TECH JOBS | Is Tech an Ally or Threat to Wall Street? (A Dialogue)

Tech Jobs vs. Wall Street Jobs (The American Banker, One Year Ago, March 16, 2017)

One year ago the American Banker displayed the chart at left, suggesting that tech jobs were in competition with many Wall Street jobs.  

Greg David recently in his Crain's blog expressed appreciation for the growth of tech jobs in New York City, as a diversification of highly paid employment within NYC. 

The following unedited (except for formatting) dialogue on this topic between Edward Greenberg, an attorney in New York City, and me were posted as comments on the Crain's blog and are re-posted here by permission of Mr. Greenberg. 

An underlying question is whether tech jobs are substitutes for Wall Street jobs, as indicated in the chart above, or are complementary.

Will more use of technology in the financial sector

• Strengthen Wall Street? 
• Hollow out its employment base?
• Permit financial jobs to migrate to other cities?

Edward C. Greenberg 
Response to Greg David, March 1, 2018

Very nice news but for context – there are 80,000 (2/3 of NYC's) such "defined" jobs in Los Angeles, a city with less than 1/2 the population of NYC. The population of the LA metro area is 13.5 million and NYC's is 20.3 million.

LA is not considered a "tech hub" like Northern Ca or even Boston. So while the number of tech jobs in NYC sounds like, and is in fact, good news, it is being employed by our politicos for their own PR purposes. By NOT comparing these figures to other major cities the figures become distorted and not indicative of anything that our politicos can take credit for.

Forbes does not list NYC in its top 10 cities for tech job growth. It does list cities like San Diego, Raleigh, Nashville (metro area) and Jacksonville, FL (where there has been a 72.4% increase in tech jobs from 2001 to 2017.

Every new job in NYC is good news but other cities are doing better in attracting these type businesses and jobs. If NYC "rests on its fake laurels" it will continue to fall behind other cities in attracting these jobs.

The author is spot on regarding the amorphous "definitions" employed to define tech sector and "eco-system" jobs. A coffee shop across the street from Google HQ which serves Google employees is clearly part of the tech "eco-system".

John Tepper Marlin
Response to Edward C. Greenberg, March 1, 2018.

I agree that understanding the significance of the tech sector in New York City requires comparing New York with other cities. The New York City Comptroller's Office did this in 1999, just before the way the job numbers are aggregated was changed.

In addition, the idea that Wall Street should be pitted against the tech sector as a source of jobs misses a big part of the story, which is Wall Street's need for tech support and tech's dependence on Wall Street

An MIT Professor solemnly told me 20 years ago that New York City could never catch up with Boston as a source of startups servicing financial institutions. MIT was developing “aggregators” that would, he said, soon be collecting financial information from individuals and assembling them in one place, across platforms. That process is taking longer than he predicted.

Meanwhile, New York City financial technology jobs have been growing because Wall Street wants these vendors close by. Those high-frequency traders have to be nanoseconds from their platforms.

Wall Street and NYC tech workers stand or fall together. NYC's preeminence in the financial world of the next decade depends on both.

The 1999 NYC Comptroller's report on the growth of tech jobs noted the difference between counting tech occupations and tech-oriented companies. The data-counting problems are too great to opt for one or the other. The problem is with the aggregation process. We depend on the BLS for data, and the BLS makes it hard to count payroll local jobs by claiming that disclosing information would allow researchers to get down to the company level and discover proprietary information.

It is sad for that reason that BLS moved many research functions out of New York City to Boston (and Philadelphia). NYC's 1911 Triangle Fire gave rise to the Labor Department and New York City was one of the earliest research centers on job data. Senator Ted Kennedy was reportedly active in promoting the move of BLS staff positions moved from New York to Boston.

A good understanding of how financial and technology jobs interface is important to New York City. It is also important to the country. We need more and better research on what is happening to jobs in the intersection between finance and technology.

Edward C. Greenberg 
Response to John Tepper Marlin, March 1, 2018


Agreed – with one key addition.


Lots of traditional Wall St, banking and financial service jobs moved from NYC to NJ, FL, S. Dakota and Utah. The concept of "geographic proximity" is rapidly becoming an anachronism. The notion that an NYC company would have "back office personnel" 500-1,500 miles from Gotham was unthinkable 25 years ago. Today it is the norm.

The Internet did not come into meaningful public use until the 1980's; computer driven trading came in about the same time. Pick up a WSJ, NYT, Forbes, Fortune or The Economist from the era. Try to find one that remotely predicts the manners of business and locations of major insurers, banks and stock trading which would exist in 2018.

Geography as a factor will soon be entirely irrelevant. Gothamites still don't believe the number of companies and jobs in these sectors moving to or already located in FL, TX and various other flyover states most of which New Yorkers have never set foot in. Did your buddy use the term "near shoring" in 1999? Betcha a beer he didn't.

John Tepper Marlin 
Response to Edward C. Greenberg, March 7, 2018

Yes, geography is less relevant than it used to be. But no, geography will never be irrelevant, even to technology. The way in which it is relevant is changing.

One of the strengths of the United States is that we have many strong population centers that are highly interconnected. New York City's greatest strength has been its ability to lead the country in finance and communications. This in turn pulled in many corporate HQs.


Financial institutions have always used every means of communication they could. Before the telegraph, they used carrier pigeons as well as horseback couriers.


Today, I'm not in New York City (I'm away from the nasty Northeastern weather) but I feel as much in touch as if I owned a huge flock of carrier pigeons or a large staff of messengers operating on routes dotted by inns with stables.


I still rely heavily on face-to-face meetings – especially when it comes to meeting new people. Personal contact may actually be more likely to mislead than seeing what someone writes, but some part of us wants to see people talk.


What is changing since 1999 is that many businesses have learned how to reduce the need for continuous face-to-face contact. Work at home, control from a remote location, and conference calling are all functioning more widely and reliably than they first did.


The natural duopoly of newspapers and bankers, and their centralization in financial centers (my great-grandfather edited Holland's then-greatest newspaper in Amsterdam, founded on family links among bankers and newspapers), survived the introduction of the telegraph and the radio. It has also survived the creation of the Internet.


We have seen recent stories about Silicon Valley's entrepreneurs seeking new locations because of high costs and inefficiencies, and the growth of new tech centers in the Midwest.


This decentralization is a good thing for the United States, even if it creates challenges for New York City. Instant reporting and high-frequency and program-driven trading is vulnerable to cyber-malfunctions, accidents or cyberattacks. After 9/11, companies built huge physical back-office locations in readiness for a need to move. It made sense to decentralize.

Geography is still relevant because cyberspace still depends on interruptible physical computers and power generation.

Edward C. Greenberg 
Response to John Tepper Marlin, March 7, 2018

You make some excellent points but if history teaches us anything it is that centers of power and commerce change for good or ill and many become irrelevant or disappear entirely.

Nobody predicted the Detroit of 2008 in 1960 or 1970. The notion that Pittsburgh would not be a steel producer by the late 20th century was predicted by no one in the years after the war. There was no mention of the Internet in any business or general circulation publication in 1960. Buffalo and Newark have 1/2 the populations today that they had in 1960. Who predicted 30 years ago that Jacksonville, Fl, Utah, S. Dakota and other places would be centers of banking, finance, insurance and credit transactions?

The ten most populous American Cities in 1960 were:

1 New York, New York 7,781,984.
2 Chicago, Illinois 3,550,404.
3 Los Angeles, California 2,479,015.
4 Philadelphia, Pennsylvania 2,002,512.
5 Detroit, Michigan 1,670,144.
6 Houston, Texas 938,219.
7 Baltimore, Maryland 929,024.
8 Cleveland, Ohio 876,050.
9 Washington, District of Columbia 783,956.
10 St. Louis 750,000.

Nobody predicted that by 2010 the above list would morph into:
1 New York City, New York 8,175,133.
2 Los Angeles, California 3,792,621.
3 Chicago, Illinois 2,695,598.
4 Houston, Texas 2,099,451.
5 Philadelphia, Pennsylvania 1,526,006.
6 Phoenix, Arizona 1,445,632.
7 San Antonio, Texas 1,327,407.
8 San Diego, California 1,307,402.
9 Dallas, Texas 1,197,816.
10 San Jose, California 945,942.

Cleveland, Baltimore, Detroit, St. Louis “disappeared". Jacksonville, Fl had a population of 201,000 in 1960 and 907,000 in 2017. Not even the town fathers saw that coming and as a result the city has been on a years-long road building project to handle the daily commuters.

Predictions of future development of population movements and industries in the US have been historically wrong. No expert, urban planner, or politician foresaw the dominance of e commerce, the existence of Facebook, Apple, Amazon or the abundance of indigenous oil/natural gas during the gas crisis of the 1970s. The Dec. 3, 1973, cover of Time Magazine, "The Big Freeze", featured a lengthy scientific article about the earth's temperature decreasing and the coming of a new ice age. This expert prediction came before the catalytic converter was required for autos, which were spewing exhaust 5 times dirtier than current cars which burn cleaner fuels. Trucks were then burning dirty diesel, and there was extensive burning of coal to generate electricity.

What odds do you think you would have received by making a bet in 1970 that in 2018, the fastest-growing states in America would be in order: Idaho, NV, Utah, Washington, FL, AZ, TX, CO, Oregon and S. Carolina (10th). Six of those states are clearly not in the sunbelt.

So, I understand your well-made points but society and business moves so fast in the 21st century that the day when geography plays little to no role in most (not all) business is already upon us. One need only visit or do business with companies in places like Miami, San Diego any major TX city and a few dozen others to see how fast NYC is becoming old by comparison. If NYC's mass transit system continues to disintegrate and employ equipment nearly 100 years old, businesses and residents will accelerate the on going trend to depart. Daily 2-hour commutes have become unnecessary and unacceptable to workers, entrepreneurs and others who have options to avoid the cost and misery of driving, buses, trains and/or subways.

The number of businesses, artisans and professionals who have left NYC and have benefited economically stands as daily proof that while in the real estate business location is everything, in the business and artistic worlds.... not so much anymore.

GAO | Three Big U.S. Agencies Unauditable

Yesterday the GAO issued its report on its audit of Federal agency spending. Its summary is here. The summary includes a link to the full report.

For FY 2015 three big U.S. agencies–the Department of Defense, Department of Housing and Urban Development, and the Department of Agriculture–failed to get clean opinions. Their accounts had "material weaknesses". Last year (FY 2014), by contrast, almost all of the key federal agencies received clean audit opinions.

In addition, the GAO highlighted the following risks:

Pension Benefit Guaranty Corporation (PBGC) liabilities exceeded its assets by more than $76 billion as of the end of FY 2015.

Fannie Mae and Freddie Mac reported maximum remaining contractual commitment to the GSEs, if needed, is $258.1 billion.

U.S. Postal Service has reached its borrowing limit of $15 billion and finished FY 2015 with a reported net loss of $5.1 billion.

Wall Street on Parade comments that people who think that Donald Trump will clean up this mess should take a look at his own financial reporting as required under campaign finance laws.

BIRTH | Jan. 30–FDR

FDR's First Cabinet. Will Woodin, Treasury
Secretary, is on his left. 

On this day in 1882, Franklin Delano Roosevelt (FDR) was born in Hyde Park, N.Y., near Poughkeepsie.

He grew up an only child, graduated from Harvard in 1904 and then Columbia Law School. In 1905, he married Eleanor Roosevelt, a niece of TR and a distant cousin.

FDR was elected to the NY State Senate, served as Assistant Secretary of the Navy under Woodrow Wilson, and in 1920 ran for Vice President on the unsuccessful Democratic challenge to Warren Harding. Despite being paralyzed by polio in 1921, he was elected Governor of NY, serving from 1929 to 1932. As Governor, he tried out social programs that were more successful than national programs to combat high (as high as 25 percent) unemployment attempted by President Hoover.

He was not financially well situated to run for President in 1932 because he had accumulated huge debts running his Warm Springs Foundation in Warm Springs, Ga.  Originally envisioned as a spa for himself, FDR brought in more staff and served other patients with the care he had been obtaining for himself, regardless, it seems, of the patients' ability to pay.

To allow FDR to run for President, Will Woodin, who as of 1928 was President or Chairman of two of the 20 companies in the Dow Jones Industrial Average–American Car & Foundry and American Locomotive–raised the money to pay off FDR's Warm Springs debts, and then helped him raise the money for his campaign for the presidency.

FDR was elected the 32nd U.S. president in 1932. He appointed Woodin–one of only three Republicans in his first Cabinet–as his Treasury Secretary. It was an inspired selection. As a business man rather than a Wall Streeter, Woodin managed the pumping of greenbacks into the banking system, the closing of banks while the solvent ones were separated from the insolvent ones (which were closed), the ending of private ownership of gold in anticipation of devaluation (Woodin salvaged an exception for collectors  of gold coins), and the walling off of commercial banking from investment banking as the price of giving banks federal deposit insurance.

In 1933, Roosevelt embarked on his New Deal, which included, besides Wall Street reform (the Glass-Steagall Act and the Acts creating the SEC), the creation of the Work Projects Administration (WPA), the Federal Industrial Recovery Act and the Civilian Conservation Corps (CCC). The New Deal was controversial, but many of FDR’s reforms, including Social Security and the minimum wage, are now entrenched institutions supported by both major parties.

Roosevelt led the United States through the Great Depression and then through victory over Hitler and Mussolini in World War II. Roosevelt died in his beloved Warm Springs, Ga. in 1945, leaving Truman to end the war with Japan and utilize FDR's blueprints to build the United Nations.

New York City's Economic Outlook

How Bad Will NYC's Economy Get? AM New York. "There have been four distinct downturns since the 1970s and the one that seems most similar to this one is the S&L crisis in 1987," said Rae Rosen, assistant vice president and economist at the Federal Reserve Bank of New York. That meltdown began with the jarring stock market crash in October 1987, and lasted into the early 1990s, spreading from Wall Street to Main Street, and crippling the city's real-estate market. The 1980s meltdown was known as a "white-collar recession," because it broke the trend of economic cycles that used to rise and fall on manufacturing. The pattern today is very much along those lines. The city lost 350,000 jobs during that period, far more than the number predicted to disappear this time. However, in a note of concern, the city's economy is far more reliant today on the fate of Wall Street, where most of the cuts are happening – so far. Wall Street employment makes up about 5 percent of the workforce but about 25 percent of all wages earned; that figure was only 9 percent in the early 90s. Comment by CityEconomist: The October 1987 stock-market crash affected New York City more than the nation, which didn’t go into recession until 1989. The low point for NYC jobs was October 1992 (the month I was first appointed Chief Economist in the Office of the NYC Comptroller in what turned out to be a 13-year stint covering three full electoral cycles and two partial ones). Using annual data, NYC's economy didn’t turn around until 1993.