As the shock of the turmoil in the financial services industry continues its ripple effect, businesses and governments outside New York and Boston are bracing for lower tax rolls as a direct result of tax cuts.
In Fairfield County in Connecticut, more than 39,000 people work at more than 2,700 investment and insurance companies, the Stamford Advocate reports, citing data from the Business Council of Fairfield County. Throughout all of Connecticut, there are 123,488 people employed in those industries.
Many of these people will lose their jobs, predicted Mark LeClair, an economics professor at Fairfield University. Conditions could become worse if other banks fail as well, which LeClair believes is possible. Is Washington Mutual next? he postulated.
In Boston, investment executives are bracing for potential job losses at the local offices of Lehman and Merrill, which together employ 1,000 people across the state, The Boston Globe reports. Industrywide, they fear the fragile state of the financial markets will make for more nervous investors, more regulations and tighter credit, which together could unhinge the economy even further.
On the bright side, the mutual fund, private equity and high-net-worth asset managers that dominate Boston believe they will be more insulated than the investment and commercial banks in New York have been.
Fortunately for us, Boston is not known primarily as the banking or investment side of Wall Street, commented Samuel L. Hayes, finance professor emeritus at Harvard Business School. Its stronger on the money-management side, which is a more stable business.