moving out of the city for cheaper rents elsewhere.
This is a textbook case of how the blue social model creates exactly those conditions that Americans deplore. New York’s complicated regulatory structure, high rents and high welfare costs make it almost impossible for even wealthy companies to maintain mass middle-class employment.
This is especially bad news for New York City, whose famed “luxury city” revitalization has been largely financed through taxes on its flagship industry. As Wall Street jobs flee the city, the tax base erodes, making it even harder to maintain.
New York has some of the bluest laws and policies around. But the net result isn’t a city that becomes more and more prosperously and stably blue. The result is a city from which the middle class is steadily exiled. The bluer you are, the more likely you are to turn into a wealth-polarized dystopia of tycoons and hotel maids.
Thanks to the financial bubble and the huge federal bailout, New York has managed relatively well for the last few years. But it’s very hard to see what jobs will replace the Wall Street mid-level positions—and where the tax revenue will come from to support the city’s huge bureaucracy and high fixed costs.
The blue social model devours its own.