1. Introduction and summary
The Securities Industry and Financial Markets Association (SIFMA) commissioned Ernst & Young LLP (EY US) to prepare this report, which presents estimates of the overall economic contribution of the New York financial services industry and reviews potential implications of the re-imposition of the Stock Transfer Tax (STT) in New York State. For the purpose of the study, the financial services industry is defined as the combination of the banking and securities sectors but excludes insurance.
The New York STT is a tax on the sale or transfer of stock or certain other certificates and interests that occur within New York State with a rate that varies depending on the value of the financial instrument that is traded. The current tax rates range from one and a quarter cent to five cents per share.2 While the STT has been rebated at 100% since 1981, legislation has been introduced in both the New York State Senate and Assembly which would repeal the STT rebate, effectively reinstating the tax.
► The New York financial services industry supports nearly one million total jobs in the state. Combined, the industry employs 369,300 people in New York state and 279,400 in New York City. These direct jobs support an additional 596,900 jobs in other sectors, for a total of 966,200 jobs supported by the sector in the state.3
► The financial services sector is one of the highest paying industries in New York, paying 17% of all private sector wages earned in the state, and 24% in New York City, while making up 5% of all state and 7% of city private sector employment. On average, the annual earnings of employees in the financial services sector is $284,500 in New York State and $335,400 in New York City, far exceeding the private-sector averages of $76,100 and $97,700 respectively.
► The industry’s employment multiplier is 2.62 which means for every financial services industry job in New York, an additional 1.62 jobs are supported elsewhere in the economy. 596,900 indirect and induced jobs are supported by the financial services industry in New York, of which 341,300 are within New York City.4 Of these New York City jobs, 22% are indirect and induced jobs coming from the health, social services and education sectors.
► Considering direct, indirect, and induced effects, the industry supports approximately $364.6 billion of total gross domestic product (GDP) in New York State and $274.5 billion for New York City. The direct contributions to GDP, the sum of labor and capital income, are an estimated $247.4 billion and $207.5 billion respectively. For New York, every $100 dollars of GDP contributed by the industry generates an additional $47 of GDP elsewhere in the economy.