New York’s aging and barely growing population is emerging as a major obstacle to business expansion. Nearly one in five state residents is now at least 65 years old, according to a concerning analysis released by Gov. Kathy Hochul’s office.
The “Labor Markets” section of Hochul’s midyear budget report warned that too few younger residents are available to replace Baby Boomers retiring from the workforce, reflecting broader limits on population growth.
“New York’s labor market faces many of the same constraints as the nation, where cautious business expansion and limited labor force growth restrain hiring,” the report stated. “Individuals age 65 and older now make up 19.3 percent of the State’s population, up from 15.0 percent a decade ago.”
“The growth of the State’s labor supply will be limited due to constraints in population growth and the aging workforce.
“These trends will likely restrict employment growth, but unemployment rates should remain stable,” the report continued. The state Division of the Budget expects New York’s unemployment rate to average 4.4 percent annually from 2026 through 2028, slightly higher than the national rate.
Analysts pointed to several forces holding back a more vibrant job market, including a decline in foreign immigration, which had historically helped offset the number of New Yorkers leaving the state. They also cited the high cost of living, especially the shortage of reasonably priced housing in the New York City area.
“We can’t change the fact that New York is getting older, but we can change both whether a young family can afford to put down roots here and whether an employer chooses New York for its next hundred jobs,” said Steve Fulop, CEO of the Partnership for the City of New York, which represents many of the city’s largest employers.
“It is all connected, and elected officials don’t always recognize it, but affordability for families and competitiveness for companies to grow in New York clearly belong in the same conversation,” he added.
Ken Girardin, a research fellow at the Manhattan Institute, said the slowdown in immigration and the housing shortage have combined to create a serious economic burden.
“Housing and immigration are two important things that lubricate the economy. Both of those things have been disrupted in recent years,” Girardin said.
New York City has traditionally served as the first destination for many new immigrants, Girardin noted. With fewer newcomers arriving, the labor pool has tightened, creating another challenge for the state’s economy.
The Trump administration has adopted stricter immigration policies, including ending temporary protected status for refugees from countries such as Haiti and Venezuela. The changes removed thousands of workers from the labor force.
Girardin also argued that New York’s housing affordability crisis has been worsened by decisions made by state and city lawmakers.
He said landlords have left tens of thousands of apartments vacant because they cannot afford necessary repairs under the stricter rent regulations enacted in 2019.
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“The situation shows how fried the housing market is. New housing units are not coming on line fast enough and then you have the disruption in rent regulations,” he said.
Declining enrollment in New York City’s public schools offers another indication that fewer young adults are settling in the city and raising families there.
Kindergarten enrollment has fallen 23% over the past eight years across the city’s public school system.
Overall enrollment has dropped 19%—nearly 187,000 students—since the 2013-14 school year, including a loss of about 22,000 students in the past year alone, according to City Comptroller Mark Levine.
“Students are unlikely to enter the public school system after kindergarten,” Yiatin Chu, co-founder of Parent Leaders for Accelerated Curriculum and Education, wrote in a tweet. “In fact, the
@NYCComptrollerIn report shows another dip in the middle school grades.”
“It’s no wonder that closing or merging schools with declining enrollment is a top priority for this administration—there’s no sign of a turnaround,” Chu added.
Chu said education is the third essential piece of the puzzle for attracting young families to New York and convincing them to stay. She argued that expanding merit-based education options would be crucial.
“The other strategic priority should be retaining families by offering the schools they want: real G&T [Gifted and Talented], K–8/6-12 schools, more screened programs, and preserving the SHSAT [the entrance exams to get into the city’s top public schools],” she said.
Hochul and New York City Mayor Zohran Mamdani have responded by pursuing an expansion of publicly funded child care, hoping to attract working parents and make it easier for existing families to remain in the city.
The Hochul budget report also highlighted several positive economic developments.
Supported by the strength of the national and state economies—and especially strong performance in financial markets—New York’s projected tax revenue is now $8.1 billion higher than the amount anticipated when the financial plan was approved in May.
Girardin cautioned, however, that the additional revenue could disappear if the stock market enters a deep bear market, as it did during the Great Recession in 2008 and the COVID-19 crisis in 2020.
He said New York’s budget has become increasingly dependent on Wall Street, including the state’s top 10.9% income-tax rate on high earners and revenue generated from capital gains.