Aging Population Stifles New York Business Growth, Says Report

Aging Population Stifles New York Business Growth, Says Report

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New York faces a shrinking workforce and aging population

New York’s stagnant and aging population is stifling business expansion across the state, according to a recent report from Governor Kathy Hochul’s office, NY Post reported.

The “Labor Markets” section of the governor’s mid-year budget plan reveals that there are not enough younger residents to replace the Baby Boomers exiting the workforce. Population growth constraints drive this shortage.

State analysts noted that while the aging trend will likely restrict employment growth, unemployment rates are expected to remain relatively stable. The Division of the Budget projects the state’s unemployment rate will average 4.4 percent annually from 2026 through 2028, a figure slightly higher than the national average.

Demographic shifts and economic constraints

The data shows a demographic tilt toward older residents. Individuals aged 65 and older now account for 19.3 percent of the state’s population, a notable increase from the 15.0 percent recorded a decade ago.

York population by age cohorts

Experts suggest this shift is being compounded by two primary disruptions: a slowdown in foreign immigration and a persistent housing crisis. Ken Girardin, a research fellow at the Manhattan Institute, noted that both immigration and housing traditionally serve to lubricate the economy, but both have faced recent disruptions.

Girardin pointed to the impact of federal policy, noting that the Trump administration’s tighter immigration restrictions—including the end of temporary protected status for refugees from nations such as Haiti and Venezuela—removed thousands of individuals from the workforce. He also characterized the high cost of housing as a “self-inflicted problem” caused by state and city politicians.

“Landlords have warehoused tens of thousands of housing units because they can’t afford repairs under stricter rent regulations approved in 2019,” Girardin said.

The housing shortage is further complicated by a lack of new supply. Girardin observed that new housing units are not coming online quickly enough, a situation worsened by the disruption caused by rent regulations.

The connection between affordability and growth

The economic consequences of these trends extend to the ability of companies to scale within the state. Steve Fulop, CEO of the Partnership for the City of New York, argued that housing affordability and business competitiveness are inextricably linked.

“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,” Fulop said.

The impact on young families is perhaps most visible in the declining enrollment within the New York City public school system. City Comptroller Mark Levine reported that kindergarten enrollment in the city has plummeted by 23 percent over the last eight years. Since the 2013-14 school year, enrollment has dropped by nearly 187,000 students, including a loss of 22,000 students in the most recent year alone.

Yiatin Chu, co-founder of Parent Leaders for Accelerated Curriculum and Education, suggested that the decline in enrollment makes the administration’s focus on merging or closing schools a logical but difficult priority, as there are few signs of a turnaround in student numbers.

Chu emphasized that education remains the “third leg of the stool” for retaining families. She advocated for the preservation of merit-based programs, such as Gifted and Talented (G&T) tracks and the Specialized High Schools Admissions Test (SHSAT), as essential tools for keeping families in the city.

Market volatility threatens state tax revenues

While the state’s budget currently benefits from strong financial market performance—with estimated tax revenues sitting $8.1 billion higher than the May plan—the underlying stability remains sensitive to market volatility. Because New York's budget relies heavily on capital gains and the top 10.9 percent of income tax rates, a market downturn could cause revenues to dry up, similar to the shifts seen during the 2008 Great Recession and the 2020 pandemic.

In response to these pressures, Governor Hochul has focused on childcare and housing as primary levers for change. She has championed a 2-K childcare program in New York City intended to reduce the financial burden on working parents.

“I had two preschoolers at the same time, just a year apart. Imagine saving $40,000 a year on childcare,” Hochul said during a CBS 2 interview.

To address the housing shortage, the Governor has taken steps to streamline environmental reviews for new developments, facilitate the conversion of office buildings into residential units, and established $750 million in state funds specifically for communities that commit to building more housing.

“I have no choice. This is the biggest cost for any family,” Hochul said on Max Politics.

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