INTRO: Eversince America was created in 1776,
New York has symbolized the American Dream. People from all over the world would immigrate through
Ellis Island hoping to create a new life in the New York City. Overtime, this made NYC into the
heartland of America as the city became the home of banks, brokerages, hedge funds, exchanges, and
basically every other financial institution you could think of. We also saw the rise of Broadway
and Carnegie hall which have made the state the dream destination for aspiring artists as well.
Despite this rich history, New York hasn’t been doing all that well over the past few decades. In
fact, New York is the fastest shrinking state in the US in terms of population. In 2021, New York
suffered a net population loss of 1.58% which was nearly twice the population loss of second place.
This translates to a population decline of over 300,000 people. Aside from people
fleeing the state in masses, many have started to associate New York with old wealth, corruption,
lobbying, and deception. So, what happened to New York?
HIGH COST OF LIVING:
Starting off with the most obvious reason, we have the insanely high cost of living. Now, I’m
sure you’ve all heard about this, but it’s hard to visualize just how bad it is without some concrete
numbers, so let’s dive into some data. Also, I should mention that most of the data that we’ll be
looking at will be regarding New York City. Nearly half the state lives in this one city and it’s by
far the number 1 place that people think of when think New York. With that being said, let’s take a
look at housing. Right now, the median sale price of single family homes, townhouses, and condos in
NYC comes in at just over $800,000. Given that the median income in the city is just over $41,000,
the average house costs nearly 20 times the median income. Even if we look at household income,
we only get $67,000 meaning that that the average house costs 12 times the median household income.
This makes home ownership basically impossible for the average person or family in NYC,
and that’s why most people don’t even consider buying property in the city. Usually, most of them
just rent for their entire lives. And given real estate ownership is responsible for creating 90%
of all millionaires in the world, this is not the best of signs for the people of NYC. To make
things worse, it’s not like renting is that much cheaper. A studio apartment itself will cost you
$3,638 per month on average. That translates to over $43,000 per year which is higher than
median annual income in the city. And that’s just a studio. If you want a 1 bedroom, you’re looking
at $4,761 per month or $57,000 per year. If you want a 2 bedroom, you’re looking at $6,188 per
month or $74,000 per year. And if you want a 3 bedroom, you’re looking at $6,544 per month or
$78,000 per year. Obviously, none of these options are affordable for the average resident in NYC.
I mean the rent for a 2 bedroom apartment is literally a $1000 more expensive than the mortgage
and tax that you would have to pay on a $800,000 house. If you could afford this by yourself,
you might as well just buy a house. Most people in NYC can’t afford it and that’s why almost all
of the average folks have roomates. In fact, 40% of adult renters in New York live with roommates.
Aside from having to share your apartment and still pay insane amounts in rent, you also have
to deal with extremely old buildings. The average residential building in NYC is literally 90 years
old. This not only makes these buildings dingy and depressing but they’re usually infested with mice,
rats, and cockroaches. And all of that is just the housing situation. Almost every facet of life
is just as expensive in NYC. Groceries for example cost $486 per person per month on average. The
average across the US is only $348 or 30% lower. Hearing all this, I don’t think you’d be surprised
to hear that 60% of New Yorkers live paycheck to paycheck. Clearly, the living situation for the
average New Yorker isn’t anything to brag about and this has prompted many to ditch the state.
THE RISE OF TECH:
Historically, one of the top reasons that people immigrated to NYC was because of
all the job opportunities that were available in the city. No other city in the world offered the
same networking capabilities when it came to the financial markets or husting your way to the top.
With the rise of technology over the past few decades, however, the appeal of NYC has been on
a decline. Take the stock market for example. Before 2000, the trading floor of the New York
Stock Exchange was crucial to operating the stock market. But, with the rise of the NASDAQ and
electronic trading and execution, trading floors have basically become obsolete. You no longer
need to be in New York to make it in the financial world. In fact, most of the fintech companies that
we hear about nowadays weren’t even created in New York. This includes Robinhood, Coinbase, Square,
Ally Bank, Acorns, Stripe, and so many more. And if you don’t have to be in New York to
build a financial career, why put up with all the cons that come with the region. Also,
something else to note is that you no longer have to be involved in the financial markets at all
to even become wealthy. A 100 years ago, the most straight forward way to earn a high salary was to
go to New York, join a financial firm, and work up the corporate ladder. But now, there’s an industry
that not only pays more but is also less intense and less stressful and that’s of course tech.
Nowadays, the dream career for many is to get a job at FAANG or an up and coming startup, and
this makes sense given how much these companies pay. I’m sure you’ve all heard about software
engineers making multiple 6 figures, but nowadays top software engineers can even earn 7 figures.
At Google, for instance, even if you’re just an entry level software engineer, you earn a total
compensation of $191,000. Meanwhile, if you work up to being a principal enigneer, you can earn
a total compensation of $1.08 million. We can see an extremely similar compensation plan at Facebook
as well. Even if you’re just an entry level software engineer, you earn a total compensation
of $184,000. Meanwhile, if you work up to being a principal engineer, you can earn up to $1.61
million. Now of course, working up to principal engineer is no easy task, but it’s also rather
achievable if you stick with such a company for 20 to 30 years. Also, even if you don’t make it
to level 8 and you get stuck at level 6 or 7, you’re still pulling in well over half a million
per year, and that’s in today’s dollars. By the time most of reach our 50s and 60s,
these positions themselves will likely be paying well over a million dollars. So, finance is no
longer the most straight forward way to make big money. Not to mention, while these tech jobs are
by no means easy, you probably won’t be working 80 to 100 hours per week either like investments
bankers and hedge fund people. You’ll probably be working closer to 60 hours which makes tech jobs
even more appealing. So, the rise of tech has robbed New York of much of its Wall Street appeal.
NOT A FINAL DESTINATION:
Aside from a high cost of living and deteriorating appeal, a major drawback of NYC is that it has
never really been a final destination. A lot of people are attracted to the city by its fast life
and career opportunities, but more times than not, these people don’t intend to stay their for
the rest of their lives. The vast majority of individuals who are immigrating to New York can
usually be categorized into two bins: the career builders and the adventurers. The career builders
usually come here straight out of college or they might even come here for college itself.
These guys usually get a job at a financial firm or a consulting firm or they might even
start they own company. Then, they grind out most of their 20s in NYC and end up saving multiple 6
figures if not even 7 figures. And finally, they move back to their home city or an up and coming
suburb where they get a job as a financial analyst or accountant and start a family.
Meanwhile, the adventurers are broke throughout their entire 20s, but they get the satisfaction
that they lived their lives to the fullest while they were still young and free. However,
these guys also usually end up moving to suburbs as they grow older. In other words, NYC is rarely
a final destination and this makes sense given the pros and cons of the city. While the city
offers great career opportunities and a fast life, it’s not exactly the best place to raise a family.
Cities in general usually don’t have great public schools because they don’t get very good funding.
In fact, schools in urban districts get $2,100 less per student than schools in
suburban districts. Considering this, it’s not surprising that parents are usually reluctant
to send kids to public schools in major cities. Even if you find a good school, the environment
itself is usually not the best for kids. Crime rates are high, subways aren’t the safest,
and there’s no neighborhood swimming pool or park. And this is especially a problem
if you’re living in poorer areas of the city. Aside from it being hard to raise a family,
New York isn’t the best place to settle down as an individual either. First of all, the weather
is pretty bad. Winters are often brutal given that New York receives the 7th most amount of snowfall
in the entire country. This is the exact opposite of California. Californians often say that weather
is one of the top reasons that they wanna stay in California. But maybe, they’re overstating
this advantage given that people have been moving to New York for centuries despite its
bad weather. Anyway, aside from poor weather, you also have taxes that will make you poor.
State income tax ranges from 4% up to 10.9%. Combine this with federal income taxes and a high
cost of living and you’ll be broke before you know it. While this may be an acceptable
sacrifice throughout your 20s, this gets old real fast as you grow older. And sooner or later,
most people just want something more slow paced and relaxed which usually leads them suburbs.
THE FUTURE OF NEW YORK:
In the end, NYC has historically been one of the most desirable cities in the world. People from
all around the world have been immigrating to this city since the beginning of America, and there’s
still plenty of people moving to the city to build their careers and lives. But, over the past
several years, the number of people leaving the city and state has oupaced the number of people
moving to the state. There’s a slew of reasons for this from bad weather to poor schools. But at the
end of the day, it just comes down to one reason. Less and less people think the opportunities
offered by New York are worth the high cost. Nowadays, you can progress within the financial
world without having to live in New York. Not to mention, you don’t even have to join the financial
world to make large salaries anymore. Technology and the internet have given people more high
paying opportunities than ever before. The fact that the billionaires list and the fortune 500
are dominated by tech is simply perfect evidence of this. This isn’t to say that New York is gonna
fall towards irrelevancy or something like that either. New York is still filled with
plenty of career opportunities some of which are still unique to New York like consulting.
Also, there’s a lot of young souls who still want to have an adventure in New York before the settle
down in a regular old suburb. So, while New York is the fastest shrinking state right now, this is
just natural shifts due to changing opportunities. Sooner or later, New York will settle down at a
new population level which will likely help with overcongestion and affordability. And hopefully,
this will open up the state to a whole new generation of people, but that’s just what
I think. Would you live in New York? Comment that down below. Also, drop a like if you’re all about
the chill suburban life. And of course, consider checking out our discord community to suggest
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