'You need these people': New York's millionaire class has swelled since the pandemic, while lower-income residents are leaving in droves. What gives?

Serah Louis
'You need these people': New York's millionaire class has swelled since the pandemic, while lower-income residents are leaving in droves. What gives?
'You need these people': New York's millionaire class has swelled since the pandemic, while lower-income residents are leaving in droves. What gives?

Headlines heralding the diminishment of metropolises such as New York City abounded in the first couple of years after the COVID-10 pandemic hit, as companies shifted to remote work arrangements and residents realized they could relocate to more affordable locales.

The Big Apple’s population receded 4.6%, while the entire state has saw a 2.1% drop from 2020-2022, according to a recent report from the nonprofit Fiscal Policy Institute (FPI). The report is based on census and tax data.

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Early in the pandemic, migration out of the state was driven by its highest earners, the top 20% with incomes of $172,000 annually or more. But in 2022, that trend witnessed a sharp reversal, with those earning $32,00-$65,000 a year leading the march.

Interestingly, although the state lost 2,400 millionaires from 2020 to 2022, the millionaire class swelled by a whopping 17,500 residents in the same period — equating to a 30% increase — which the FPI attributes to a strong economy and rising wages.

The report also contends that the state’s high taxes aren’t motivating its top earners to flee.

New York isn't driving out those who can afford it

As noted, although higher earners left New York at a higher rate than other income groups at the onset of the pandemic — particularly white collar workers who could work remotely — this trend had abated by 2022.

Wealthy New Yorkers who stuck it out became even wealthier during this time due to federal stimulus policies, low interest rates and a flourishing stock market.

But not everyone can afford the stay. The cost of living has risen since the pandemic, while interest rate hikes have made it more expensive to borrow.

In New York City, more than half of renter households were “rent-burdened” in 2021, meaning tenants shelled out at least 30% of their income on rent, according to the Community Service Society of New York.

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Meanwhile, the city is preparing for some tough budget cuts that will impact schools and preschool programs, sanitation and more. With parents already struggling with the rising costs of childcare — 17% higher in NYC compared to the national average, according to Care.com — some families might turn to other places that offer more accessible and affordable services.

“The main priority for policymakers should be retaining the middle- and working-class populations of New York by making it affordable and livable,” Nathan Gusdorf, director of the FPI, told The New York Times.

Taxes not pushing out the rich

If New York loses its middle-income workers, some experts have concerns about the city’s amenities and industries, as well as the future economy.

“If you want a subway system, an office sector, a restaurant industry, you need these people,” Andrew Beveridge, president of Social Explorer, a demographic information firm, told The TImes.

There could be a solution to this problem — taxing the rich. Gusdorf says the extra tax revenue could help fund public services such as free prekindergarten and housing subsidies.

Although critics of raising taxes on the wealthy worry this could push some rich folks out of New York, the FPI report says there was no significant increase in migration out of the state among the top 1% of New Yorkers (annual incomes of $815,000 or more) in response to two tax increases that took effect in 2017 and 2020.

Many in that group who have been leaving the state are relocating to other high-tax areas, such as Connecticut, New Jersey and California, the report says.

“The state’s tax revenues also grew substantially during the pandemic and have remained relatively steady,” the researchers who wrote the report concluded. “Not only is high-earner tax migration largely a myth, but there is no need to fear for the state’s fiscal and economic future.”

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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