NYC's lower-middle and middle class have been exiting the city in droves for more affordable locations. Photo: Avi Waxman

The left-leaning Fiscal Policy Institute (FPI) this week put out a detailed analysis using data from the Census’ American Community Survey to detail how, contrary to some dire projections about high taxes driving out the rich, New York City had added thousands of millionaires over the pandemic and post-pandemic period, and has generally enjoyed robust population growth among the wealthiest people. On the other hand, tens of thousands residents making between $32,000 and $65,000 annually left, representing the largest income group to relocate outside the city. They were followed by residents making between $104,000 and $172,000 annually.

Most of the coverage and analysis of the report focused on the former point, read as a vindication that raising taxes doesn’t translate to substantial losses in high earners. Almost immediately, the right-leaning Empire Center for Public Policy put out a blog post complaining that the FPI was using too-small sample sizes and that there was some other countervailing evidence showing the wealthy were indeed leaving; I’m not convinced, but I certainly would appreciate seeing more granular data breakdowns. What really caught my eye, though, was the notion of the middle class on its way out. I’d venture it’s quite possible that you, dear reader, know someone who has seriously considered leaving or actually left on account of the cost of living.

It might seem a little bit odd and even counterintuitive that the segmentation is such that the people most likely to leave aren’t actually the poorest, but those one or two rungs up from that. Why does the lower-middle and middle class seem likeliest to be hitting the eject button? The short answer is that they might not have the income to live comfortably in much of NYC, but they have the money necessary to move at all. Moving is expensive; it often requires the ability to take time off work, find employment and housing elsewhere (which means new safety deposits and the physical moving costs), and so on.

Even if you’re doing it to save on long-term and recurring costs, the act of moving away is a sizable capital and logistical challenge on the front end that a lot of low income people can’t handle. There’s also the fact that these folks tend to receive certain types of assistance that aren’t available to those with higher earnings, like continued access to NYCHA housing and insurance under Medicaid. It’s a well established principle of our bizarro social services system that there are income thresholds you can cross where you’re functionally kind of worse off as assistance falls away. Nonetheless, the most eye-watering costs, particularly child care, are only somewhat subsidized (an expansion of child care assistance was one of the last things to fall from our now-defunct Covid social safety net, as we’ve explored before) and represent huge costs for poor New Yorkers that they can’t necessarily mitigate.

Put another way, we’re seeing a middle-class outflow and we’d likely be seeing a substantial lower-income one too if everyone who wanted to move could afford to do so. This is, for many reasons, very, very bad. Beyond the obvious issues with trapping people in cycles of unaffordable expenses, we’re basically negating the good economic news that everyone’s supposed to be celebrating — the rising real wages, the stabilization of inflation. If anything, those good economic realities are driving more people to leave NYC, seeing as they have a little more of that necessary financial wiggle room and see very clearly that they can get more bang for their buck elsewhere.

It’s important to note this isn’t just a Covid story, despite often being framed as one. The Census’ periodic reports recorded a population decline in NYC beginning from 2017 to 2018, years before most New Yorkers knew what a coronavirus was, though the pandemic certainly supercharged this trend. Between 2020 and 2022, some 529,000 people left, offset by new arrivals to reach a net population loss of about 405,000, or nearing 5 percent of the city’s population.

To some extent, the city had started being a victim of its own success. The population boom that peaked in 2017 got started in earnest around 2010, when the lingering impacts of the 2008 economic crash began to finally dissipate and more people started moving to the city for jobs and opportunity; this activity grew the city’s economy but also put a crunch on what is our most precious resource, housing, which did not grow nearly to the level of meeting the much increased demand. Housing costs now represent a significant driver of the departures.

Aside from the ideological arguments around what sort of city we want to be, and laments over the idea of NYC as a playground for the rich, there are some real practical issues here. A city, obviously, needs a robust middle class to actually run, logistically. People need to staff the government and operate the schools, run the trains and own small businesses. A city also needs people with lower incomes to be able to survive there for it to, well, be interesting and relevant in any way. What has made NYC a global powerhouse?

You can point to Wall Street and big business and say that the torrents of money made and invested here have made the city one of the most prominent on Earth, and there’s some validity to that; the very wealthiest New Yorkers pay the bulk of the taxes that backstop the services everyone needs. But people around the world care about NYC because of theater, and the incubation of music and visual art, and the melding of global cultures, and the countercultural scene of the 70s, 80s, and 90s, and a bunch of other things that required a lot of people to make their way living on a dime. If they’re all gone, what’s left? It’s not just a conceptual loss. There is no NYC without them.

Before we start sounding too dire, let me emphasize that NYC is not emptying out. Percentage-wise, this isn’t existential outmigration, and we’re still well above the population even in 2010. But these trends have a way of self-perpetuating, especially if the underlying factors don’t shift, and, unfortunately, plenty of people are still ready to go to war in defense of less housing. As I outlined in our recent election recap, democrat City Council incumbent Marjorie Velázquez suffered a shock defeat against her GOP challenger in the Bronx, largely on the strength of discontent over her vote in favor of a housing development that would have included hundreds of affordable units. Governor Kathy Hochul’s ambitious housing plan was killed in Albany. Mayor Eric Adams’ housing plan features some good ideas, but is relatively modest to avoid anti-housing backlash.
Despite being the primary cost driver, costs beyond housing are driving people out. It’s a critical problem that requires solutions, and requires them now, before the cycle continues. Instead, mass municipal budget cuts threaten to give people even fewer reasons to stay.

Felipe De La Hoz is an immigration-focused journalist who has written investigative and analytic articles, explainers, essays, and columns for the New Republic, The Washington Post, New York Mag, Slate,...

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1 Comment

  1. A major reason middle class people and people are leaving is the quality of life. We made it clear that we don’t want dining sheds but we were overruled. E-bikes, bikes, mopeds and motor scooters on the sidewalks and ignoring all traffic laws with no repercussions. They cause accidents then blame motorists. It is lawless. Police brag about gun violence prevention, which is very important, but do nothing about “low level” crimes. A terrible example is being set for the children who watch breaking of rules and laws going unpunished.

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