FOR IMMEDIATE RELEASE
“Looking in the rear-view mirror, we have come very far. Glancing from the side windows, we see peers passing us by.”
PHILADELPHIA (April 24, 2018) – Philadelphia is enjoying the longest period of economic expansion in the last 50 years, adding 55,100 jobs since 2010 and showing positive growth in all but one year since 2005. Philadelphia added a record 13,600 jobs in 2016, tapering down to 10,700 more jobs in 2017. For a city that has been contracting since the 1950s, this is positive news. But by national, urban standards, things should be significantly better.
More on this and other detailed information can be found in State of Center City 2018, a 75-page report released today, which distills a wealth of up-to-the-minute data from city, state and national agencies; a broad range of local organizations and businesses; and Center City District’s own in-depth data analysis to examine Philadelphia’s current successes and challenges, benchmark our strengths and weaknesses against other metropolitan areas; candidly highlight our shortcomings; and make policy recommendations to address those deficiencies.
Center City is the largest employment hub in the city and region, holding 42% of Philadelphia’s jobs with 298,612 wage and salaried positions and another 9,000 self-employed individuals, freelancers and those compensated as partners. Other growth areas include University City, with 11% of city jobs, and the fast growing Navy Yard, with 1% of the city’s jobs. But since 2005, the balance of Philadelphia has continued to lose jobs at the rate of 0.4% per year.
“Now is the time for the city to focus on high-growth policies that capitalize on recent positive trends and realize Philadelphia’s full potential. Our success in the 21st century must be built upon a relentless impatience with the status quo,” said Center City District President and CEO Paul R. Levy.
Diversification is the defining strength of the downtown economy. Professional, business and financial services, real estate and information — prime office-using industries — account for 40% of downtown jobs, occupying 41.2 million square feet of space. Education and health services, the largest sector citywide, is the second largest downtown with jobs provided by 15 colleges and universities and five hospitals, accounting for 20% of Center City employment. Entertainment, leisure, hospitality and retail provide 16% of downtown jobs in 243 arts and cultural institutions, 11,675 hotel rooms, 992 retail premises and 453 full-service restaurants. Federal, state and local government employment provides 12% of Center City jobs.
Located at the center of the region’s transit and highway network, 48% of downtown jobs are held by commuters from outside the city who pay the city wage tax and also patronize downtown restaurants, retailers and cultural institutions; 53% of jobs are held by Philadelphia residents, with the city’s share of jobs steadily increasing as the downtown population has grown. This vibrant live-work core is just 6% of the city’s land area, but generates 32% of all property tax revenue for the city and the Philadelphia School District, and accounts for close to 50% of the wage tax generated by jobs in Philadelphia.
Public transportation makes possible a level of density and accessibility unmatched in the region, concentrating jobs at 59 per acre in Center City and at 38 per acre in University City, compared to 4 per acre in the rest of Philadelphia and less than 1 per acre in the suburbs. Transit accessibility also enables 25% of the workers living in city neighborhoods outside Greater Center City to commute to jobs downtown; another 6% work in University City. In all of these neighborhoods, more people work downtown than in the area where they live. While 37% of Center City jobs require at least a bachelor’s degree, 30% are accessible to those with an associate’s degree, and another 33% require no more than a high school diploma.
But job growth in Philadelphia is uneven. Education and health services, largely exempt from real estate and business taxes, accounted for 56% of the jobs added since the recession; lower wage, leisure, hospitality and retail employment — important entry level positions — accounted for 37% of the growth; professional and business services accounted for 20% of the new jobs, while Philadelphia shed 4,400 jobs in financial activities and information services, the city’s highest wage jobs.
While private sector growth was particularly strong in 2016 and 2017, with the city’s rate surpassing that of the region and nearly catching up with the nation as a whole, Philadelphia has not kept pace with the rate of employment growth in America’s 26 largest cities, with size determined by the number of jobs. Since 2009, the largest cities have been outperforming the national economy and adding private sector jobs at an average of 2.3% per year, compared to only 1.4% in Philadelphia. The recent positive trends were sufficient to lift Philadelphia above Baltimore’s and Memphis’s rates of growth, but still behind 23 other cities, including Boston, Detroit, New York City, Washington D.C., as well as the national rate of growth of 1.7% per year. As a result, in nearly every category of employment, except construction and hospitality, the nation’s top cities outperformed rates of growth in Philadelphia. Looking in the rear-view mirror, we have come very far. Glancing from the side windows, we see peers passing us by.
Our past dependency on industrial jobs can no longer suffice to explain slow growth. Other Northeast cities that hemorrhaged manufacturing rebounded through more robust, post-industrial growth. Using 1970 as the baseline, New York’s total employment is up 11% and Boston and Washington, D.C. are both up 23%. By contrast, Philadelphia has 26% fewer jobs than it did in 1970. Philadelphia’s tax structure, with its unique dependency of taxing what easily moves — employee wages and business revenues — is out of sync with hyper-mobile, 21st century, post-industrial realities.
This is a prime reason for Philadelphia’s high poverty and unemployment rates and why 40% of working residents from each City Council District outside of the downtown (211,000 workers) are reverse commuting to the suburbs each day. Educational levels required for jobs in the suburbs are not significantly different than those in the city. The suburbs simply have more jobs and, until recently, continued to add them faster. Despite recent growth, we are digging out of a deep hole: Philadelphia still has 5% fewer jobs than in 1990, while our suburbs are up 26%.
If local growth since 2009 had been robust enough just to make us average, attaining the 2.3% per year rate of growth of America’s largest cities, Philadelphia would have added an extra 45,400 jobs on top of existing growth of 55,100 for a total of 100,500 new job opportunities. The city’s unemployment rate, which dropped from above 10% in the depths of the Great Recession to 6.2% in 2017 — still two percentage points higher than regional and national averages — could have dropped further. This would have expanded the tax base, increased demand for neighborhood housing and generated additional tax revenue for the city and schools without raising rates.
Not counting people who have ceased looking for work, an average of 43,600 Philadelphians remained on the unemployment rolls throughout 2017 and population continued to decline in many older neighborhoods. Those with jobs often follow them to the suburbs. Despite success downtown, 62,000 more residents of city neighborhoods since 2010 decamped for homes in the suburbs than moved in and Philadelphia's 25.7% poverty rate is the highest of the 10 largest U.S. cities.
The opening of the new Comcast Technology Center, the retention of Aramark’s corporate headquarters, the rapid growth of startups, investments in innovation made by major employers and local institutions and the eagerness of suburban firms to connect with Center City’s educated, skilled workforce are all positive trends upon which to capitalize. So too is the dynamic growth in University City and the collaborative work and positive messaging that emerged from the pursuit of Amazon.
“The success in Center City, University City and at the Navy Yard is substantial — but simply not large enough to offset declines elsewhere in the city. The disparities between the thriving and declining sections of the city are enormous and the temptation is strong to fall into a politics of resentment with anti-growth rhetoric,” Levy said. “Our national politics are already consumed by extremes -- a tendency to pit one group against another. Philadelphia needs to avoid that trap and to seek far more pragmatic solutions that work locally. Instead of pitting the interests of market rate development against the needs of lower income residents, elected officials should focus on aligning both around a strategy of job growth for all.”
The federal government is steadily reducing the social safety net. State resources are constrained as well. If Philadelphia is going to make any impact on its 25.7% poverty rate, the highest of America’s 10 largest cities, it must create a competitive environment that grows private-sector jobs at a faster rate, as other cities have done.
Philadelphia needs to commit not only to its public schools, but also to comprehensive tax reform. We can grow jobs citywide if we reduce local government’s dependency on highly mobile wages and business revenues and rely more on an expanding base of the local property tax to fund municipal services and improve public schools. Otherwise, educated residents of many neighborhoods will continue to leave for greater opportunities in the suburbs.
To read or download the report in full, or by chapter, visit centercityphila.org/socc.
The Central Philadelphia Development Corporation is a membership organization of more than 100 leading businesses with a stake in the future of Center City and the region. Its purpose is to strengthen the vitality and competitiveness of Center City Philadelphia as the vibrant 24–hour hub of the Greater Philadelphia region, through planning, research and advocacy.