Mayor Zohran Mamdani, who ran on a platform of addressing the affordability crisis, faces some stiff economic challenges — many stemming from policy choices out of Washington likely to worsen income inequality in the five boroughs — according to a new report from the Center for New York City Affairs at the New School.
Federal health care cuts enacted in 2025 will increase costs and place many New Yorkers at risk of losing insurance, including about 350,000 low-income city residents who are at immediate risk of losing coverage through the state's Essential Plan, according to the report, unveiled on Mamdani’s first day in office.
Another blow comes in March, when as many as 230,000 New Yorkers are set to lose access to food stamps due to revisions in federal SNAP eligibility, the report notes. Tax cuts, similarly pushed through by President Donald Trump and the Republican-led Congress, will transfer billions of dollars in wealth from low-income New Yorkers to high-wage earners, the report states.
Lauren Melodia, director of economic policy at the Center for New York City Affairs and a coauthor of the report, said in an interview ahead of the report's release that those changes and others will widen the gulf between the haves and have-nots across New York.
Melodia said state and local elected officials, including Mamdani, have the capacity to mitigate some of those changes. The democratic socialist’s campaign, largely focused on the economic interests of ordinary New Yorkers, touted such policies as rent freezes, affordable day care, free bus rides and a $30-an-hour minimum wage.
“Public policy can shape the economy in inclusive ways that can support everyone,” Melodia said.
The findings from the left-leaning center come as some other analyses highlight positive news. New York City remains a beacon for young, educated workers, and the return-to-office trend in Manhattan continues to gain momentum, according to a mostly upbeat report released in December by the New York City Economic Development Corporation.
The City Council predicted in a December economic report that the city’s tax revenues in fiscal years 2026 and 2027 will far exceed estimates made previously by the Mayor’s Office of Management and Budget.
But even those assessments forecast trouble ahead.
The Economic Development Corporation stated that “uncertainty about immigration, trade, interest rates, and tariffs all loom” over the city’s economy. It highlighted the chronic problems of affordability and the housing shortage, along with “never-ending increases in monthly energy bills and everyday food and child care costs.”
And a December report from the independent, nonpartisan Empire Center for Public Policy based in Albany sounded a similar alarm.
“These trends point to the need for a new direction in state and city policy, one that prioritizes affordability and economic opportunity while avoiding the excessive taxes and regulations that make it hard to live and do business in New York,” that report said.
Here are other key findings from the Center for New York City Affairs analysis:
The strength of the local economy conceals important facts
While many workers in the New York City economy are thriving, the report noted there is a racial divide.
“The stability of white workers in the face of a sluggish and uncertain economy is distinct from the experiences of workers of color,” the report states.
The unemployment rate for the metropolitan area’s white workers was just 3% in the third quarter of 2025, while the rate for Black workers was 8.6%, the largest Black-white gap of any major metro area in the country, according to the report.
The center also flagged the Trump administration’s deportation efforts, which continue in 2026, fortified with billions of dollars in new funding. The center said those efforts “disproportionately targeted” Hispanic men in the workforce.
“White workers are doing extremely well in the New York City economy right now,” Melodia said. “On the flip side, workers of color are really struggling.”
The New York City metropolitan economy is larger than that of any other municipal area in the world, generating $2 trillion in GDP, according to the Economic Development Corporation. But that strength is driven in large part by Wall Street, according to the Center for New York City Affairs report.
Melodia said much of that growth is centered, for better or worse, on artificial intelligence, an area fraught with uncertainty.
“There's so much investment happening in this space and a lot of unknowns,” she said. “So it has the potential to have a bubble burst.”
Income inequality is high, and growing
The city already has the highest income inequality of any major city in the country, and that gap is only set to grow, according to the report. “New York City shows deepening signs of labor market inequality, negatively impacting workers of color,” the report states.
The wealthiest New Yorkers, those with an average household income above $517,700, will experience an after-tax income gain of $13,600 due to the sweeping domestic policy bill Trump pushed through Congress in 2025. At the same time, those at the other end of the income scale, with an average household income of $38,840, will experience an after-tax income loss of $1,200, according to the analysis.
Those changes are taking place in a city whose residents, on the whole, are struggling. Real median household income in New York City declined by 4.9% from 2019 to 2024, while it has increased nationally by 0.9%, according to the report. Among the top-10 largest cities, no other city experienced a statistically significant decline in its median household income during the same period, according to the center.
“The combination of declining real median income, increasing wages at the top of the income distribution, and high cost-of-living pressures has resulted in growing precarity among low and middle-income households in New York City," the report states.
Pushing back on federal policies
For all the risks that lie ahead, the report said the new mayor and state officials can push back on federal policies in ways that protect New Yorkers, including low- and middle-income residents already grappling with the high cost of living. Hochul, though, has already said New York state would be unable to “backfill” or account for the federal budget cuts felt by New Yorkers.
“Their political futures require them to make commitments that reflect real, meaningful progress to address the affordability crisis,” the center’s report states. “They will also need to meet the needs of the city’s most vulnerable low-income households, who will be losing critical social safety nets.”
Melodia said the city and state should support agencies and community-based organizations that help New Yorkers file for SNAP and Medicaid assistance. Likewise, she identified another policy lever that could be pulled in New York: Make higher-income earners pay more taxes, generating more resources for the city.
“It's not a very progressive tax code right now,” she said. “There's been a lot of conversation about implementing progressive income tax reform and the city really has space to do that.”
She added: "I think there's opportunity to really think outside the box this year."
