JPMorgan may move workers out of New York, here's where they may go
Banking giant JPMorgan is considering downsizing its New York City workforce as it seeks to reportedly move employees to other locations where costs are likely to be lower.
JPMorgan is looking to move mainly non-client facing workers and junior-level investment bankers to lower-cost locations like Texas, Ohio and Delaware, according to a recent report from Bloomberg, which cited people familiar with the matter.
In a statement to FOX Business, a JPMorgan spokesperson said “it is healthy to continually review where it’s best to locate” employees, adding that decisions are not solely based on costs, but also related to local talent and other characteristics, like business resiliency.
In response to Bloomberg’s report that J.P. Morgan was even considering selling its New York headquarters, a company spokesperson said the company is committed to the city and expects it to be its largest location for the foreseeable future.
“We are building our new headquarters in Manhattan that will house twice as many employees (12,000 people) as our old headquarters,” the spokesperson said.
JPMorgan has its current headquarters at 383 Madison Avenue in Manhattan. Last year, it unveiled plans to build a headquarters at 270 Park Avenue.
The move would not be without precedent: a number of financial firms have found that they can operate in lower-cost environments where talent is readily accessible.
It was revealed earlier this year that billionaire activist investor Carl Icahn is planning to move Icahn Enterprises’ offices from New York City and White Plains, New York, to Miami in 2020. Icahn has spent nearly his entire career in New York, but the move is part of a growing trend of people fleeing the state in favor of lower tax locales like Florida and Texas in the wake of changes implemented by the Tax Cuts and Jobs Act.
As previously reported by FOX Business, more than 70 financial services companies had moved to Palm Beach County, Florida, as of August.
Here’s a look at the financial environment in the cities where JPMorgan may move employees.
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Plano, Texas
Earlier this year JPMorgan said it was building a tower in Plano, Texas, with plans to add to its workforce in the area. By the end of this year, the Plano campus workforce will expand to 6,500 from 4,500. Overall, Texas is home to more than 24,000 JPMorgan employees, which is its second-largest presence in the country.
Texas is one of only a handful of states in the U.S. that has no statewide income tax. The Lone Star State also has no corporate income tax.
It does, however, have what is known as a franchise tax, which applies to most businesses. For tax years 2020 and 2021, the taxable threshold is $1.18 million. The rate on businesses, other than retail or wholesale, is 0.75 percent.
The sales tax rate in the state is 6.25 percent, but local regulations bring the total in Plano closer to 8.25 percent.
For every $100 of taxable value, the average local sales tax in Plano is $0.44.
According to a study from the Tax Foundation, Texas ranked 15th in terms of best overall business climate.
According to a NerdWallet calculator, an individual earning $50,000 in New York would need to earn just $22,103 in Plano, Texas, in order to maintain the same standard of living, since living costs are 56 percent lower.
Columbus, Ohio
JPMorgan has about 19,200 employees in Columbus, making it the second largest private employer in the city.
The top individual income tax rate in Ohio is just shy of 5 percent. Its state and local tax burden ranks 19th out of all 50 states, according to the Tax Foundation. In terms of state and local income tax collections per capita, it ranks 22.
As of 2019, it ranked as one of the states with the worst business climates — 42nd out of 50 — though it fared better than New York, which is ranked 48th.
The state imposes taxes on gross receipts of businesses. Its Commercial Activities Tax is typically 0.26 percent on businesses with more than $150,000 of taxable gross receipts.
Costs of living in Columbus are 62 percent lower than in Manhattan, meaning an individual earning $50,000 in New York City would need to make $18,866 in Columbus to maintain the same standard of living. Housing costs are 84 percent lower, while the cost of food and transportation are 30 percent and 25 percent lower, respectively.
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Wilmington, Delaware
In Wilmington, Delaware, JPMorgan has five office locations with more than 3,800 employees.
For employees the bank could potentially move from New York City to Wilmington, Individual income tax rates are progressive. They range from 2.2 percent to 6.6 percent. The cost of living is about 53 percent lower, so an individual earning $50,000 in Manhattan would need to earn $23,340 to maintain the same standard of living, according to NerdWallet. Housing costs are about 77 percent lower, while transportation costs are about 18 percent lower.
The corporate income tax rate in Delaware is 8.7 percent.
In terms of its overall business climate, Delaware ranks 11th overall.