Economists call Mamdani's city grocery plan an 'illusion' funded by taxpayer subsidies
A 30% discount on groceries at city-backed stores amounts to a taxpayer subsidy by another name, according to three economists who reviewed New York City Mayor Zohran Mamdani's proposal. The city has committed $70 million in capital funding to open five municipal stores, one per borough, and projects shoppers will save about $1,000 a year.
Key takeaways
- Three economists argue that Mayor Zohran Mamdani's plan for a 30% grocery discount at five city-backed municipal stores is effectively a taxpayer subsidy rather than real savings.
- New York City has committed $70 million in capital funding to open one municipal grocery store per borough, projecting shoppers will save about $1,000 a year, or roughly $90 a month.
- Under the plan, private operators would run daily store functions while the city owns the real estate, sets pricing, and absorbs overhead like rent and property taxes.
- The first store is planned for Hunts Point in the Bronx and is expected to open by the end of 2027, with the other four boroughs to follow within the mayor's first term.
- Economists including the Heritage Foundation's E.J. Antoni argue a 30% discount at stores with roughly 2% profit margins would create losses that taxpayers must cover and draw sales from unsubsidized private supermarkets.
A 30% discount on groceries at city-backed stores amounts to a taxpayer subsidy by another name, according to three economists who reviewed New York City Mayor Zohran Mamdani's proposal. The city has committed $70 million in capital funding to open five municipal stores, one per borough, and projects shoppers will save about $1,000 a year.
The city's proposal
Mamdani's administration says it can undercut private grocery prices by absorbing costs competitors carry: rent, property taxes and occupancy expenses. Private operators would run each store's daily functions, including staffing and sourcing, while the city owns the real estate, sets pricing requirements and absorbs major overhead. Under the plan, prices on a core basket covering fresh produce, meat, seafood and roughly 20 pantry and dairy categories would be fixed monthly rather than fluctuating week to week. City Hall estimates visitors save an average of $90 a month.
The first store is planned for Hunts Point in the Bronx and is expected to open by the end of 2027. Locations in East Harlem, Brooklyn, Queens and Staten Island are scheduled before the end of the mayor's first term.
Economist objections
Adam Lehodey, a policy analyst at the Manhattan Institute, said the savings figure misrepresents the underlying economics. "The 30% savings that Mamdani announced on his government-owned stores are an illusion," Lehodey told Fox News Digital. "Taxpayers will foot the bill for millions of dollars in subsidies, and they will operate on government-owned land with rents waived. New Yorkers will still be paying the full price, just indirectly." He also warned that pricing below market rates invites resale arbitrage and can trigger shortages, as shoppers buy more than they otherwise would at artificially low prices.
Richard Stern, vice president of the Plymouth Institute for Free Enterprise at Advancing American Freedom, told Fox News Digital that city budget money would cover the gap between discounted prices and operating costs.
E.J. Antoni, chief economist at the Heritage Foundation, said grocery industry margins make the arithmetic simple. "A 30% discount at stores with a 2% profit margin is simply a loss for taxpayers who will have to make up the difference," Antoni told Fox News Digital. He said the plan would also draw sales from private supermarkets that operate without public subsidy.
Unanswered questions
Bureau of Labor Statistics data show food-at-home prices have risen 33% nationwide since 2019. Fox News Digital asked Mamdani's office how it calculated the projected 30% discount, whether independent economists vetted the financial assumptions and how much ongoing taxpayer support the stores would require. The office did not immediately respond.