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Lost in the mayhem in DC over the past few days has been Wall Street’s move to quietly delay — yet again — a full return to their New York headquarters. Originally the return was expected for this summer, but now I’m hearing that workers won’t come back till closer to the end of 2021 or even early 2022.
The new (unofficial) timetable being adopted by the likes of Goldman Sachs, JPMorgan, etc., won’t generate the national headlines of the DC riots, or the president’s inexcusable behavior egging them on. But the delays will have consequences — all negative — for the city’s finances, for people who hold debt in New York and for anyone who cares about the quality of life in this once-great city.
And don’t blame the usual punching bags, aka the executives who run the big banks. The fat cats are merely reacting to the fact they can’t get COVID vaccine needles in the arms of their people because of the glaring incompetence of Mayor de Blasio and Gov. Cuomo. The duo had at least nine months to prepare for a vaccine and obviously didn’t.
Also, don’t expect the banks to make any grand announcements about their delayed return to Wall Street. That’s because they have no faith in the governor or the mayor to speed things up. As a result, they may have to push it back again, possibly into 2022, bankers tell me, because of the massive cloud of uncertainty that hangs over the local vaccination effort.
“We’re not worried that people will get COVID at our offices, which are scrubbed and purified,” said one senior executive at a major bank. “It’s getting to the office that’s a problem and the only way to eliminate that risk is for everyone to be vaccinated, which is a question mark at this point.”
What I am told is that bankers — who for vax-priority purposes are considered lower-rung essential workers — can reasonably be expected to get the first shot by the summer, not the early spring as most Wall Street brass had previously expected. This means the financial sector’s roughly 500,000 workers may not be vaccinated until the fall.
While de Blasio and Cuomo have been finger-pointing on the vaccine fiasco, they are oblivious to the harsh economic reality of their blundering: Banks had expected to have around half of their workers in their NYC offices by the end of 2020. But by most estimates staffing levels remain at around 20 percent as the pandemic took another ugly turn during the holidays.
Just to recap what this means for the city economy: In round numbers, we’re talking a massive reduction of all those jobs banks bring to the city, a huge bite out of the about $4 billion in city tax revenues Wall Street generates, and a reduction in the 17 percent of economic activity that financial services contribute during normal times.
Since so many of these folks make a lot of money, they in turn create a lot of jobs by going to bars and ordering big lunches. About three jobs in the state are created by one job in banking, the state Comptroller’s Office estimates.
Without them, the city and the state may be facing some dark times. The city’s Independent Budget Office hinted at this problem in a recent glass-half-full report of our COVID finances. The office said city budgets in particular face deficits but are faring better than expected, which is hard to believe given the fact that Manhattan has become a ghost town — particularly after the end of indoor dining just before the holiday season.
My guess: City and state bean counters have always been adept at budget gimmicks to make things look better than they are. Wall Street bond traders are good at sniffing out this shell game, which is why yields on NYC bonds had recently spiked on the worry that default is more than a theoretical possibility, recovering after the Dems took the Senate based on the possibility of a federal bailout for New York’s budget woes.
But buried in the report is this more sobering piece of analysis: “Even by the end of 2024, however, employment in the city is projected to remain below its pre-pandemic peak. While we expect recovery over the next few years, there is great uncertainty over the city’s longer-term outlook, as residents and businesses reassess the risks and benefits of living and working in New York City.”
Another guess is that the office’s analysis isn’t weighing the news I’m reporting here: That the lousy vaccine rollout is pushing back a full NYC return of the banking sector indefinitely.
Translation: The city’s long-term employment outlook is even more bleak. (The IBO didn’t respond to a request for comment.)
The irony is that the individual moneymen and women want to come back and return to some semblance of their normal lives. Not all of them like their work-from-home arrangements during the pandemic even if their firms have done just fine. (See shares of Goldman Sachs, which were stagnating before the pandemic. Since January of this year, they are up around 9 percent, while the Dow is up just 3 percent.)
Many don’t want to move to Florida or Texas as the banks consider relocations to more business-friendly states. And most have no problem with braving the possible side effects of the COVID vaccine if that’s the price they’ll have to pay for a return to normal, bank executives told me.
Now if only the mayor and the governor would listen and save what’s left of our economy.