Anyone versed in basic economics will tell you that it is all about the allocation of scarce resources to maximize societal benefits. If we adhere to a budget (and NYC does—it must), a dollar spent on one program is a dollar not available for others. This is the very definition of opportunity cost and the current migrant crisis plaguing NYC highlights the issue.
Migrants Flood into NYC
For anyone asleep at the wheel, more than 122,000 migrants have arrived in NYC since April 2022. The cost to shelter a single family is downright jaw-dropping at approximately $380 per night or nearly $35,000 over a three month period. At the current pace, the city is on track to spend $12 billion over the next three years to shelter and support migrants. For some perspective, the budgets of the Fire, Parks, and Sanitation Departments combined are about $5 billion annually.
Mayor Adams was blunt in his assessment of this crisis when he said “This issue will destroy New York City.” And perhaps it will if federal assistance doesn’t arrive in time or falls far short of what is needed. And isn’t just about dollars—there simply isn’t enough housing available. Last week, the city’s lawyers requested the 1981 consent decree—that legally obligates the city to provide shelter to migrants—be suspended whenever the governor or mayor declares a state of emergency. Opposed to the move, the Legal Aid Society and the Coalition for the Homeless said the change would “gut” protections and noted “street homelessness would balloon.” No decision by the NY Supreme Court has been made as of this writing.
Who Should Taxpayer Dollars Help?
In a perfect world, our desire to help all those in need would be bankrolled by an infinite flow of dollars. But that isn’t the case and, therefore, legislators should ask whether we should be subsidizing low income New Yorkers living in rent stabilized apartments or recently arrived migrants?
I recently wrote a piece here about the rent stabilization laws and the burden they put on landlords. Several owners have already experienced—and many more are facing—the loss of their properties through foreclosure as the income from these properties is insufficient to support current debt loads. Meanwhile, buildings are falling into disrepair and we may be headed toward the blight and urban decay that defined certain NYC neighborhoods in the 1970s and 1980s. City, state, and federal programs such as FHEPS, Section 8, and HASA subsidize the rents of certain low income tenants and I think it’s fair to ask why not expand the subsidy to include low income rent stabilized tenants?
The $4 Billion Math Problem: Subsidizing Rent Stabilized Tenants or Sheltering Migrants
Let’s do a bit of math.* According to a city survey in 2021, the median rent for a stabilized apartment was $1,400 compared to $1,825 for an unregulated unit. With approximately 900,000 stabilized units in the city, the rent shortfall amounts to approximately $383 million a month (or $4.6 billion a year)—the required subsidy to make landlords whole. Ironically, this cost is about the same as housing and supporting migrant families. Who deserves those dollars? Both groups of course but in a world of scarce resources, legislators must choose.
*This calculation assumes that the cost to subsidize every rent stabilized apartment is the difference between the median stabilized rent and the median unregulated rent multiplied by the total number of stabilized units in NYC, which may not be correct. To undertake a more accurate calculation, we would need to look at each regulated apartment on an individual basis and compare its rent to the market rent for a similarly sized and located unit, and aggregate that amount for all 900,000 stabilized apartments over a monthly and annual basis.
Website Sources: Mays, J. C. (2023, August 10). Mayor Adams Said Migrant Influx Will Cost NYC $12 Billion. The New York Times. https://www.nytimes.com/2023/08/09/nyregion/adams-nyc-migrants-cost.html#:~:text=As%20newcomers%20continue%20to%20arrive,them%20and%20provide%20other%20services. Fitzsimmons, E. G. (2023, September 7). Eric Adams Asserts Migrant Crisis Will ‘Destroy New York City.’ The New York Times. https://www.nytimes.com/2023/09/07/nyregion/adams-migrants-destroy-nyc.html#:~:text=Mayor%20Eric%20Adams%20said%20that%20New%20York%20City%20was%20not,We’re%20here Fitzsimmons, E. G. (2023, October 4). NYC Moves to Suspend Right-to-Shelter Mandate Amid Migrant Crisis. The New York Times. https://www.nytimes.com/2023/10/04/nyregion/eric-adams-right-to-shelter-migrant-crisis.html
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