New York’s mayoral race is shaping up to be the city’s most consequential in a generation. Zohran Mamdani, a state assemblymember and the Democratic nominee, has proposed sweeping measures to tackle economic inequality: a two-point tax hike on high-income earners, a citywide rent freeze, and government-run grocery stores aimed at lowering food prices. His platform has sparked fierce debate over whether the city can afford the cost.
Critics of Mamdani’s platform have framed his policies as “utopian,” arguing that affordability cannot come at the expense of the city’s economic wellbeing. With housing prices soaring, small businesses struggling, and wage inequality deepening, the election has become not only a referendum on affordability, but also inspired fierce debate on the economic, business, and balance sheet implications of a Democratic Socialist agenda.
To better understand what’s at stake, we asked Columbia Business School experts to weigh in on the policies driving this election, how they will be paid for, and the implications for New York’s complex and dynamic economy.
CBS: What is the evidence for whether income tax increases—like Mamdani’s proposed two-point hike on incomes over $1 million—have meaningful effects on revenue or migration?
Massachusetts and Washington introduced similar tax increases between 2022 and 2024, targeting high-income earners and capital gains. Interestingly, the number of millionaires in both states increased during this period, suggesting that modest tax hikes did not trigger significant outmigration.
I suspect that millionaires are unlikely to leave New York City over modest tax increases. This issue should be viewed in the broader context of post-pandemic return-to-office trends and the ongoing AI-driven technological boom. Top-earning professionals, such as managing directors at Goldman Sachs and JPMorgan, were among the first to return to the office, and JPMorgan has just opened its new $3 billion headquarters in midtown.
During periods of rapid technological acceleration, the advantages of being near talent, opportunity, and professional networks—saving commute time—outweigh the costs of living in high-tax regions.
– Daniel Keum, David W. Zalaznick Associate Professor of Management
CBS: What is the impact of rent control on new apartment construction, and what is the practical downstream impact on both apartment construction as well as price dynamics, of freezing rents?
Tighter rent control may soothe frustration in the short term, but in practice it exacerbates the very problem it is meant to solve—affordability. Job growth and population demand in New York have far outpaced the number of units built: rents are high because people want to live and work here, but housing supply hasn’t kept up. We have more people chasing too few apartments. Meanwhile, a 2019 rent stabilization law and rising costs have squeezed landlords, leaving nearly a quarter of rent-stabilized property mortgages delinquent and many units sitting vacant.
The next mayor should focus on expanding supply rather than freezing rents—through a combination of forgivable loans for landlords, reform of the 2019 rent stabilization law, denser development in outer boroughs, and rezoning that allows for new construction. Rent control may be a great message for a political campaign, but regulation that is too tight reduces supply, drives out investment and degrades housing stock. If Mamdani wants to lead New York into a more affordable future, the path forward is clear: bring vacant apartments back, reform misguided rules and, above all, build more housing.
– Stijn Van Nieuwerburgh, Earle W. Kazis and Benjamin Schore Professor of Real Estate and Finance
CBS: Could a government-run grocery store lower prices by removing rent and property tax costs?
I grew up in China. My childhood memory of government-run grocery stores in the 1980s is still vivid. The price was controlled and relatively low, but the supply was also limited. Shortage was prevalent. The big problems were that the government may not necessarily know what people want so well, and workers’ incentives were also low. However, when the market economy opened up in the 1990s, the production scale greatly expanded, workers were more motivated, and production efficiency significantly improved. The abundance of food suppressed the price and significantly increased ordinary people’s living standards.
The takeaway is that the market has its logic of functioning, and government intervention can distort the market mechanism. When inserting government regulation over the market, the potential consequences need to be carefully studied and debated.
– Lori Yue, Associate Professor in the Management Division
Government-run grocery stores are possible but challenging. The basic idea seems simple: if a city or state owns the property, the grocery store can operate with no rent or property taxes—two of the biggest fixed costs in retail. These savings, in theory, could be passed on to customers.
Removing rent, property taxes, and profit motives gives public stores more flexibility to offer affordable prices—hopefully. They could buy some items in bulk through centralized warehouses, negotiate directly with suppliers and wholesalers, and serve neighborhoods that private grocers find challenging because margins are too thin. These stores would be run as public services rather than profit-driven businesses. They could even have some level of government subsidized losses if the social benefit—better access to healthy, affordable food—justified it.
But the grocery business is exceedingly difficult with low margins, dependent on tight logistics, scale, and turnover. Waste is the enemy of success and must be minimized. Expiration dates, product shelf loss, pilferage, and on-going monitoring are huge. Private operators have all the algorithms and tech to manage food flow through volume purchasing, monitoring product shelves and velocity, and mixing low margin shelf products with higher margin prepared and value-based selections. Government stores will be challenged to do this. Even if rent and taxes disappear, costs like labor, paper and packaging, energy, waste, extermination, and transportation remain high. Without private-sector efficiency and accountability, publicly run groceries could become costly, bureaucratic, and inefficient.
Still, in neighborhoods where grocery access has become spotty, the model offers an alternative. Think of a local co-op, Army PX, or retail food bank. A publicly owned grocery store could operate like a utility—mission-driven, and responsive to community needs rather than business demands. It wouldn’t need to dominate the market; it just needs to fill the gaps left behind by private chains.
– Stephen Zagor, Adjunct Assistant Professor of Business in the Management Division
A role model I would encourage Mr. Mamdani to look at would be the Fair Price stores run by a social cooperative in Singapore. Singapore has huge income and wealth inequality-somewhat like NYC. These Fair Price stores are financially viable, they sell generics that are 10-15% cheaper than branded alternatives, they have low margins (2% of revenue) but they also have scale (60% of market share) that enables better cost management. Most importantly, the store is run professionally and is not funded via massive taxpayer dollars and helps lower income citizens who are reeling from food price inflation that we have experienced.
– Shivaram Rajgopal, Roy Bernard Kester and T.W. Byrnes Professor of Accounting and Auditing
CBS: What are the effects of recent minimum wage increases, and how might a $30/hour wage reshape small-business economics in New York?
Increases in the minimum wage are likely to raise labor costs for small businesses. However, wages represent only a portion of the total cost of running a business. Local businesses often emphasize the cost of real estate and regulatory red tape as the main difficulties in operating their businesses, rather than wage increases.
In addition, small businesses are particularly ill-equipped to deal with the significant regulatory hurdles that exist for new establishments in NYC. Business owners are often forced to deal with multiple agencies and undertake a series of steps that can unpredictably delay the opening of the business or limit their ability to change or expand. According to one analysis, opening a barbershop requires 52 steps, 12 of which need to be completed in person. Despite calls to simplify the process, there has been little policy progress.
Dealing with these bureaucratic challenges can get in the way of core operations, which results in missed revenue opportunities. Having to temporarily close down a store to address an administrative or compliance request can mean a loss of sales, creating greater financial liability. A welcomed policy change would be to offset the added labor costs of hiking the minimum wage by making it easier for small businesses to launch and operate without the onerous administrative burdens they deal with today.
– Jorge Guzman, Gantcher Associate Professor of Business and Dan Wang, Lambert Family Professor of Social Enterprise
The evidence across the nation in retailing is mixed. Some studies found that retailers altered overall compensation by reducing the hours worked. Other studies found that increasing the minimum wage in retailing led to an increase in worker productivity but that this finding was not consistent across all individuals or locations. Worse, overall store profits declined in spite of the increase in worker productivity.
In retailing, a closer look at firms like Costco is warranted. Costco pays their employees a living wage and pays for that by being incredibly operationally efficient. It makes specific choices about the level of inventory it holds, the variety it offers its consumer so it can maintain low costs and be selective in the employees it hires and is able to retain given its effective compensation strategy.
– Nicole DeHoratius, Professor of Professional Practice in the Decision, Risk, and Operations Division
CBS: Could the increase in labor force participation and hours worked compensate for the increased revenue burden that would come with universal childcare?
High childcare costs are a major drag on parents’ labor-market participation. Owing to the still heavily gendered nature of child-rearing, these costs tend to impact women’s engagement in the paid workforce more heavily than men’s. And as women’s educational attainment has increased, impediments to being involved in the job market imply mounting opportunity costs for society. Ensuring widespread access to affordable childcare is one way to address these losses.
In 1997, the province of Quebec launched a universal childcare program that has had an important hand in raising women’s involvement in paid employment, closing gender pay gaps, boosting economic activity, and raising government tax revenue. In 2021, the Canadian federal government began the creation of a nationwide version of this program. The International Monetary Fund and major Canadian banks’ economic research departments, amongst others, counselled that the ensuing boost to economic activity generated by facilitating greater participation of women in the formal workforce could lead to enough additional tax revenue to pay for the program’s costs.
It is less clear how this might play out under a municipal universal childcare program. Some of the benefits of such a scheme may not be accrued directly here in New York City. As a result, any boost to NYC tax revenue from the increased paid work that universal childcare facilitates may not be enough to cover the costs of such a program. But we don’t generally demand that socially beneficial policies be entirely self-financing. Instead, concerns about funding are really an invitation to consider the pros and cons of different methods of addressing the high childcare costs that New York’s working families face.
– Brett House, Professor of Professional Practice in the Economics Division
CBS: How might ranked-choice voting shape New York’s political outcomes?
It is obvious that anything new can face resistance, particularly when it comes to a tradition like casting ballots. You might think that rank-order voting didn’t work in the Democratic primary, but it did. To see this, think how it would affect the vote on November 4th. Traditional, ‘first past the post’ applies, and polling right now shows Mamdani leading with about 45 percent of the vote, Cuomo with about 30, and Sliwa just below 20. Under this system, Mamdani has a strong lead and will likely win.
But what if rank-order voting was used in the general election? It would be a tighter race and Mamdani might lose: If Sliwa voters preferred Cuomo to Mamdani, and Cuomo’s voters preferred Sliwa, then one of the two of them would win. Their total vote, about 50 percent, exceeds the projected total for Mamdani.
Of course, without rank-order voting in the general election, we will never know, and we are stuck in a world where, instead, candidates call on each other to drop out. People know who their second and third choices are, and that should matter.
– Eric Johnson, Norman Eig Professor of Business in the Marketing Division