How Texas came to rival New York as a finance hub

JPMorgan Chase (JPM) is putting up a massive new headquarters in midtown Manhattan. But New York is no longer the state where it employs the most people.

Texas is.

The country’s largest bank has 31,500 employees in the Lone Star State following an expansion over the last decade highlighted by a four-building, 1-million-square-foot campus in Plano, a suburb of Dallas. That is 2,600 more than it has in New York.

“This state has been booming,” JPMorgan Chase CEO Jamie Dimon told Yahoo Finance in November during a summit with local business owners in Frisco, Texas.

It’s not just JPMorgan. What’s happening at the nation’s largest lender is also playing out across the wider world of banking.

Texas recently passed the state of New York in finance employment for the first time ever in a 33-year period, according to an analysis by Yahoo Finance of Bureau of Labor Statistics data from 1990 to 2023.

It happened in December, when Texas had 384,900 such workers. That was 100 more than New York state.

The Comerica tower in Dallas is one symbol of how important finance now is to the region. (James Leynse/Corbis via Getty Images) (James Leynse via Getty Images)

This tally counts jobs directly tied to the banking industry — like analysts, loan officers, and financial managers — and does not include the insurance and real estate sectors.

The New York City metropolitan area, which includes parts of New Jersey, is still No. 1 in finance workers when compared to other metro areas. But a well-known Texas region — Dallas — has taken the No. 2 spot.

The move to the middle

The emergence of Texas as a banking center is many decades in the making. In fact, New York state has been slowly losing its grip as the dominant place for banking jobs since the years following the terrorist attacks of Sept. 11, 2001.

That’s when some of the biggest financial institutions began shifting parts of their workforce elsewhere to save on costs and manage risks. California took over the top spot between 2001 and 2006, but a housing meltdown and the 2008 financial crisis sent employment in that state and New York tumbling again.

New York eventually regained its top spot and began adding more workers as the wounds of 2008 healed.

But Texas accelerated at a much faster rate, with Dallas as a new hub for many finance giants attracted by the state’s lack of an income tax, lower cost of living, plentiful building sites, and easy transportation access.

View of the Dallas skyline on July 21, 2020, in Dallas, Texas. (Photo by VALERIE MACON / AFP) (Photo by VALERIE MACON/AFP via Getty Images)

View of the Dallas skyline. (VALERIE MACON / AFP) (VALERIE MACON via Getty Images)

One attraction is that financial giants can save money by moving more employees to Texas. The pay discount for financial workers in Dallas is 10% to 15% when compared with New York, though this discount narrows for more senior positions, according to Chris Connors, a principal with Johnson Associates.

The cost savings are most pronounced in more junior, clerical, or back-office jobs.

For these workers, though, the argument is their money will likely go a lot further. The cost of living in Dallas is 55% lower than in Manhattan, according to Bankrate. Again, the more senior a position, the more the cost of living difference narrows.

“You can’t make as much as in New York City but the discount is not nearly as punitive as the cost of living for more junior, clerical jobs,” Connors added.

From bust to boom

The state has been through banking booms before, as well as busts.

Local lenders thrived alongside the oil and gas industry in the 1970s and early 1980s, but Texas then became one of the hardest-hit areas in the country during the savings and loan crisis that lasted into the 1990s.

Texas lost 425 banks between 1980 and 1989, according to an FDIC history of that period, including nine of the state’s 10 largest bank holding companies.

Now many of the biggest banks in the US are rushing to install new campuses or headquarters, especially in the Dallas area. Goldman Sachs (GS) plans to complete a new office campus north of downtown Dallas by the end of 2027 and expects to add 1,000 more employees to the 4,000 it already has in the area.

PENWELL, TX-MAR 01: A long ago shuttered shop that once serviced pump jacks in Penwell, Texas is a symbol of the boom and bust oil cycle that Texans have lived with for generations. Penwell was named after a well drilled in 1929 by independent oilman Robert R. Penn. As (per barrel) oil prices dropped these past months, many Texas drilling companies (and the local towns where they operated) suffered dramatic financial losses. Among those hit hard was the Houston based Swift Energy Company which has filed for Chapter 11 Bankruptcy protection. Terry E. Swift is the President and Chief Executive Officer of Swift Energy Company. He is now struggling to keep the company going that was founded by his father in 1979. (Photo by Michael S. Williamson/The Washington Post via Getty Images)

A long-shuttered shop that once serviced pump jacks in Penwell, Texas is a symbol of the boom-and-bust oil cycle that Texans have lived with for generations. (Michael S. Williamson/the Washington Post via Getty Images) (The Washington Post via Getty Images)

“Dallas has this confident, frontier spirit — bold innovation, can-do attitude — I think that really aligns with what Goldman Sachs defines in our own culture and what we’re looking to build in the region,” said Vicki Tung, Goldman’s global head of recruiting, who is based in New York but is originally from Dallas.

Not that far from Goldman’s campus, Bank of America is the anchor tenant of a new 30-story, $500 million high rise in Dallas’s Uptown district expected to be finished in 2027. Wells Fargo (WFC) is expanding its office campus in Irving with a two-tower, 850,000-square-foot space set to be finished in 2025.

Lots of money managers are setting up shop, as well. That includes Charles Schwab (SCHW), which moved its headquarters from San Francisco to West Lake, Texas, in 2021. It currently has 10,000 employees, or 30% of its workforce, in the state.

‘Don’t become like D.C.’

Operating in Texas is not without its challenges for some financial giants. There are government efforts at the state level to restrict the ability of certain banks to participate in muni bond offerings if they don’t comply with local preferences.

The office of the state’s attorney general, Ken Paxton, is currently reviewing anti-firearm policies of JPMorgan and Bank of America as well as environmental, social, and governance policies of other banks.

The state has a law in place barring certain government contracts with companies that have anti-gun business practices.

WASHINGTON, DC - ARPIL 26: Texas Attorney General Ken Paxton speaks to reporters after the Supreme Court oral arguments in the Biden v. Texas case at the Supreme Court on Capitol Hill on Tuesday, April 26, 2022 in Washington, DC. (Photo by Sarah Silbiger for The Washington Post via Getty Images)

Texas Attorney General Ken Paxton. (Sarah Silbiger for the Washington Post via Getty Images) (The Washington Post via Getty Images)

Last year, in fact, Paxton’s office determined that Citigroup (C) had “a policy that discriminates against a firearm entity or firearm trade association.”

The response followed a decision made by Citigroup to restrict its banking services to gun retailers that sold firearms to people under 21, which came as a response to the 2018 Parkland shooting in a Miami suburb.

The CEO of the largest US bank, JPMorgan’s Dimon, said he likes what’s happening in Texas. The state “is conducive to business” and “they’re making it good to come here,” citing the roughly 10,000 people the bank has in Plano alone.

Jamie Dimon, chairman and CEO of JPMorgan Chase, speaks during the ceremony for placement of the final beam for JPMorgan Chase's new global headquarters building at 270 Park Avenue in New York City, U.S., November 20, 2023.  REUTERS/Brendan McDermid

Jamie Dimon, chairman and CEO of JPMorgan Chase, speaks last November during the ceremony for placement of the final beam for JPMorgan Chase’s new global headquarters building on Park Avenue in New York City. (Brendan McDermid/REUTERS) (REUTERS / Reuters)

But he also offered a warning. “I’m begging Texas, don’t become like D.C.,” he added, referring to the US capital.

“D.C. goes out of its way to make it hard for small to large businesses to grow and expand.”

David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.

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