After being wined and dined by more than a dozen U.S. cities over the better part of a year, Amazon handed one of two roses to New York, promising to create roughly 25,000 jobs as part of an incentive-laden deal to establish another headquarters in Long Island City. The move will have significant implications for residents, taxpayers and job seekers, but will also act as the latest, yet most impactful blow to New York banks already facing an uphill recruiting battle against companies like Amazon, Google and Facebook. In years past, Wall Street only had to keep its eye on Silicon Valley. Now, banks are in a turf war over blue-chip graduates and current engineering staff.
“Engineers and developers will have a lot of leverage with Amazon coming to New York,” said Lisa Mogilner, a senior executive recruiter at Wall Street headhunter Clear Point Group. Add in the 12,000 new jobs Google plans to bring to the city on top of its current footprint, and local banks will soon be facing competition like they’ve never seen before in what is already a tight recruiting market.
One junior software engineer at a tier-1 bank said he routinely gets messaged on social media by recruiters and even colleagues in his network to see if he’s interested in making a move. Despite only 18 months on the job, he’s seen much of his team turn over. “I’ve had three bosses in a year-and-a-half,” he said. While yet to have experienced this himself, he’s seen colleagues get cold-called by recruiters while at the office – a tactic that has become more commonplace recently.
A VP who works at a competing investment bank previously told us that the high attrition rate in technology exacerbates the situation as empty seats create more work for the people who remain, giving them reason to answer those calls themselves. Even the most senior engineers with expansive leadership roles are hopping around. Eight of the 20 data scientists in finance who were deemed to be at the top of their profession as of March of last year have already left for other firms, despite many making the list because they were recently given a big new role.
Now, two bullies are set to move in. Amazon was actually offered better terms from Maryland and New Jersey but chose New York along with Virginia “to attract top talent,” the company said in a release.
“I think this may turn into a great opportunity for people with strong tech skills, not only in app development but also in data, analytics, program management, infrastructure and security,” said Gina Schiller, a managing director at Jay Gaines & Co. with 20 years of IT recruitment experience. Banks won’t wave the white flag, of course. Instead, they’ll likely be waving giant checks. “At the very least, demand will drive up compensation” for engineering talent on Wall Street, Schiller said. Banks will also need to offer more perks typically associated with Silicon Valley and take steps to improve work-life balance, Mogilner added.
Another potential ramification of an uber competitive recruiting environment is that New York banks may no longer be able to continue “offshoring” engineering jobs to lower cost and less desirable cities. While relocation may seem even more prudent now with Amazon and Google headed to New York, local programmers and developers with newfound career options may take their walking papers rather than up and move to keep their jobs. “This may be an opportunity to keep talent local or lure people back,” Schiller said. If New York becomes Silicon Valley 2.0, banks seeking to relocate technology staff to cheaper cities may instead have to settle for second or third-rate engineers – something most banks will be unwilling to do.
Despite increased competition, top investment banks and hedge funds have shown no inclination to lower their standards, particularly with the rise of quants and algorithmic trading. Rather, they’ve just loosened dress codes and built shiny new tech hubs outfitted with ping-pong tables, video games and electric guitars. Goldman Sachs famously hiked salaries for its entry level technologists to $100k last year. Banks will likely need to double down on these initiatives and more as the recruiting battlefield becomes more crowded. Meanwhile, current employees can simply sit back and enjoy the leverage.
Long Island City
The one advantage banks may have in the short-term, at least over Amazon, is that Long Island City won’t remind anyone of Silicon Valley or Manhattan, at least not in its current form. While it’s being rebuilt at a rapid pace, with new apartment complexes popping up almost daily, Long Island City still has a long way to go when it comes to proper public transportation and schools – something Mayor de Blasio acknowledged. Construction is set to run through 2033.
The local reaction to the news has so far been mixed. A lawyer who recently bought an apartment in Long Island City with his wife and child told us he’s “wary of the strain on neglected infrastructure” with the expected influx of new residents but said he’s “cautiously optimistic” that the local school system will be improved.
Longtime residents of the Queens neighborhood share his fear of overburdened and broken-down subways as well as the anticipated rent increases that coincide with gentrification. de Blasio said the average salary for new Amazon employees will be roughly $150k. A caravan of young engineers with money in their pocket are destined to transform the neighborhood known for its character, whether for good or for bad, and banks will need to match this - at least.
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