23 April 2019 16:27:24 IST

A management and technology professional with 17 years of experience at Big-4 business consulting firms, and seven years of experience in high-technology manufacturing, Rajkamal Rao is a results-driven strategy expert. A US citizen with OCI (Overseas Citizen of India) privileges that allow him to live and work in India, he divides his time between the two countries. Rao heads Rao Advisors, a firm that counsels students aspiring to study in the United States on ways to maximise their return on investment. He lives with his wife and son in Texas. Rao has been a columnist for from the year the website was launched, in 2015, and writes regularly for BusinessLine as well. Twitter: @rajkamalrao

New York City is slowly becoming unlivable

Unable to bear the high costs of living, the highly taxed New Yorkers are voting with their feet

New York City, perhaps one of the greatest cities the world has ever known, is not so great any more. America’s largest city is losing population for the first time in more than a decade as international migration into the city is slowing to a trickle.

There are numerous reasons for this decline. Issues which big, third-world cities routinely confront — such as substandard infrastructure and inadequate housing — have become familiar headaches in a wealthy city like New York. The subway system is crumbling with trains frequently late or cancelled. President Trump, a lifelong New Yorker, laments that La Guardia Airport, the domestic terminal that serves the city, is worse than many third-world airports.

New York City roads are so choked with traffic, packed with Uber and Lyft ride-share cars, that the average speed midtown has slowed to 10 mph. In August last year, the city decided to freeze the number of ride-shared cars for a year, trying to close the barn doors after the animals have bolted. For those still willing to tolerate the drive, parking in private lots can cost upwards of $48/day.

Transport infrastructure

Bus rides from origin to destination routinely take up to two hours. A recent report said that nearly 20 per cent of bus riders regularly skip paying the ride fare because they either don’t have the money or they just don’t care. Fare skippers are not penalized, by law.

Train services into and out of New York are a mess, with every train overcrowded. Fights with the federal government over funding have left key urban train tracks dangerously under-maintained. A proposal to double track capacity is expected to cost a whopping $20 billion and take eight years to complete, and this too has stalled.

Everything is so congested that the City recently approved a plan to tax all cars entering south of 60th street, into Manhattan — borrowing from similar urban planning implementations in London and Singapore. This means that any visitor driving to New York to visit the city’s famous sights such as the Empire State Building, Times Square, Wall Street, the World Trade Center, and Wall Street — will have to pay up to $16 in tolls just for entering the Central Business District (CBD). This will be on top of any tolls to cross the Hudson or East Rivers, which have since risen to the highest tolls in the nation.

Lost opportunity

The city’s socialist leadership helped kick Amazon out of the city before the big retailer had even arrived, promising to build a second headquarters in Brooklyn. This was a potential loss of over 25,000 high-paying jobs and nearly $27 billion in badly needed additional tax revenue over ten years. Ideological purity trumped practicality and, while political leaders gloated, residents fumed at lost opportunities.

Gentrification - wherein wealthy companies and citizens buy up lower and middle-class homes in neighbourhoods close to the CBD, and convert them to office buildings and high-end apartments — is a big problem in all American urban areas. In New York, the working poor are being displaced from their homes to outer boroughs, but with all the problems of public transportation and road congestion, these residents are finding it harder and more expensive to commute to the CBD, where they often work in low-end and low-paying service jobs.

New York has become a nightmare for the well-off too. New Yorkers pay the highest rates of state and city income taxes in the US, on average, about 12.7 per cent of income. Someone living in Dallas or Houston, in Texas, or Miami in Florida pays zero state or city income taxes. New York City’s taxes are on top of federal income taxes. According to Politifact in 2012, a single New Yorker earning $250,000 as an employee paid nearly $100,000 in federal, state and city taxes.

High cost of living

It’s not just the taxes. It’s the cost of living. Home values are astronomical, with the average Manhattan real estate property priced at $1,750 per square foot. A 1,100-sft two-bedroom apartment in Manhattan can cost nearly $2 million. Property taxes at just 1 per cent will take away an additional $20,000 each year. Most people cannot afford a home and, therefore, rent. But rents are expensive, trending to over $4,000 a month for such an apartment. Affordable housing has become extremely scarce because of gentrification and outdated rent-control rules.

Unable to bear such high costs of living, New Yorkers are voting with their feet. The out-migration of New Yorkers is the highest in the nation, next only to those fleeing the even more unlivable San Francisco Bay Area. Meanwhile, illegal immigrants are drawn to New York City’s status as a liberal hub with generous benefits, including sanctuary protection, where the city will not disclose the identities of undocumented people to the US government for deportation action.

The city’s population mix is rapidly changing. People who pay substantially in taxes are leaving. People who draw benefits are moving in. Expectedly, this is increasing the economic burden on the remaining wealthy residents, who pay the region’s high taxes, causing them to leave in higher numbers. This spiral has been going on for over ten years now. In the next census, New York will likely lose three seats in the US House of Representatives because of out-migration. This is a big deal as it amounts to a loss of nearly 10 per cent of the New York Congressional delegation.

The lessons of New York translate easily to big urban populations in India too, with one exception. In India, conditions out in the hinterland are so bad that rural migration into the big cities continues unabated. This is an exceptionally acute problem but no politician has the guts to take it on — in fact, this critical issue is not even being debated by the various political parties during this election season.