US economic stagnation in the 1970s hit New York City particularly hard, amplified by a large movement of middle-class residents to the suburbs, which drained the city of tax revenue. In February 1975, New York City entered a serious fiscal crisis. Under mayor Abraham Beame, the city had run out of money to pay for normal operating expenses, was unable to borrow more, and faced the prospect of defaulting on its obligations and declaring bankruptcy. The city admitted an operating deficit of at least $600 million, though the actual total city debt was more than $11 billion and the city was unable to borrow money from the credit markets. There were numerous reasons for the crisis, including overly optimistic forecasts of revenues, underfunding of pensions, use of capital expenditures for operating costs, and poor budgetary and accounting practices. The city government was reluctant to confront municipal labor unions; an announced "hiring freeze" was followed by an increase in city payrolls of 13,000 people in one quarter, and an announced layoff of eight thousand workers resulted in only 436 employees leaving the city government.