{"id":37627,"date":"2025-11-12T21:41:18","date_gmt":"2025-11-12T21:41:18","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ny\/37627\/"},"modified":"2025-11-12T21:41:18","modified_gmt":"2025-11-12T21:41:18","slug":"billionaires-wont-leave-mamdanis-new-york-but-their-employees-might","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ny\/37627\/","title":{"rendered":"Billionaires Won\u2019t Leave Mamdani\u2019s New York, but Their Employees Might"},"content":{"rendered":"

You\u2019re reading Capitolism, Scott Lincicome\u2019s weekly newsletter on economics. This newsletter has been unlocked for all readers. To read all our reporting and commentary, become a Dispatch member today<\/a>.<\/p>\n

Zohran Mamdani\u2019s recent victory in New York City’s mayoral race has sparked a debate about whether the city\u2019s billionaire class will abandon Gotham once and for all. The 34-year-old democratic socialist campaigned on an ambitious (and costly) \u201caffordability\u201d agenda: freezing rents on 1 million apartments, raising the minimum wage to $30 per hour by 2030, establishing government-run grocery stores and universal child care\u2014and funding it all through higher taxes on corporations and the wealthy. As a result, several ultrarich residents vocally opposed Mamdani\u2019s election, noting that his big government plans would likely add, not remove, burdens for most New Yorkers and would push the city\u2019s super-elite to relocate elsewhere.\u00a0<\/p>\n

Since Mamdani\u2019s big win, some of those billionaires have already walked back their threats, and several commentators have gleefully noted that the rest of the city\u2019s elites need\u2014or simply love\u2014NYC too much to abandon it for greener, cheaper pastures. Yet this focus on the city\u2019s billionaire class mostly misses the point. Aside from the most extreme and unrealistic of Mamdani\u2019s wealth-confiscating plans, the flight risk arising from his proposals policies was never about billionaires; it was about their employees\u2014the higher-earning New Yorkers who can\u2019t easily absorb the higher costs and greater inconveniences that Mamdani\u2019s plans will produce but can move to places, near and far, where life is a little easier. These HENRY (\u201chigh-earner-not-rich-yet\u201d) workers form the backbone of New York’s economy and, thanks in large part to remote work, have been increasingly heading for the exits. Mamdani\u2019s policies could accelerate their departure, harming New York along the way.<\/p>\n

\nWhat Mamdani Can (and Can\u2019t) Actually Do\u2014and What It Will Cost\n<\/p>\n

Before we get to that, however, it\u2019s important to note that political realities will likely limit which policies Mamdani can actually implement, even with a big mandate. As our Dispatch colleagues reported last week<\/a>, he probably won\u2019t fulfill his signature promise to raise income and corporate taxes because \u201cunder state law, New York City cannot raise the city income tax without Albany signing off,\u201d and New York Gov. Kathy Hochul has already rejected the idea (in part because she\u2019s facing her own reelection in 2026). Other proposals, such as free buses and that $30 hourly minimum wage, also need state approval. And without new tax revenue, other parts of Mamdani\u2019s agenda\u2014free child care, tons of new public housing\u2014-face major fiscal constraints because of an already-large budget gap (caused in part by the city attracting<\/a> fewer American millionaires between 2010 and 2022 than places like California, Texas, and Florida\u2014more on that in a second).<\/p>\n

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Several of Mamdani\u2019s other plans have a better shot of being implemented in some form, albeit likely watered down. His promise of a four-year freeze on rents for the 40 percent of New York City apartments that are rent-controlled, for example, faces legal hurdles<\/a>. But it\u2019d be surprising if the city\u2019s nine-member Rent Guidelines Board, which Mamdani will surely influence via new appointments and political strong-arming, doesn\u2019t pass some form of expanded rent control. New York City mayors also have substantial authority over appointments, agency priorities, and enforcement, so we should also expect his administration to push the city\u2019s child care, education, and municipal workforce policies as far left as they can feasibly go in the near term, and for him to use the bully pulpit to agitate for longer term reforms at the city and state level.<\/p>\n

Yet even a watered-down version of Mamdani’s agenda\u2014partial rent freezes, higher minimum wages for city contractors, more union mandates, expanded public child care, less choice in education, etc.\u2014would impose new burdens on both businesses and most residents, especially HENRY workers who are too rich to qualify for government benefits but too poor to simply shrug off higher costs.\u00a0<\/p>\n

Housing provides the most obvious example. Little chance that a HENRY couple would qualify<\/a> for new public housing or \u201caffordable\u201d units, either built by public-private initiatives or required to be set aside for low- and middle-income workers. (As an aside, various<\/a> estimates<\/a> show that requiring union labor for new \u201caffordable\u201d housing in NYC would raise construction costs by 30 percent or more, with some Manhattan units costing upward of $1 million each! Hence, the snarky scare-quotes.)\u00a0<\/p>\n

Any expansion of rent control, meanwhile, will surely harm more New Yorkers than it helps. As we\u2019ve discussed<\/a>, the evidence on rent control is overwhelming and unambiguous: It helps a handful of local renters but reduces housing supply, decreases maintenance, distorts markets, and ultimately makes cities less comfortable and affordable for everyone else. Renters competing in New York\u2019s unregulated market would face higher prices when, for example, frozen rents push already-struggling buildings into foreclosure. (The city\u2019s Rent Guidelines Board data shows that 10 percent of rent-regulated buildings\u2014totaling more than 64,000 units\u2014are already operating at a loss<\/a>.) The additional supply crunch would force HENRYs to bid against each other\u2014and people with even deeper pockets\u2014for whatever housing is left, pushing prices even higher.<\/p>\n

New child care policies would likely cause similar problems. The average cost of private, center-based infant care in New York City already exceeds $25,000<\/a> annually, while less-regulated \u201cfamily care\u201d is still more than $20,000. Many New York families with two children often pay more for child care than rent! Mandating higher wages for child care workers while expanding access through new city-run centers will surely serve some people (though, research cautions<\/a>, probably not well). Yet it\u2019s bound to increase the cost of both public and private child care in the city, with HENRYs\u2014reluctant to use public daycare or ineligible due to income limits driven by politics or the aforementioned fiscal realities\u2014again on the losing end.\u00a0<\/p>\n

For starters, boosting wages for public child care workers would\u2014along with mandatory benefits and union requirements for city-funded facilities\u2014not only increase the costs of that care but likely pull workers and resources away from private facilities used by wealthier families who won\u2019t qualify for public assistance. (And, as we\u2019ve discussed<\/a>, U.S. immigration restrictions will surely limit any replacements.) Throw in New York’s already high regulatory costs, and the annual private child care expense for HENRYs could easily exceed $30,000 per child once this \u201caffordability\u201d agenda is enacted.\u00a0<\/p>\n

Other policies, such as higher minimum wages, involve similar trade-offs, with HENRYs usually on the losing end of the trade (higher prices, fewer choices, etc.). Even if many of Mamdani\u2019s plans aren\u2019t implemented, moreover, the mere signaling effect of his agenda also matters: Upper-middle-class professionals planning where to live and raise their families might be unwilling to wait to see if economic gravity once again exists. Instead, they might just leave.<\/p>\n

\nSo, They\u2019ll Leave\u00a0\n<\/p>\n

New research shows, in fact, that HENRYs\u2014aided by remote work\u2014are already leaving New York and other big cities for these very reasons. As we\u2019ve discussed repeatedly<\/a>, the pandemic-era remote-work boom allowed millions of Americans to flee unaffordable places and live where they want to live, instead of where their employer happened to be located. A new paper<\/a> from Stanford-affiliated economists confirms these trends in ways that are particularly notable for a place like NYC. It shows that remote work has expanded the average distance between an employee\u2019s home and her employer worksite (from 15 miles in 2019 to 26 miles in 2023) and tripled the number of employees living at least 50 miles from their employers. But these effects weren\u2019t uniform; they were concentrated among workers in their 30s and 40s \u2026<\/p>\n

\"image\" <\/p>\n

\u2026 And among highly paid workers in industries like finance and insurance, information, and professional and business services:\u00a0<\/p>\n

\"image\" <\/p>\n

Finally, the researchers find that these new movers were motivated by housing costs and taxes, with effects again concentrated among higher earners:<\/p>\n

\"image\" <\/p>\n

\"image\" <\/p>\n

All of this makes intuitive sense: Workers in their 30s and 40s tend to be ones who are raising (or contemplating) families, making long-term residential decisions, and thus are particularly sensitive to the cost of living. Higher-paid \u201cknowledge workers\u201d also tend to have jobs that more easily allow them to live farther from their workplaces (and have the resources to make such a move happen). The cost savings from such moves, the Stanford paper calculates, are substantial: Employees who made more than $250,000 a year, moved between states in 2020, and stayed with the same employer lowered their state tax rates by an average of 5.2 percentage points, or $15,000 in annual tax savings for someone earning $300,000. Mobile workers making at least $150,000, meanwhile, enjoyed a 16 percent reduction in their local housing costs\u2014and likely even greater gains on a price-per-square-foot basis, as homes tend to be larger where space is cheaper.<\/p>\n

These findings* have clear implications for a place like New York\u2014and for Mamdani\u2019s agenda. The city, in fact, comes up twice in the Stanford paper because it\u2019s not only expensive but also contains large shares of just the type of people who are particularly willing and able to move because of living costs. As the paper\u2019s authors put it, \u201cOutmigration pressures are most acute for cities with high housing costs that are situated in high-tax states, especially cities that also have high employment shares in industries with remote-suitable jobs.\u201d That\u2019s NYC in a nutshell.<\/p>\n

Child care costs are unmentioned in the Stanford paper but could play a role too, especially in New York. A two-child HENRY family living in the city can\u2019t reasonably spend $70,000\/year on child care without seriously contemplating a change in scenery. And the city\u2019s government recently found<\/a>, in fact, that New York\u2019s \u201cpopulation losses are concentrated among families with children,\u201d with middle- and high-income families\u2014households that \u201coften exceed income limits for public assistance programs while still struggling with the combined costs of living in NYC\u201d\u2014disproportionately leaving:<\/p>\n

\"Screenshot <\/p>\n

\nThe Exodus Already Underway\n<\/p>\n

The Stanford paper is hardly the only one to find increasingly mobile American workers moving from higher-cost to lower-cost places. Along with the research we\u2019ve already discussed, for example, U-Haul’s 2024 migration data<\/a> show the biggest gainers last year were Dallas, Charlotte, Phoenix, and Austin\u2014not coincidentally, metros with lots of housing and lower costs of living. A recent Tax Foundation analysis<\/a> confirms the trend: Americans are systematically relocating from high-tax, high-cost states to low-tax alternatives. For the second consecutive year, South Carolina saw the greatest population growth from domestic migration, while New York lost 0.61 percent of its residents to other states, ranking 49th nationally.<\/p>\n

\"image\" <\/p>\n

This doesn\u2019t mean, however, that disgruntled New Yorkers (or potential transplants) are all necessarily moving to the Carolinas, Texas, or Florida (though lots of them are). They\u2019re also moving upstate, up or down the turnpike, or just across the river. Around 75,000 New Yorkers, for example, relocated to New Jersey in 2024<\/a>\u2014a 12 percent increase from the previous year. Philadelphia, the Times reported earlier this year<\/a>, is \u201cthe new hot spot for New Yorkers\u201d looking for a lower-cost life. And Connecticut home prices have far outpaced<\/a> the national average in recent months, signaling that pandemic-era moves<\/a> are continuing (and backing recent anecdotes<\/a> about New Yorkers continuing to leave the city for Bridgeport, Hartford, Stamford, and the like).\u00a0<\/p>\n

The math underlying any such decision is straightforward: Why pay $4,000<\/a> to rent the average one-bedroom apartment in NYC when you can pay the same monthly amount to own a $650,000 home in a New Jersey community that has direct and relatively quick train service into Manhattan (when a hybrid worker might need it). Throw in modestly lower taxes, decent schools and cheaper child care, added public safety, and various conveniences, and it\u2019s a pretty easy call for many New Yorkers who can afford to make such a move. As the National Association of Realtors just concluded<\/a>, New York City residents really are headed toward the exits, \u201cand their top destinations ensure a cheaper life\u201d:\u00a0<\/p>\n

\"image\" <\/p>\n

New Mamdani tax, housing, child care, and other policies adding to these already-high pressures are sure to hasten the exodus.<\/p>\n

\nSumming It All Up\n<\/p>\n

Wealthy elites often have specialized needs\u2014access to capital markets and clients, proximity to their businesses, cultural and social networks\u2014that New York City uniquely provides, and higher costs usually won\u2019t offset these advantages. But cities don’t run on billionaires alone. They run on the accumulated contributions of all residents, including hundreds of thousands of HENRY professionals who work in New York’s knowledge industries, patronize its businesses, pay substantial taxes, and do it all without government help or the perks that only the ultrarich can afford. For these folks, living costs matter, and\u2014thanks to remote work\u2014they\u2019re increasingly willing to leave when life gets too expensive or uncomfortable, taking their tax dollars with them. (And, if recent news<\/a> out of Connecticut is correct, the exodus may have already begun.)<\/p>\n

The silver lining, if there is one, is that, by eroding New York City\u2019s tax base, HENRY departures would make Mamdani\u2019s budget-challenged plans even more challenging. As the Stanford researchers note, the loss of high-earning employees has \u201cpotent fiscal consequences for states and localities,\u201d with migration from high- to low-cost states significantly reducing income tax collections in the former (and overall) between 2020 and 2023. Other studies, meanwhile, show<\/a> that outmigration from New York\u2014driven mainly by NYC departures\u2014has reduced taxable incomes there by tens of billions of dollars. Lower tax revenues would mean less money available for the social programs Mamdani wants to implement. Lose enough HENRYs, and the math stops working altogether.\u00a0<\/p>\n

Ironically, it might be this flight risk that prevents many of Mamdani\u2019s policies from being implemented in the first place. That\u2019s another benefit of people voting with their feet\u2014 and of remote work helping them do it.<\/p>\n

*And, before you ask: Despite all the return-to-office talk, the latest data for November 2025<\/a> show work-from-home rates to be stable, with only a small drop this year and particular strength in finance, IT, and professional services.<\/p>\n

\nChart(s) of the Week\n<\/p>\n

\"image\" <\/p>\n

Yes, tariffs are boosting retail prices<\/a><\/p>\n

\"image\" <\/p>\n

\"image\" <\/p>\n

\"image\" <\/p>\n

\nThe Links\n<\/p>\n

Trump\u2019s tariff contradictions pile up (including at the Supreme Court)<\/a><\/p>\n

Deflation (\u201cstate capitalism\u201d) pain in China<\/a><\/p>\n

Walmart\u2019s Thanksgiving meal is cheaper this year because it\u2019s smaller<\/a><\/p>\n

Greedflation is so back, you guys<\/a>\u00a0<\/p>\n

The Jones Act is bad for Alaska<\/a><\/p>\n

More on the market for tariff refund claims<\/a><\/p>\n

Farmer bailout could increase fertilizer prices, thus harming farmers<\/a><\/p>\n

Latinos bailed on the GOP for obvious reasons<\/a><\/p>\n

Tariff complexity nightmare<\/a><\/p>\n

Decades of protectionism haven\u2019t helped the U.S. steel industry<\/a><\/p>\n

Government equity stakes already causing capital misallocation<\/a><\/p>\n

Shameful U.S. policy toward Venezuelans here<\/a><\/p>\n

Paper: Higher housing costs mean fewer kids<\/a><\/p>\n

How markets can reduce carbon emissions<\/a><\/p>\n

China already backtracking on Trump\u2019s deal<\/a><\/p>\n

U.S. tractor exporters not counting on China deal<\/a>\u00a0<\/p>\n

Calculating Brexit\u2019s cost<\/a><\/p>\n

College football coach buyouts are weird and fascinating<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"You\u2019re reading Capitolism, Scott Lincicome\u2019s weekly newsletter on economics. This newsletter has been unlocked for all readers. To…\n","protected":false},"author":2,"featured_media":37628,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[2907,22023,426,9,24,56,63,65,64,299,1211,2780,4692,82],"class_list":["post-37627","post","type-post","status-publish","format-standard","has-post-thumbnail","category-new-york-city","tag-housing","tag-housing-prices","tag-kathy-hochul","tag-new-york","tag-new-york-city","tag-ny","tag-nyc","tag-nyc-headlines","tag-nyc-news","tag-opinion","tag-socialism","tag-taxes","tag-wealth","tag-zohran-mamdani"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/37627","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/comments?post=37627"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/37627\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media\/37628"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media?parent=37627"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/categories?post=37627"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/tags?post=37627"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}