ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Why is New York City so Expensive? Part two: Food, Unions, Taxes

Updated on April 15, 2015

Food costs in New York

A 2012 study by UBS which found that New York was the 6th most expensive major city on earth, calculated a monthly average food cost of $552, beating out cities such as Chicago, Milan, Vienna, Montreal, London and Paris.

However, a 2011 study by Columbia economists actually found that food is cheaper in New York than in other places in the US. Specifically, although food on average is more expensive (hence the results in cost-of-living comparisons), when the study authors looked at comparable food items, the city came out cheaper for both low-priced and high-priced groceries. The great number of high-end, fancy grocery options makes NYC seem more expensive, according to the Wall Street Journal article discussing the findings:

The perception of higher costs, the authors say, comes from the vastly expanded food choices available in a major metropolis like New York, which throws off the average prices used in cost-of-living calculations.

Bigger cities also tend to be wealthier than their smaller counterparts, and the grocery-variety gap between New York and Des Moines is filled with many fancy foods that cater to wealthy customers.

You can get bread in any grocery store, as Mr. Weinstein says, but "if you go into Fairway in New York, you can buy a Balthazar baguette"—and pay for it too.

In dense, high-traffic commercial areas of Manhattan like Midtown East or the Financial District, the delis, sandwich shops and restaurants charge high prices because the workers in those areas have high salaries, a demand for healthy and quick meals during the day, and a desire for high-end dining in the evening. (Those eateries must also pay higher rent and wages than their counterparts in residential neighborhoods, further pushing up prices.)

As a result, workers see the amount of money they spend on lunch every day and conclude that New York has expensive food. But cheaper options are available in residential areas like the Upper East Side and Harlem, and in the outer boroughs.

Union membership in New York

Perhaps unsurprisingly, New York state has the highest rate of union membership in the United States at 24.1% of all employed workers. New York had 1.9 million union members in 2011, second only to California. According to the Bureau of Labor Statistics, in 2011 "Texas had about one-fourth as many union members as New York, despite having 2.3 million more wage and salary employees." New York City had about 40% of the state's union members, at 750,000 individuals. Fourteen percent of the city's private sector workers are unionized (twice the national total), and 71% of public sector workers are unionized (predominantly education, healthcare and public administration).

Whether one is a supporter or critic of unions, the fact is that unions push up costs for corporations and businesses, which in turn often leads to higher prices for the consumer. One major example is hotels. In early 2012, the New York Hotel Workers' Union negotiated a very attractive new contract with the city's major hotels. The agreement provides for a 29% rise in wages over the next seven years. In 2011, the average Manhattan hotel room cost $275 per night, and hotels only see demand rising in the coming years.

Taxes in New York

New York state has some of the highest personal income tax rates in the country, ranging from about 4 to 9% in 2012. New York City is one of the few cities of its size to have its own personal income tax, roughly 3 to 4% in 2011.

New York state has one of the lowest sales taxes in the country at 4%, but one of the highest average local sales tax rates at 4.48%. The two combine to make the state #7 in the country on the overall sales tax rankings as of January 2012.

New York City's basic sales tax rate is 4.5%, and the city also features a number of business and excise taxes on banks, cigarettes, commercial vehicles, hotel rooms, mortgages, alcohol and more.

Finally, New York state has been ranked as the fifth-highest in the country on property taxes as a percentage of median income (higher than 5%). And New York City's property tax rates range roughly between 10% and 18% for 2011 and 2012.

Why New York City is so expensive

A combination of supply, demand and government factors has created the costliest city in the country. Manhattan is a small island that has a low supply of real estate, but extremely high demand. Residents make high incomes and can afford high average food costs. Poor fiscal management by transit authorities has contributed to steep costs for public transportation. The highest rates of union membership in America increase the costs of doing business. High taxes and significant regulations from the state and the city on real estate, parking, business activities and healthcare further push up costs for companies and residents.


    0 of 8192 characters used
    Post Comment

    No comments yet.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)