Mayor Bill de Blasio’s appointment of New York University law professor and former New York City housing commissioner Vicki Been as the new deputy mayor for housing and economic development comes at a critical time for the city. New York has been the beneficiary of incomparably good economic fortune but has been unable to manage the problem of population growth induced by the ready availability of jobs.

New York sits at the center of one of the nation’s most productive metropolitan areas. A 2017 Brookings study ranked the region seventh among the 100 largest metro areas nationwide in output per worker. High-productivity metros yield bountiful tax revenues. According to the New York City Comptroller’s Comprehensive Annual Financial Reports, in Fiscal Year 2008, the peak of the last business cycle, total city tax revenues amounted to $38.6 billion. By FY 2018, tax revenues added up to $59.1 billion, a 53 percent increase, more than three times greater than the rate of inflation. All that money facilitated large increases in spending on education, social programs, an expanded public workforce, and neighborhood amenities.

Everyone in New York likes the revenue benefit of being a high-productivity city but accommodating high-productivity workers—the people who make the high salaries—has proved difficult. The Census Bureau’s American Community Survey (ACS) categorizes occupations that require higher levels of education and generally pay more as “Management, Business, Science, and Arts Occupations.” In 2008, 37 percent of employed New York City residents fit this category; in 2017, 41.2 percent did. Over that period, the number of people in this category grew by 273,000, or about 19 percent, to more than 1.7 million.

We don’t yet have comparable data for 2018, but New York City’s rapid job growth has continued. The problem: the seemingly inexorable growth of higher-paying jobs brings in people who will outbid others for a limited housing supply. In the ten years from 2009 through 2018, New York City completed 177,062 new housing units, according to the Rent Guidelines Board and Department of City Planning. This may sound like a large number, but in a city with a housing stock of 3.37 million housing units, it’s not enough to improve the rental-market conditions faced by the typical household. The median New York City household pays more than 30 percent of its income for rent—a threshold defined as “rent-burdened,” meaning that this cost eats into other typical household expenditures like food and clothing. About a third of all renter households pay more than 50 percent of income for rent.

De Blasio’s response has been to institute a huge affordable-housing program, setting a production target of 120,000 new units by 2026, of which 35,685 had been started by the end of October 2018. The mayor’s effort has not, however, changed the broader reality that available rental housing is too expensive for most households.

Attention at the state and local levels is increasingly focused on strengthening rent regulation. Lawmakers threaten to repeal provisions of current law that have enabled landlords to raise regulated rents nearer to market levels. While popular, such measures protect current tenants and prevent landlords from renting to newcomers—including the well-educated professionals who drive the city’s economic growth. And yet, it’s not clear that such households can be kept out successfully. In decades past, when New York’s rent controls were even stricter, potential renters who could afford it paid under-the-table commissions to landlords, and lower-rent tenants were paid to leave. Were New York’s legislators to enact new rent laws that further cap rents and somehow prevent these evasions, they would trade a rent squeeze for a skilled-labor shortage.

As The Economist remarks, “in places where demand for urban housing is rising . . . a more effective policy is simply to build more housing.” If more new housing were available to newcomers, the city could continue growing its high-productivity labor force while keeping older housing affordable. It’s the only way that everybody can benefit from the city’s amazing growth machine. The new deputy mayor has an opportunity to institute common-sense policies that move the city in that direction.

Such policies should include a bona fide effort to mobilize private-sector resources to produce more housing. Any expansion of housing would have to be substantial to relieve the strangled rental market. De Blasio once aspired to permit 16,000 new market-rate units per year, though he proposed no policies to achieve this goal and appears to have forgotten about it. Been should revive it and try to surpass it.

The city needs to set borough- and community-district-wide targets for new housing. The Bloomberg and Giuliani administrations pushed through large-scale rezonings that dominated housing production over the last decade, including in Long Island City, Greenpoint/ Williamsburg, Downtown Brooklyn, Hudson Yards, and West Chelsea. The next round of rezonings should be more widespread, so that the effects of growth are shared. Development opponents must be challenged to accept the changes to zoning and other regulations to allow new housing.

At the same time, the city should tailor its Mandatory Inclusionary Housing policies to economic realities. Enacted in 2016, this program, which applies to all residential rezoning, is tough on real-estate developers without acknowledging that developers build all our new housing. Limiting developer incentives by forcing the industry to build and subsidize new housing for lower-income people simply causes developers to look to the public sector for financial support. By tying new housing construction in many parts of the city to still-limited public funding, when private capital would be otherwise available, the program effectively ensures that we will never build enough housing for everyone.

The good news is that New Yorkers have the means to keep their city both prosperous and affordable. New York doesn’t need a bailout from Albany or Washington; it needs only to avoid policies that prevent housing from being built and adopt policies that facilitate it. Let’s hope the new deputy mayor gets on board.

Photo by Drew Angerer/Getty Images


City Journal is a publication of the Manhattan Institute for Policy Research (MI), a leading free-market think tank. Are you interested in supporting the magazine? As a 501(c)(3) nonprofit, donations in support of MI and City Journal are fully tax-deductible as provided by law (EIN #13-2912529).

Further Reading

Up Next