New York’s aging, barely growing population is putting the brakes on business expansion. Residents 65 and older now account for nearly 20% of the state’s population, according to a sobering report from Gov. Kathy Hochul’s office.
The “Labor Markets” section of Hochul’s midyear budget plan found that too few younger residents are available to replace Baby Boomers leaving the workforce, a trend driven by “constraints in population growth.”
“New York’s labor market faces many of the same constraints as the nation, where cautious business expansion and limited labor force growth restrain hiring,” the study said. “Individuals age 65 and older now make up 19.3 percent of the state’s population, up from 15.0 percent a decade ago.”
“The growth of the state’s labor supply will be limited due to constraints in population growth and the aging workforce.
“These trends will likely restrict employment growth, but unemployment rates should remain stable,” the report said. The state Division of the Budget projects that New York’s unemployment rate will average 4.4 percent annually from 2026 through 2028, slightly above the national average.
Analysts pointed to several forces weighing on the state’s job market, including declining foreign immigration, which historically helped offset the number of New Yorkers leaving, and the high cost of living. The shortage of affordable housing in the New York City region was cited as a particularly serious obstacle.
“We can’t change the fact that New York is getting older, but we can change both whether a young family can afford to put down roots here and whether an employer chooses New York for its next hundred jobs,” said Steve Fulop, CEO of the Partnership for the City of New York, which represents the Big Apple’s largest employers.
“It is all connected, and elected officials don’t always recognize it, but affordability for families and competitiveness for companies to grow in New York clearly belong in the same conversation.”
The combination of slowing immigration and a severe housing shortage amounts to a double blow for New York, said Ken Girardin, a research fellow at the Manhattan Institute.
“Housing and immigration are two important things that lubricate the economy. Both of those things have been disrupted in recent years,” Girardin said.
“New York City is the first stop for new Americans. The drop-off in immigration has tightened the labor market. The tight labor market presents a challenge to New York’s economy,” he added.
The Trump administration imposed tighter immigration restrictions, including ending temporary protected status for refugees such as thousands of Haitians and Venezuelans. The move removed thousands of people from the workforce.
Girardin also argued that New York’s elevated housing costs are, in part, a self-inflicted problem created by state and city lawmakers.
He said landlords have kept tens of thousands of apartments off the market because they cannot afford to make repairs under the stricter rent regulations approved in 2019.
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“The situation shows how fried the housing market is. New housing units are not coming online fast enough, and then you have the disruption in rent regulations,” he said.
Declining enrollment in New York City’s public schools offers further evidence that fewer young adults are settling in the city.
Kindergarten enrollment in the city’s public school system has fallen 23% over the past eight years.
Overall enrollment has dropped 19%—nearly 187,000 students—since the 2013-14 school year, including a decline of 22,000 students in the past year alone, according to City Comptroller Mark Levine.
“Students are unlikely to enter the public school system after kindergarten,” noted Yiatin Chu, co-founder of Parent Leaders for Accelerated Curriculum and Education, in a tweet. “In fact, the
@NYCComptrollerIn report shows another dip in the middle school grades.”
“It’s no wonder that closing or merging schools with declining enrollment is a top priority for this administration—there’s no sign of a turnaround.”
Chu said education is the third pillar in efforts to attract and retain young families in New York. She argued that supporting merit-based education programs would be critical to that effort.
“The other strategic priority should be retaining families by offering the schools they want: real G&T [Gifted and Talented], K–8/6-12 schools, more screened programs, and preserving the SHSAT [the entrance exams to get into the city’s top public schools],” she said.
Hochul and New York City Mayor Zohran Mamdani have launched an expansion of publicly funded child care as part of an effort to attract and retain working parents.
The Hochul budget report also highlighted several positive developments.
Bolstered by the strength of the national and state economies—and particularly strong financial market performance—New York’s estimated tax revenues are $8.1 billion higher than projected when the financial plan was approved in May.
Girardin cautioned, however, that those revenues could evaporate if the stock market enters a deep bear market, as it did during the Great Recession in 2008 and the COVID-19 outbreak in 2020.
New York’s budget is more dependent than ever on Wall Street income, including the state’s top 10.9% tax rate on high earners and revenue from capital gains, he said.
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