New York City Is Losing Wealthy Residents When It Needs them Most

As COVID-19 took hold in New York City last spring, many of the city’s wealthiest residents left Manhattan and surrounding boroughs for the Hamptons and the Hudson Valley, as well as other locations across the country. 

Nearly a year later, many of those people have not returned to the Big Apple. Experts are beginning to worry about the impacts the loss of tax revenue will have on the city’s future. 

In November, the New York Post reported that the United States Postal Service processed nearly 300,000 change of address requests from March 1 through October 31 —  three times as many as the same time period in 2019. Because of the way change of address requests are recorded, the actual number of people who have left the city for good is likely much higher. 

Michael Hendrix, director of state and local policy at the Manhattan Institute, told the Post that the pandemic was not the only reason people left the city.

“I think people are afraid,” Hendrix said. “They’re afraid of catching a deadly virus and they’re afraid of crime and other quality-of-life concerns. One thing we also hear is about trash and cleanliness of the city.”

A tax analysis Hendrix conducted found that a 5% increase in people who earn $100,000 or more leaving the city would result in $933 million in lost income, sales, and business tax revenue. A 3% decline in that population would mean $576 million in lost revenue, and a 1% decline would equal a $220 million loss. 

No matter which way the numbers ultimately fall, the change will mean a big loss for the city. The budget to fund the city’s health department, which is responsible for COVID-19 response and vaccination, has an annual budget of around $1 billion per year.

A loss like that seems likely to happen given the fact that many high-income households can work remotely for the foreseeable future. 

“Even a small share of the workforce staying remote following the pandemic would have a large and lasting impact on the makeup of knowledge-driven economies such as New York’s,” Hendrix wrote in an article for the Manhattan Institute. “If such increases in net out-migration were sustained the city’s revenue losses would grow—and our estimates do not even begin to consider the cost to other tax revenue streams or to the broader economy from high-earners heading for the exits, such as the corporate income tax and property tax, or other spillover effects on the economy.”

In order to recoup that revenue, Hendrix says, the city should focus on growing all segments of its tax base post-pandemic, which will mean increasing affordable housing in the city and opening it up to people who’ve been priced out in recent years, as well as providing incentives for workers to come back into the office once it’s safe to do so. 

Hendrix says, “with the right policies in place, New York City can build back bigger and better than ever.”

Grassroots Pulse covers public policy and political issues aimed at engaging highly-active policy makers, donors, and grassroots leaders at the forefront of the political process in America today.

Image Credit: Photo by Luca Bravo on Unsplash

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