State of Working Philadelphia: An Economy Growing Apart

Incomes for the bottom 60% of households remain at or below their levels of a decade ago. Income of top 1% of city’s families up 32%
Date of Press Release: 
October 25, 2018

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HARRISBURG, PA – The Keystone Research Center today released its report “The State of Working Philadelphia.”  The report finds that, despite healthy job growth, a majority of Philadelphia’s households earn less than comparable households did a decade ago.

The report points to three factors that help explain this: 1. many workers in the city continue to struggle with low pay and insufficient hours, 2. employers – led by giant service-sector employers of millions of low-wage workers – use their market power over workers ruthlessly to repress wages and hours, and 3. national and state public policies, shaped by legislatures with Republican majorities, and federal courts (including the Supreme Court), dominated by conservative justices, continue to rig the economy further against ordinary workers.

Overall the city’s economy is performing well:

  • The unemployment rate in the city of Philadelphia as of this August stood at 6%, the lowest August unemployment rate in the city since 2000 when it reached 5.8%.
  • Employment growth in the city has been stronger than in the state since the end of the Great Recession, growing at an average annual rate of just over 1%, compared to the statewide average of 0.85%.
  • Employment growth has reduced unemployment by almost half from its post-recession peak of 10.9%. 
  • The share of city residents with employment in 2017 (53%) is higher than before the recession began. 
  • Growth in the city has reduced the poverty rate, which has fallen from its peak of 28.4% in 2011 to 25.7% in 2016. 

However, in 2017 household incomes fell and the poverty rate was unchanged from the previous year while the share of people living in deep poverty climbed.

"Poverty will remain stubbornly high in the city because economic growth on its own is not sufficient to lead to large reductions in the poverty rate or broadly shared income growth," said State of Working Philadelphia author and Keystone Research Center Labor Economist Mark Price.

The report finds:

  • Incomes for the top 20% of households in the city are up over 2007 by 13% while incomes after adjusting for inflation for the bottom 60% of household remain at or below their levels in 2007.  
  • Internal Revenue Service data suggest that income growth among the top 20% has been concentrated among the top 1% of the city’s families, who have seen their average income climb 32% since 2010.
  • Among full-time, full-year workers living in the city in 2017:
    • median earnings for black men were $39,367 or 68% of the median ($57,542) for white men.
    • median earnings for black women were $37,594 or 65% of the median for white men.
    • Hispanic men had median earnings of $36,465 a figure which is 63% of the figure for white men.
    • Median earnings for Hispanic women were $33,737 or 59% of the figure for white men.
    • Among Asian men, median earnings were $44,660 or 78% of the median for white men.
    • At $38,355, median earnings for Asian women were 67% of the white male median.

“In order to address the growth in inequality overall and the persistent inequality by race, ethnicity and gender born of centuries of bias in the application of law and public policy, the city, the state and the federal government all need to take positive steps to make sure the benefits of growth in Philadelphia are more broadly shared,” said Price.

The report finds that many workers in Philadelphia and Pennsylvania work in part-time jobs when they would prefer full-time work. Because of this, the underemployment rate in Pennsylvania (9.4%) is higher than following the aftermath of the recession in 2002. The challenge of insufficient hours is felt most acutely by Philadelphia’s service sector workers, just 17% of whom are employed full-time. Almost three in four of Philadelphia’s part-time service workers report needing additional hours to better make ends meet.   

“The Philadelphia City Council will soon take up Fair Work Week legislation that, in addition to providing workers with more notice on scheduling of work hours, a key requirement for all working parents, it also requires employers, when expanding their schedule, to offer hours first to incumbent part-time employees rather than hiring new ones. Expanding hours for the underemployed is an important step towards helping more working Philadelphians to move out of poverty,” said Price.