Mamdani, Affordability, and Inequality

Zohran Mamdani won the New York City mayoral election for several reasons—his ability to inspire thousands of very active supporters, the weakness of his opponents, his own cleverness expressed in videos and online, his smile and upbeat presentation—and the list goes on. But perhaps the primary reason he won was his continued focus on “affordability,” and the substance he gave to that focus with proposals on housing, food prices, childcare, and bus rides—and, of course, raising taxes on the very rich. 

The costs of housing, food, childcare, and transportation are one side of the affordability issue, the side where Mamdani might be able to have a direct impact. Yet, there is another side to affordability, namely people’s limited incomes, and thus their limited ability to pay for things. The two sides of affordability—costs and ability to pay—are connected as consequences of the long rise of economic inequality.

Consider the housing issue and the data presented in the table below, which demonstrate the problem. Housing prices in New York City in the last 25 years rose more than twice as much as prices generally. And, though household incomes in the city rose faster than prices generally, the price of housing rose almost twice as fast. (I’ll come back to the national productivity increase shortly.)

New York State has the most unequal distribution of income of any state in the country, driven in part by the great inequality in New York City, where extreme wealth is concentrated—especially in Manhattan. Moreover, in each of the city’s boroughs for which data are available, income inequality has been increasing substantially over the last 15 years. (See here, here, and here.)

Income inequality means, of course, a greater share of the city’s total income in the hands of, say, the top 10% and top 20% of the population, and also in the top 1%. One of the things they spend their money on is housing—driving up the price of existing housing—think of those old brownstones in Park Slope, Brooklyn and the lavish condominiums in new Manhattan skyscrapers. Their purchases drive up the prices of much of the city’s housing stock. And, if developers have an opportunity, they will build for these high-income payers, obtaining greater profits and “crowding out” more affordable housing.

Of course, there are other factors that drive up housing prices. Limited space to build in the city gets a lot of attention, and it is an important factor. But, whatever the supply of housing, inequality as great as what exists New York will tend to drive up the prices.

And then there is the other end of inequality—the stagnation, or at best slow increase, of the incomes of people at the bottom. Yes, as the table above shows, the median household income has risen a bit more than prices overall, though not nearly as much as housing prices. 

But what if workers’ incomes had risen along with both their increased productivity and the overall rise of prices? If the productivity of New York City workers had risen the same as workers nationwide (as shown in the table), their wages would have risen in inflation-adjusted terms by 60%. If we then assume that wages rose along with inflation and rose along with the increase of productivity, the wage increase would have been 207.2% above the 2000 level. If we take this rise in wages as a rough proxy for a rise in median household incomes, the household incomes would have risen by 207% between 2000 and 2025. (That is, taking “W” as the wage in 2000, the inflation increase would have taken the wage to 1.92W; then the productivity increase would have taken the wage to 1.60 x 1.92W = 3.072, which means the 2025 wage would have been a 207.2% increase from 2000.) 

Put another way, if household income had risen along with the average increase in prices generally and with labor productivity, the affordability problem would still exist but it would be small. Housing is especially important, of course, but similar stories can be told about childcare, food, and transportation. And, remember, there are two ends to the inequality-housing story: both the rich driving up prices and everyone else’s income lagging behind. 

Great economic inequality is not the whole story of affordability, but it is a large part. The problem for mayor-to-be Mamdani is that New York City’s government can do little about rising inequality, which has causes that transcend the national economy, and perhaps the global economy. 

This does not mean that Mamdani should give up. On the contrary, it is all the more reason to press forward with taxing the wealthy, stabilizing rents, and providing more effective grocery supplies, free childcare, and free buses. Elements of this agenda will need support in Albany, and none of it will be easy, but progress is possible. There are certainly limits to what can be done in the short run about national inequality, but Mamdani can use the political power that comes with the New York City mayor’s office to press for national change as well!

Note on the calculations: The calculations used here should be viewed as relatively rough. Limitations of the data (or perhaps my inability to find some data) forced some substantial assumptions—for example, using the change of median household income from 1999 to 2023 as a proxy for the change from 2000 to 2025. And the change in household income is not a result only of rising wages but also a result of the change in the number of people per household in the workforce. Further: Using averages and medians in such calculations obscures the fact that there is great variation among some of the numbers—such as the inequality of wages. Nonetheless, the calculations do illustrate a general point that is accurate.

Arthur MacEwan is professor emeritus of economics at the University of Massachusetts Boston.