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Eye on the News

Fred Siegel
Goodbye, New York
State residents are rushing for the exits.
24 May 2011

For more than 15 years, New York State has led the country in domestic outmigration: for every American who comes to New York, roughly two depart for other states. This outmigration slowed briefly following the onset of the Great Recession. But a new Marist poll released last week suggests that the rate is likely to increase: 36 percent of New Yorkers under 30 are planning to leave over the next five years. Why are all these people fleeing?

For one thing, according to a recent survey in Chief Executive, New York State has the second-worst business climate in the country. (Only California ranks lower.) People go where the jobs are, so when a state repels businesses, it repels residents, too. It’s also telling that in the Marist poll, 62 percent of New Yorkers planning to leave cited economic factors—including cost of living (30 percent), taxes (19 percent), and the job environment (10 percent)—as the primary reason.

In upstate New York, a big part of the problem is extraordinarily high property taxes. New York has the 15 highest-taxed counties in the country, including Nassau and Westchester, which rank first and second nationwide. Most of the property tax goes toward paying the state’s Medicaid bill—which is unlikely to diminish, since the state’s most powerful lobby, the political cartel created by the alliance of the hospital workers’ union and hospital management, has gone unchallenged by new governor Andrew Cuomo.

New York City doesn’t suffer from outmigration to the extent that the state does; in fact, the city grew slightly over the past decade, thanks to immigration. And there’s more work in Gotham than in the state as a whole. The problem is that the kind of work available shows that the city accommodates new immigrants much better than it supports middle-class aspirations. A recent report from the Drum Major Institute helps make sense of the Marist numbers: “The two fastest-growing industries in New York are also the lowest paid. More than half of the city’s employment growth over the past year has been in retail, hospitality, and food services, all of which pay their workers less than half of the city’s average wage.” Worse yet, more than 80 percent of the new jobs are in the city’s five lowest-paying sectors. Parts of the country are seeing a revival of manufacturing—traditionally a source of upward mobility for immigrants—but not New York City, whose manufacturing continues to decline. The culprits here include the city’s zoning policies, business taxes, and declining physical infrastructure.

Then there’s the cost of living in New York City. A 2009 report by the Center for an Urban Future found that “a New Yorker would have to make $123,322 a year to have the same standard of living as someone making $50,000 in Houston. In Manhattan, a $60,000 salary is equivalent to someone making $26,092 in Atlanta.” Even Queens, the report found, was the fifth most expensive urban area in the country.

The implications of Gotham’s hourglass economy—with all the action on the top and bottom, and not much in the middle—are daunting. The Drum Major report, which noted that 31 percent of the adults employed in New York work at low-wage labor, came with a political agenda. The institute wants the city to subsidize new categories of work by expanding the scope of “living-wage” laws, which require higher pay than minimum-wage laws do, to all businesses that receive city funds or contracts. But that would mean higher taxes for the middle class and a further narrowing of the hourglass’s midsection.

Governor Cuomo is calling for a property-tax cap, but without “mandate relief” for localities—for example, relaxing state laws that require localities to pay out exorbitant pension benefits. Mayor Michael Bloomberg has pledged not to increase local taxes, but even at their current level, city taxes and regulations will keep serving as an exit sign for aspiring twentysomething workers. In short, we can expect New York to lead the country in outmigration for the near future.

Fred Siegel is a contributing editor of City Journal, a senior fellow at the Manhattan Institute, and a scholar in residence at St. Francis College in Brooklyn.

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