Big Business This Week: Could Zohranomics actually work?

Update: 2025-11-14

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Zohran Mamdani, the 34-year-old Democratic Socialist who was elected mayor of New York City this month, is promising to usher in a new brand of economics. To tackle the city’s inexorably rising costs and Make New York Affordable Again, he’s proposing a series of sweeping economic changes, includingfreezing stabilized rents, free buses, City-owned supermarkets, free day care, constructing half a million union-built, city-owned affordable housing units, and new taxes on the 1%.

We spoke with two experts about why the plans could be tough to execute.

One of themost unaffordable things in New York is housing. And while average rents on existing leases are still relatively affordable at less than $2,000 a month for a two-bedroom apartment, anyone leasing now will pay an average of$3,900 per month. The big driver is scarcity. With a 1.4% vacancy rate, and more than half of renters paying more than 30% of their income for rent, and over a quarter paying more than 50%, the city needs a new plan.“That’s a severe rent burden,”Mark Willis, a housing policy expert at New York University, told BBTW.“We need more housing. Plain and simple.”

A healthy city would have a vacancy rate above 5%, the threshold for deactivating the city’s rent stabilization law. But Willis says that’s unlikely to ever happen. Citywide averages may show landlords making $600 a month for every apartment in a stabilized building, but that ropes in buildings with only a few stabilized units. Landlords of truly affordable housing, Willis said, are getting about a month’s less rental income a year than it costs to simply maintain an old building. A freeze could bankrupt landlords, and the city needs to reduce their costs with bigger tax breaks for repairs and investments.

“You want to know why rents are high in this city? Well, the basic costs of running a building are high,”said Willis.“And if rents are lower because of rent stabilization, then you can’t properly maintain the building even if you wanted to.”

Is Mamdani’s plan to build more realistic? Maybe, but not if union labor is used. Hisproposed $100 billioncan build 200,000 units over 10 years, but using union labor would boost the price by 50% or more.

The rest of Mamdani’s agenda is even less viable, argues Nicholas Economides, a serendipitously-named professor of economics at New York University.“If you really have free buses and anybody can come in, no questions asked, the homeless are going to live there, the drug addicts are going to live there,”he told BBTW. The city’s transit operator says free buses will cost it $640 million in lost fares, about 4% of its total budget. Astudy for Mamdanisays it will generate $1.5 billion in new economic activity, but it may be hard to funnel that cash back to the MTA.

Mamdani’s plan to open one low-cost supermarket in each of the city’s five boroughs won’t do much, noted Economides.“We’re going to pay it from our taxes, but one grocery store for the whole of Manhattan and one for the whole Queens and so on, I mean, it’s not going to make any difference,”he said.

But the real problem with Zohranomics, argues Economides, is Mamdani’s plan to raise taxes on the city’s wealthy. New York already has city and state income taxes that total 14.8% of taxable income. Another two percentage points would bring that to nearly 17%.“That’s a huge number,”said Economides.“People who don’t have to live in New York, let’s say they’re retired, can go to a state in which they pay zero tax. I think that it shows an extreme level of irresponsibility by the mayor-elect to propose new taxes.”

It’s also notable that versions of Mamdani’s plans already exist and that they could be expanded at lower cost than investing in splashy new programs. Low-income New Yorkers get free or reduced fare cards. Expanding that program would cost more, but tying it to SNAP benefits (what used to be called food stamps) would make administering and funding it a breeze. Publicly-ownedsupermarkets exist, with mixed success, in places from Kansas to Colorado and St. Paul, Minnesota. And the U.S. operates hundreds of grocery stores at military bases around the world with prices some 25% below retail. The city could give tax breaks or space in City-owned buildings to existing food pantries that can sell lower-priced and healthy groceries to SNAP recipients. No need for a City department of grocery stores.

Free day care just expands the existing Pre-K program. Pre-pandemic, Mayor Bill De Blasio opened a free universal pre-K program in less than two years. The real key to making New York City affordable, say both Willis and Economides, is doing more with less.

“Maybe we can’t afford to build the highest quality for everybody. Maybe just providing people with basic amenities,and that’s it,”said Willis. He said allowing more home-sharing and even bringing back single-room occupancy buildings could help.

“We should live within our budgets and make things work better and give better services to consumers,”said Economides.“The rest of the world, the rest of the United States, is much more efficient, and that’s what we need to do. New York has to become much more efficient, less corrupt, and more productive.”

—Peter S. Green

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Businesses mentioned this week:

The usual suspects

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