New York’s political class continues to search for complicated explanations for a very simple fact: people leave when the government makes life too expensive, too cramped, too disorderly and too unrewarding.
That’s what happened in New York City.
For years, City Hall and Albany behaved as if New York’s pull was permanent and taxpayers captive. They assumed that families would tolerate shrinking apartments, rising rents, dirty streets, unreliable public transportation, rising taxes, bureaucratic arrogance, and declining law and order because this is New York, after all. That conceit is now colliding with reality. New Yorkers of all income levels voted with their feet.
The numbers are striking. The Citizens Budget Commission found that New York City alone lost 166,000 people, representing 52,600 households, to domestic emigration in 2022. That loss reduced city tax revenues by an estimated $309 million, including at least $259 million in income tax revenue.
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New York City does not provide a competent government, but it has not gone so far as to save it. (Gary Hershorn/Getty Images)
This isn’t just the story of a few wealthy financiers moving to Palm Beach. It’s broader and more disturbing than that. The New York City Comptroller found that between 2019 and 2023, the city lost about 83,000 full-year resident tax returns and nearly 347,000 people associated with those returns. The decline occurred mainly among married couples and families with children, while almost all of the net decline in filings and population was concentrated among returns with incomes of $50,000 or less.
In plain English: New York is losing people from the bottom, middle, and family-building ranks. Lower-income residents are being pushed out. Families leave because they need space and functioning systems. Middle-income earners are leaving because they are being asked to pay luxury prices for increasingly mediocre results. And higher-income residents, given new options by remote work, no longer have to shelter in place simply because their office once demanded it.
The same CBC report noted that one in four college-educated New Yorkers reported working primarily from home in 2022, especially in higher-wage industries such as finance, media and technology.
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What is the cause? Start with housing, where so many of New York’s other failures become most punishing. For years, the city made construction too difficult, too slow and too expensive. Zoning restrictions, permit postponements, endless procedural bottlenecks, anti-growth policies and regulatory overload have limited supply.
The result is not just high rent. It is a market that is so distorted that normal life becomes more difficult at every stage. The CBC found that 25% of households in New York City are moderately or severely overcrowded, while only 9% meet the matched household size and space standard.
This is what overregulation looks like in real life. It means that young families cannot find an apartment large enough to stay in. It means workers are spending a larger portion of their wages to stay put. It means that people who once endured the inconveniences of New York now realize that they can live better elsewhere.
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But housing is not the whole story. New York also suffers from a deeper government disease: the country spends enormous amounts of money poorly. The city’s fiscal year 2026 budget totals $115.9 billion. That’s an astonishing level of spending. The state of Florida has a smaller budget with almost three times as many residents. Yet New Yorkers do not experience city government with the competence required for such a budget.
Here’s the crux of the matter: New York doesn’t just have big government. It has an undisciplined one. The comptroller warned in late 2025 that chronically underbudgeted costs were estimated to total $3.76 billion in fiscal year 2026, with even larger gaps expected in coming years. In other words, the city too often underestimates expenditure, postpones settlement and pretends that future pressure is smaller than it actually is.
Start with housing, where so many of New York’s other failures become most punishing. For years, the city made construction too difficult, too slow and too expensive.
That is not wise management. It is a budgetary illusion.
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The problem is also not solved by simply appropriating more money. Inflated budgets are not the same as good governance. In fact, they often hide poor management. Taxpayers are being asked to fund ever-increasing spending plans while dealing with dirty streets, persistent disorder, tender failures, service delays and agencies that too often seem incapable of basic implementation. New York’s problem isn’t that the government is too small. It is that the government is too expensive for what it delivers.
Then there is labor policy, another issue that the city’s establishment handles with kid gloves. Municipal workers deserve fair pay. But taxpayers deserve a government organized around performance, efficiency and results. Too often, employment contracts in New York lead to higher costs without corresponding modernization.
The CBC noted that health insurance costs have risen the fastest among compensation costs, with an average annual increase of 7% between fiscal years 2009 and 2019. It also points out that more than 95% of urban municipal employees choose plans that do not require employee premium contributions, forcing the city to bear costs that are far more generous than those of most public and private employers.
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This is where union demands become more than a budget line. They become a structural obstacle to reform. Collective bargaining becomes a one-way street for wages and benefits, while labor rule reforms and productivity improvements are seen as optional or offensive. Taxpayers ultimately get the worst of both worlds: a more expensive government and an underperforming government.
So what should New York do?
First, it must embrace genuine supply-side housing policies. Upzone more neighborhoods. Streamline permits. Reduce procedural delays. Remove regulations and mandates that make construction financially irrational. A city that will not build is a city that will drive away its families. Why don’t the state and the city defeat the jungle of rent control and rent stabilization along the way that is ruining landlords and leading to structural decay?
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Second, it should restore fairness to the budget. Stop cutting predictable costs. Stop relying on rosy assumptions and budget tricks. Force agencies to justify spending based on measurable performance and real results.
Third, it must seriously and fairly reform labor costs. Future labor agreements must link wage growth to productivity gains, modernized labor rules, greater management flexibility and healthy benefits.
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Fourth, it must focus relentlessly on the visible quality of daily life. Clean streets, safer public spaces, reliable public transportation, responsive city services, and orderly neighborhoods are not superficial concerns. They are part of the city’s competitive position.
The result is not just high rent. It is a market that is so distorted that normal life becomes more difficult at every stage.
New York is still one of the largest cities in the world. But as ancient Rome showed, greatness does not happen by itself. A city can live for a long time on inherited prestige, accumulated capital and memories of better governance. Eventually, however, reality sets in. If the government overregulates housing, mismanages budgets, drives up labor costs, and declines in performance, people will leave.
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And they did.
The lesson is not that New York is doomed. It is that New York must rediscover a truth it once well understood: prosperity does not come from squeezing the productive population, subsidizing dysfunction, and governing through inertia. It comes from the freedom to build, discipline in spending, competence in management and respect for the taxpayers and families who make the city possible.
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