New Issue Brief Examines Urban Flight of Highly Educated Workers in New York City

As New York City reopens, it must take into account new real-estate and service-sector challenges brought about by remote work 

NEW YORK, NY – New York City faces a new challenge in the future of remote work. For the past several decades, after overcoming rampant crime issues, Gotham reinvented itself as one of the most important finance and tech hubs in the world for educated workers—thriving on the very jobs that are now most easily made remote. As crime fell, many of these high-income workers decided to stay and raise kids rather than move out to other suburbs. But the pandemic has changed this equilibrium, breaking with a status quo that was already beginning to see residents deterred by growing housings costs.  

In a new issue brief, Manhattan Institute adjunct fellow Arpit Gupta looks at what the data reveal. He points out that last year saw an exodus of younger educated workers who could stay employed at home while many of the amenities and services they would normally use shut down. This finding is corroborated by rents in the city center, which dropped as much as 15-20 percent during the peak of the Covid exodus last year. This decline in residents and commuters hit low-income workers hardest, who saw demand for their services and goods fall. Meanwhile, the tax base for the city is threatened by future workers deciding to not move back, reducing revenue for New York taxes. The future of business and tax bases also faces the reality that immigration to the city was dropping well before Covid; it fell 45 percent from 2016 to 2019. This trend cannot just be chalked up to national immigration lowering across the board under the previous president; many immigrant communities across the country are moving to and growing in suburbs rather than inside major metros.  

To address these challenges and the shift of workers to New Jersey and Connecticut suburbs, Gupta recommends that policymakers in New York City reverse regulatory barriers to greater housing and development to lower the cost of living. He also points out that several large employers are increasingly looking at hybrid work, a policy certainly preferable to fully remote work since it keeps workers somewhat connected to the city. But with reduced consumption for goods and services by workers coming into the office less, it is only more urgent for the city’s leadership to address quality of life issues. Cutting housing costs through zoning reforms and enforcing rules against noise while taking trash off the streets could go a long way to securing an educated and high-income worker community for years to come. Remote work is a serious challenge; policymakers have many important choices ahead of them to meet this new reality.  

Click here to read the full issue brief.