Mamdani wants a growing, more livable city — but that goal is in tension with his core affordability promise.
Mayor Zohran Mamdani’s election demonstrated that, for many voters, affordability is New York City’s biggest issue. Mamdani was elected on promises to lower the share of income families have to spend on rent and childcare, provide cheaper public transit and improve access to low-cost groceries. Affordability is clearly top of mind for many middle-income New Yorkers — but it’s a tough goal for a city government.
Tackling affordability for middle-income residents at the city level is challenging for two reasons. First, the City has only partial control of the underlying demand and supply factors that drive affordability. Second, the law of 100% makes addressing affordability across goods and services that vary not only in price but also in other dimensions well-nigh impossible.
Mayor Mamdani leads a city, not a country. That means that he doesn’t control the single biggest element of demand — the size of the city’s population. If the mayor succeeds in making New York a better place to live (let’s say that’s the effect of delivering free buses and cheaper groceries, less crime and more art), new people are likely to move in and current residents are less likely to move out. Between 2010 and 2020, for example, the city’s population increased by nearly 630,000. That’s the equivalent of adding two-thirds of the population of Austin, Texas — often hailed as a beacon of affordability — in just a decade.
Adding people to the city, whether through more stayers, more in-migrants or more births than deaths among residents, raises demands for housing as well as childcare and transportation services. Research shows that increased demands for housing, such as those induced by migration, raise home prices and rents (though, of course, migration also brings many benefits). In other words, making New York City a more desirable place to live will make it less affordable.
This problem is best understood by looking at its reverse — the effect of city shrinkage on housing affordability. The most affordable cities in the U.S. are those in the Rust Belt, cities that have lost substantial population relatively recently. In general, population size and rents travel together. New York became less affordable precisely because it became more attractive.
The government of New York doesn’t fully control the supply of core goods and services — including housing — either. The City can certainly try to remove impediments to construction, although large-scale construction in dense places is inherently challenging, but it has no control over housing affordability in the City’s suburbs and commuter regions.
About one million people commute to the City each day, from across a three-state commuting shed. The supply of housing and other services in that commuting shed acts — as a safety valve or a pressure cooker — on the New York City supply. Between 2010 and 2020, the shed acted as a safety valve. As housing in New York City became more expensive, people moved to the suburbs (from within the city and elsewhere). New York’s housing stock grew by 7.3%, but the increases in Jersey City (18%), Bayonne (14%), Newark (9%) and Stamford (10%) were even greater. These four cities alone added about 40,000 housing units between 2010 and 2020 and had population and housing growth 15% as large as New York City itself. New York’s affordability agenda depends on decisions made throughout the tristate area (and even beyond).
The other problem is that affordability, especially for the kinds of goods and services the mayor is targeting, is a slippery goal. By construction, household spending always adds up to 100% of expenditures (note that some income isn’t spent but goes to savings and taxes). Reducing unit prices for basic, core needs such as housing, food and transportation will allow people to spend a greater share of their income on less essential “wants.” But because there is so much potential for variation in the quality of those core needs (think square feet of living space, strawberries in January or power windows) much of that increased spending will typically be devoted to improvements in the quality of core goods themselves. In this way, a reduction in the price of housing could lead to an increase in the share of expenditures devoted to housing. The key point is that a larger share of spending on some good or service isn’t always bad; sometimes it’s a byproduct of improved standards of living and happier citizens.
To better understand this paradox, it’s useful to contrast gas or food and housing (or health care). Right now, many Americans are very unhappy about the affordability of gasoline. That’s easy to track: Gas, pretty much, is gas. Similarly, the U.S. government has a way of defining the affordability of food based on the Thrifty Food Plan, originally developed back in 1975. Nutritional needs haven’t changed much since then, though the plan was modified in 2021 to reflect changes in how families today prepare food.
The picture for housing (or health care or transportation), however, looks quite different. Households today are smaller than in the past, and square footage per capita has increased. People expect more comfort and privacy. New Yorkers no longer sleep on mattresses outdoors in the summer. All New York City apartments will have air conditioning by 2030, and most do already. People will pay more for housing near parks, in low-crime areas, close to transit, with good restaurants nearby or even near their friends. If people move to be nearer to those good things, their rent will be higher. Efforts to reduce housing prices may lead people to live with fewer housemates, in larger units, with more amenities, and spend just as much, or even more, on rent. That doesn’t mean that housing has become less affordable.
The potential for substitution between money costs and other aspects of goods or services makes it particularly hard to change spending shares. When prices of some goods decline in relative terms, people reshuffle their spending and buy more of the others. That’s apparent in comparisons of how New Yorkers spent their money over time. The share of our spending on core goods and services in total has hardly changed, but the distribution across core goods and services has. Back in 2004, New Yorkers devoted a larger share of their budgets to food, transportation and apparel and a smaller share to housing and health care than New York City residents do today, reflecting the much greater improvements in the quality of housing and health care that they now consume.
It’s also clear when we look across the country that people in different cities prioritize their spending differently. Let’s compare spending shares on food, housing and transportation in New York City to spending shares in other large U.S. cities. In each of these very distinct cities, residents devote about 65% of their expenditures to food, housing and transportation, leaving 35% for all other spending. Food costs are quite comparable. But the division of expenditures between transportation and housing varies a lot. It’s not a coincidence that New York is both transportation-cheap and housing-expensive — or that the pattern in Houston is the reverse.
When costs of apparel, food or transportation fall (in relative terms), residents shift their spending. They might spend more on entertainment or pensions (the 35% of “other” spending), but the cross-time and cross-city comparisons suggest that it more often goes toward improving the quality of core goods. Reducing the cost of childcare allows people to spend more of their income on more comfortable, well-located housing. Lowering subway fares means people can spend more on groceries. That doesn’t mean they’ve become worse off. Nostalgia is a poor policy goal when standards are changing. Middle-class housing in New York was not more affordable when high crime kept prices low and most units did not have air conditioners or dishwashers, food was not more affordable when fresh berries and ripe tomatoes were unavailable in the winter, and health care was not more affordable when the standard treatment for heart attacks was bed rest.
In sum, New York City’s government should do everything it can to reduce the cost of living. Removing unnecessary barriers to construction, taking on overpriced monopolies and helping out low-income residents are all worthwhile goals. But short of making city life undesirable, it’s going to be hard to come through on the affordability promise itself.
