More Financial Jobs Move to Jersey. But is it a good thing for New York?
It appears that there will soon be 1,600 fewer finance jobs in Lower Manhattan. But these job losses aren't the result of mortgage backed securities or credit default swaps. They are the result of Mayor Bloomberg's tough but smart stance of not giving out tax breaks and other subsidies to companies that threaten to leave.
The Depository Trust and Clearing Corporation will likely move most of its financial sector jobs across the Hudson to Jersey City. The Garden State offered the company $74.6 million over 10 years in subsidies to relocate. While we will miss the jobs and the tax revenue they create, it is better to lose these jobs than to throw a host of incentives and subsidies at the company to entice them to stay. Deputy Mayor Robert C. Lieber says it well:
"We're glad the company is maintaining its headquarters here," said Deputy Mayor Robert C. Lieber.
"But," he added, "we're not about to use scarce taxpayer dollars to chase irresponsible enticements that other places may be willing to give away. We're better off investing that money."
Very true. New York will never be the cheapest or most cost-effective place to do business--land is way too expensive for one. But what New York can offer is value. In order to create value, we must make smart investments in our physical infrastructure, our human capital, and our environmental sustainability. These are the ways in which New York City can be competitive.
There is much the city could do to reform its economic development policies. Requiring subsidy recipients to pay a living wage would be one. And it seems that the city does sometimes negotiate with companies that threaten to leave. But the city is making some good moves, and this is one of them.