Finance industry: Dallas, Austin, Salt Lake City, San Francisco, Florida

Where are the financial centers of the future? Joel Kotkin writes in City Journal,

The big winners—as Alliance-Bernstein’s move demonstrated—have been overwhelmingly in the low-cost, low-density Sunbelt. With reasonable taxes, more affordable home prices, and expanding residential populations, these areas are becoming financial-industry giants, even if they lack large, locally based companies. Among the global financial firms relocating operations to these less costly locales are UBS, Deutsche Bank, Morgan Stanley, and Goldman Sachs.

The next potential financial superstar is the Dallas area, now boasting the country’s third-largest concentration of financial workers and likely to supplant Chicago from second place in the near future. Last year, the Dallas Morning News suggested that “Y’all Street” may soon replace Wall Street as the U.S. financial capital. That’s a bit of a stretch, but between 2009 and 2017, Dallas did expand financial employment by 30 percent—three times New York’s rate and more than six times that of Chicago or Los Angeles. With rapid population growth, low taxes, moderate housing prices, and a premier strategic location between the coasts, Dallas has much going for it. Last year, Texas overtook New York for the most banking and insurance jobs among the states; in 2005, New York had led by almost 100,000 jobs.

Dallas is not alone. Since 2009, Nashville, San Antonio, and Phoenix—winner of new jobs from employers like USAA, State Farm, and Charles Schwab—have experienced financial-services growth rates greater than 30 percent. Charleston, Charlotte, Durham-Chapel Hill, Raleigh, and Greenville have all seen their financial workforces expand by more than 20 percent. Florida, which shares a time zone and many cultural ties with New York, is a financial-services hotbed, with Jacksonville, Miami, Tampa, and Orlando all experiencing growth rates two times that of Gotham.

The other region clearly capitalizing on the outbound trend is the Intermountain West. The epicenter here is Utah, notably St. George, Provo, and especially Salt Lake City. All enjoyed 25 percent growth since 2009, with Salt Lake City emerging as a growing center for international banking, in large part due to the area’s language capabilities, an outgrowth of Mormon missionary activity. Salt Lake City has become Goldman Sachs’s fourth-largest global hub; the firm now employs more people there than in any U.S. location outside New York. All indications are that the financial-services presence in Utah will continue growing.

…Increasingly a business service and media hub, Silicon Valley/San Francisco is no longer just geek central. As long ago as 2015, JP Morgan Chase CEO Jamie Dimon warned that “Silicon Valley is coming” after New York’s core business. Home to many rising “fintech” companies, the Bay Area already counts established firms like Apple, Square, and Paypal that are ideally suited to the new phone-based payment system. Talent that might have headed to Wall Street or LaSalle or State Streets is instead going to San Francisco’s Montgomery Street or the dominant venture-capital region around Palo Alto and Menlo Park. Financial employment is rising in other tech centers, too, notably in Austin, where financial-sector growth topped 39 percent. California-based PIMCO, the nation’s largest bond fund, recently announced plans to site its expanding data and analytics operation in the Texas capital—not in Orange County, long a center for tech and data analysis.

The changing nature of the financial and tech industries, along with the appeal of lower-cost regions for these industries, poses a threat to long-established finance centers like Boston, Chicago, and New York. In these traditional hubs, banking and finance have long been producers of both high-paying jobs and generous revenues for overspending urban regimes. Legislators in old-guard cities should take a long look at the policies that are driving these jobs away presently—and perhaps permanently.

Read more here.