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Remember when Goldman Sachs chief David Solomon called remote work an “aberration”?
In a recent survey published by The Partnership for New York City, major employers indicated their needs for office space would decline drastically over the next five years. 13% of total employers surveyed expect a reduction in jobs located in New York City, with most of the losses coming from the financial sector. 22% of all financial services companies surveyed expect cuts to their New York City workforce. The survey also found that 80% of employers across all sectors expect permanent changes to their remote work policies, with 47% expecting their NYC-based staff will work remotely three or more days per week.
While the survey does not provide details into what’s driving the anticipated job cuts, it’s clear that the shift to fully remote or hybrid work environments, which will reduce the need for costly NYC-based workers and office space, is a key driver. So, while David Solomon and other top bankers didn’t take to the remote work movement at first, the tide appears to be changing. As more workers demand remote or hybrid work flexibility, big banks will have to make some concessions if they want to retain top talent who are leaving New York en-masse.
But retaining top talent is only one part of the equation. Big banks have already been cutting staff over the years as developments in automation and technology have made many jobs obsolete. Hiring lower-cost remote teams from outside New York and abroad will only allow Wall Street to slash their workforce further. You can bet Wall Street is looking at remote work to reduce their labour costs by hiring employees working in lower-cost areas that will likely demand less compensation than those living in a high-cost city like New York City.
So, while higher-level bankers may come out of this shift with more leverage and flexibility, this could be bad news for some entry-mid level workers in NYC. The latter is going to be facing even more intense job competition from national and international applicants.