A few thousand high-end condo units added since 2001 stand out as symbols of change and, sometimes, objects of resentment. Yet, more than 90% of developed land downtown is occupied by office towers, hospitals, hotels, colleges and retail shops. Two-thirds of jobs in these buildings do not require a college degree; one-third need only a high school diploma. SEPTA enables 150,000 Philadelphians, 25% of working residents of every city neighborhood outside Center City, to connect to these jobs each day. This is the largest and most diverse center of employment in the region.

Pull the camera back to Philadelphia’s 135 square miles and you find working-class, middle-class, and some upper-income neighborhoods, but quickly confront the central challenge: the highest poverty rate (25%) of America’s 10 largest cities.

Here, children may grow up without opportunity, without skills needed to compete in the 21st century economy. More than 80% of the city’s 127,646 low-income renter households pay a disproportionate share of income on housing, leaving less for food and clothing. Federal subsidies are declining. Homeowners with limited means cannot afford repairs, so their properties deteriorate. Diminished purchasing power causes quality grocery stores to avoid many neighborhoods. The opioid crisis further destabilizes communities, driving a new surge in homelessness.

A PROBLEM OF JOBS:

Poverty is not a scourge like a biblical plague. It is neither fate, nor a fact-of-life. Poverty ballooned in the 1970s as Philadelphia began hemorrhaging 300,000 jobs over the next three decades. From 1970 to 2015, the city added 100,000 people living in poverty – 2,200 per year born, falling into, or arriving in poverty. Yet, in those same years, Philadelphia lost more than 500,000 working-class and middleincome residents – about 11,000 per year – departing for suburbs where jobs expanded by 110%. So Philadelphia’s high poverty rate results in part from losing five times as many working- and middle-class residents as new poor people added. This does not minimize the magnitude of poverty, it only highlights that this is a problem of jobs.

Mayor Kenney’s focus on education is an essential part of the cure, equipping young people with skills to be competitive. Yet, only 27% of the city’s households have school-age children and the strategy presumes available jobs – lots more of them – in a city that is growing more slowly than 23 of America’s largest cities.

Since the recession, most American cities have outperformed the national economy. Philadelphia has not. New York and Boston, which lost the same percent of manufacturing jobs as we did in the last quarter of the 20th century, have since rebounded, respectively adding 14% and 24% more jobs than they had in 1970. Philadelphia has 24% fewer jobs. We’ve barely returned to 1990 job levels. Cities with higher rates of job growth usually have lower rates of poverty.

ACCELERATING GROWTH:

What does it take to accelerate job growth and raise incomes locally? The majority of employers in the post-industrial economy have choices. They can locate anywhere and yes, they choose places with great amenities and thousands of recent college graduates. However, facing global pressures, they also require a competitive business climate and attention to the quality of public spaces and walkways.

Philadelphia’s wage tax, despite substantial reductions from 1996 to 2008, is still almost four times the regional median and the City recently slowed its rate of reduction dramatically. We are the only large city to have a business tax on both gross revenues and net income. Regionally, the Business Income and Receipts Tax (BIRT) has no counterpart, adding a 20% to 50% premium on downtown occupancy costs.

This is an era of corporate downsizing and cost-conscious consolidation. Nonetheless, office buildings remain in most cities the densest containers of jobs – the highest wage and the most diverse offerings – including maintenance, security, janitorial, engineering, construction, technical and office support functions. Office buildings hold 40% of Center City’s jobs. Among the 20 largest cities, Philadelphia is just one of two (along with Baltimore) with fewer office jobs than in 1990, down 2%. New York is up 2% in office jobs, Chicago +3%, Boston +5%, Atlanta +9% and Charlotte +12%.

Philadelphia has a history of self-inflicted wounds. In the 1970s, de-industrialization, suburbanization and inner city redlining cost us 164,457 jobs and 260,399 residents. At the same time, local government more than doubled the wage tax from 2% to 4.3%, cresting at 4.96% by 1990. People and jobs departed, the tax base shrank, but rates were continually raised with few efficiencies achieved in government. This pushed more employers and workers out of the city.

It is not that Philadelphia taxes too much, we tax the wrong things; 63% of the municipal budget comes from taxing what readily moves, namely employee salaries and business revenues. Despite recent increases, we still under-rely on the property tax and pay the price with underfunded schools. What’s required is a shift from taxing what moves to relying more on immobile land and improvements.

COMPETITIVENESS AND QUALITY OF LIFE:

After 50 years of decline, job growth in Philadelphia started only after the City began significant reductions to wage and business taxes in 1996. Prior to passing the 10-year tax abatement in 1997, Philadelphia produced less than 3% of the region’s housing units. In the decade after, we jumped to a 10% regional share and began to add residents. Since 2010, 25% of the region’s housing starts have been in the city, with 55% of those in Greater Center City. Of course, demographics are helping, but construction numbers need to work to attract investment capital.

So too in the 1990s, all major cities discovered that when they focused on minor infractions, quality-of-life crimes and disorderly behavior, while providing help for those in need, serious crimes declined. Quite simply, a city can be compassionate and still set standards for reasonable behavior on the street (see outreach story on page 5). It was only after business and residential areas became safe in the 1990s that population and jobs began to rebound. Too many take today’s vibrant Center City for granted when it rests in part on a buoyant national economy and demographic trends that won’t last forever.

AN OLD, CONTINUING STORY:

When poverty and income statistics were released last month, there was much consternation that the city’s poverty rate barely budged, while experts puzzled about incomes that seemed to fall. This is because the obsession with gentrification in a handful of neighborhoods is blinding reporters and analysts to the obvious: in many neighborhoods, the old trend of working-class and middle-income households departing for the suburbs continues, as seen on this map.