Illegal Immigration Costs to New York City Far More than Is Reported

FAIR Take | February 2024

New York City is budgeting $12 billion between now and the end of Fiscal Year 2025 to provide for the 173,000 (and counting) recent illegal migrants who have settled in the five boroughs. According to City Councilwoman Vicki Paladino, the city is now “spending more taxpayer money to care for foreign nationals than we are on the annual budgets of the NYPD, FDNY and Department of Sanitation, combined.” Mayor Eric Adams has already announced that these expenditures will force deep across-the-board cuts to every city agency to cover the costs.

As astounding as the $12 billion price tag might seem, it does not account for the full fiscal impact the city is bearing for the Biden administration’s open border policies and its own promise of sanctuary and shelter for every illegal alien who shows up. The $12 billion only represents the city’s expenditures on illegal aliens. The unceasing influx of new illegal aliens is also taking a significant toll on revenues, meaning that the city will have even less money on hand to meet the essential needs of New Yorkers.

Most notably, under New York City’s right to shelter law, some 16,000 hotel rooms across the city have been “taken off-line” as it attempts to “house the unhoused, refugees and migrants,” according to a trade publication. In all, 140 hotels were completely closed to travelers. As early as May 2023, Mayor Adams claimed that nearly half of the city’s hotel rooms were occupied by migrants.

As of September 2023, the average nightly cost of a hotel room in New York City was $504 – roughly double what it cost six months earlier (and likely a reflection of that fact so many rooms are being dedicated to house illegal migrants). But even at the “bargain” February 2023 average cost of $257, the city is losing a fortune in revenues by not having 16,000 rooms available to tourists and business travelers.

Anyone checking into a New York City hotel can expect to pay a 14.75 percent occupancy tax and a $3.50 per night fee on top of what they pay the hotel. Thus, on an average hotel room rented out last February, the city pocketed $41.40. In 2023, 87.5 percent of hotel rooms were occupied on any given night. That means that of the 16,000 hotel rooms that are now unavailable to ordinary travelers, about 14,000 would likely have been filled by paying customers, netting the city $579,600 in revenues. Over the course of a year, that represents a revenue loss to the city of $211,544,000.

Tourists and business travelers aren’t just dropping a bundle on hotel rooms when they visit the Big Apple. They tend to eat out at pricey restaurants, take in a Broadway play, buy souvenirs and do other activities that support the tourism industry, while generating nearly 9 cents on every dollar spent in sales tax revenues that are divided between the city and the state. The illegal aliens who are filling city hotel rooms instead, aren’t likely doing any of those things.

But the loss in revenue doesn’t stop there. The illegal migrants who aren’t engaging in outright criminal activities like pickpocketing, prostitution, or staging fake accidents to extort drivers, are largely working off-the-books or as unlicensed vendors. There is a “burgeoning underground migrant economy — taking jobs as food delivery drivers, day laborers on building demolition sites, cooks, subway candy sellers and cleaners,” reports the New York Post. According to Daniel Di Martino, an economist with the Manhattan Institute, “The biggest impact is that it’s going to reduce tax revenue for the city because it’s a largely cash-based, unreported market.” Moreover, he notes, “that’s going to lead to worse social services and lower quality of life.”

Even before the full force of the migrant crisis struck, New York (both the city and the state) was hemorrhaging people and taxpayers. According to Census data, 545,498 people moved out of New York State in 2022 – a trend that continued in 2023, as costs increased and quality of life deteriorated.

In testimony before the state’s Joint Legislative Fiscal Committees last February, Edmund McMahon of the Empire Center for Public Policy noted that “between 2010 and 2020, Internal Revenue Service data show New York’s share of the nation’s millionaire earners decreased from 12.7 percent to 8.9 percent, the lowest level on record.” The loss of high earners represents a big hit to both the city and state’s revenue flow. The top 1 percent of wage earners accounted for 48 percent of New York City’s tax revenues in 2021, according to the Comptroller’s office. Across New York State, millionaires accounted for 48.5 percent of taxes paid in 2021.

It is virtually impossible to affix an exact price to the effects of the illegal migrant crisis in New York City because many of the downward pointing trends predated the huge influx of the migrants. But it is reasonable to assert that the widely reported $12 billion cost is a lowball estimate of the fiscal impact the crisis is having, as the city burns the candle at both ends. Until the federal government takes steps to curb mass illegal immigration, and New York City decides to end policies that make it an attractive landing spot of illegal aliens, the out-of-pocket costs will continue to accelerate, while the revenue flow will continue to dry up.