New York City's Jobs Predicament

A mayor’s first executive budget marks the moment where campaign promises meet reality. New York City Mayor Zohran Mamdani’s supporters have lauded his budget for avoiding “austerity,” while skeptics point out that much of his ambitious campaign agenda landed on the cutting room floor and the “fixes” are short-term patch jobs. The unsettling truth is that nearly every robust source of middle-class jobs left in New York City—health care, social services, and education—is directly or indirectly subsidized by the same public dollars now under strain. If Mamdani wants his affordability agenda to be more than a redistribution of this shrinking pie, he will need to recharge the private-sector engines of upward mobility. He can do that by confronting the occupational licensing and business regulations, land-use restrictions, and cost drivers that have made middle-class life in New York so hard to sustain.

The numbers underlying New York City’s jobs predicament are sobering. Between 2019 and 2025, employment in health care and social services rose by approximately 35 percent. Absent these gains, the city’s workforce would have shrunk by 49,000 people. As of February 2026, health care accounts for one in four of the city’s “private sector” jobs—up from one in five in 2020. New York’s liberal Medicaid spending underwrites these jobs. Meantime, researchers at the New School found that the city lost a net of 76,000 middle-income jobs since the pandemic. The city’s already diminished manufacturing industry shrank by 21 percent between 2019 and 2025. The more substantial construction industry shed 15 percent of its jobs over that period. In real dollars, average hourly private-sector wages in 2025 are about where they were in 2007, on the eve of the financial crisis.

Two decades of wage stagnation perhaps explain why class-warfare rhetoric found an audience in the global capital of capitalism, but candidate Mamdani said little about jobs and wage growth, instead championing a brand of state-centric urban socialism. He wanted the government to do more and to do it for “free.” In Mamdani’s sparkling vision, a New Yorker could look forward to waking up in a rent-stabilized apartment, dropping his two-year-old off at city-funded childcare, stopping in for breakfast-to-go at a city-run grocery, and then catching a free bus. He had little to say, however, about where this lucky resident of socialist New York might actually be going to work each morning.

The mayor’s budget has shown the fiscal limits of this state-driven vision. If Mamdani wants to revive the city’s middle class and deliver on his promise of an affordable New York, he will need to outgrow the city’s habit of using government as a jobs program and instead look for ways to revive private-sector job growth while public dollars flow toward core public functions.

Mamdani has shown flashes of ideological flexibility on issues ranging from private-sector housing construction to the role of private developers in NYCHA redevelopments. The good news for the mayor is that deregulatory politics are inherently unsexy—only industry insiders and policy nerds follow the twists and turns of occupational licensing regimes and tort reform. Entrenched interest groups will fight aggressively to defend their turf, but the mayor’s broad popularity and goodwill with his base give him political space to buck left-wing orthodoxy on this issue.

While low-profile, occupational licensing and business regulations are vital to the city economy. The Institute for Justice found that one in five New York City jobs requires an occupational license of some sort; the national average at midcentury was one in 20. The typical moderate-income job requires roughly 275 days of education and on-the-job training before a worker can legally practice his chosen profession. For low-wage workers with a foothold as cashiers or delivery drivers, the need to forgo current income and shell out on credentialing programs halts upward mobility.

Mamdani had considerable success dramatizing the plight of regulation-burdened halal cart owners during the campaign; he has since promised regulatory relief for small business owners more broadly. New York State’s regulatory code has roughly 300,000 regulations running to approximately 17 million words; the notorious “scaffolding law” dates to an era when the city’s biggest public health concern was horse manure on its streets. A modest culling of regulations written for entirely different contexts would free up dollars for investment and hiring.

City government’s most powerful tool for expanding the middle class is not conjuring jobs that pay a certain salary but lowering the cost of goods those salaries need to cover. The 2024 American Community Survey put New York City’s vacancy rate at 3.7 percent—the third lowest of any American city over 400,000 people. Despite strong demand, housing supply is moving in the wrong direction. The Partnership for New York City reports total rental inventory declined by 6.7 percent across 2025 while median asking rent rose 7.7 percent to $3,650. A housing boom would also cure the city’s construction malaise, breathing life into one of the few genuinely private industries that pay middle-class wages to moderately skilled workers, with an average wage of $98,000. The YIMBY movement has built a rich bank of ideas that could move the needle further: from scrapping parking minimums to rezoning single-family areas to permit two-family dwellings.

Nothing drives middle-class families to the suburbs faster than a childcare bill that rivals rent for costliness—the under-three population fell 19 percent between 2020 and 2023. While state dollars trickle in to shore up 3-K and Pre-K in the face of stagnating demand, the mayor could make life easier for private providers, who can more nimbly expand or contract as demand shifts. Changing the law that requires childcare providers to operate in ground-floor spaces with access to a yard would be an easy first step that would not come off as a retreat from his commitments.

Mamdani has assumed leadership of the city at a time when the underlying contradictions of its political economy are reaching a breaking point. His legacy will depend on his ability to transition New York City to a new model—one where middle-class goods and middle-class jobs exist independent of the public dollars that have long underwritten them.