Equity and Planning for Post-Covid-19 Philadelphia
Nero fiddled while Rome was burning. While local authorities and politicians quarrel over petty spoils, our boys are dying on the plains of France in the name of democracy. Urgent problems both for today and for the future, are upon us. The daily press deals more or less adequately with the needs of the moment. But there has been almost nothing said about the local problems of the reconstruction period. – Citizens Business, July 25, 1918
For 111 years the Economy League of Greater Philadelphia has served a vital function as a civic “wayfinding and meaning-making” organization. During times of national crisis such as the First World War, the Great Depression, and the Second World War the Economy League provided independent thought leadership and made clear-eyed recommendations. It is our intention to do so during the rapidly unfolding COVID-19 pandemic as well.
I spent part of last weekend perusing old issues of the organization’s newsletter, Citizens Business, and was struck in particular by the July 25, 1918 issue entitled “Politics or Patriotism: A World Made New.” Before anyone knew when the Great War would end, the Economy League was looking ahead, asserting that Philadelphia had an obligation to plan “comprehensive municipal programs… to bridge over the critical period of readjustment.” There was a call for the formation of a local reconstruction commission to “prepare definite projects and determine exactly the amounts of labor, material and money that would be needed in each case,” and a recommendation to issue municipal bonds to fund the work.
I am struck by the parallels between 1918 and today. Of course the author of the Citizens Business piece could not have known that by the fourth quarter of 1918, the Spanish flu pandemic would begin its global rampage, killing 50 million people, more than three times as many as perished during the 4 years of “the war to end all wars,” later known as the First World War – including 700,000 Americans and 16,000 Philadelphians. One hundred and two years later the politicized, fitful reaction of the federal government to the COVID-19 pandemic will likely mean higher rates of mortality and more severe economic disruption than a rapid and competent response would have produced. Those of us in leadership roles at the municipal level must have a clear-eyed, data-informed perspective on the twin public health and the economic crises, and we must do so through an equity lens.
COVID-19 is affecting us all
Due to both the fumbling, inconsistent response at the federal level and the draconian policies implemented by local and state governments in reaction to the rapid spread of coronavirus, particularly in the metropolitan centers that generate the preponderance of national economic activity, it seems highly likely that the US economy is heading toward a rather deep recession. The NY Times predicts output falling 0.4 percent in the first quarter of 2020 and an astounding 12 percent in the second, the largest contraction on record, though some analysts think it will go even deeper. Even Trump administration officials like Steve Mnuchin are predicting 20% unemployment levels later this year.
If these predictions are remotely in range, the downturn will make the impact of the financial crisis of 2008-2009 seem mild by comparison. Unfortunately, the stimulus proposals under consideration in DC right now are not nearly robust enough to move the needle, and thus far are withering on the vines of partisan politics. Small businesses in particular, the backbone of local economies, face a “bloodbath,” as Drexel University’s Bruce Katz put it, calling for a dramatically scaled up small business support strategy from the federal government. “America’s restaurants need a miracle,” says the Atlantic’s Derek Thompson. “This is our great economic crisis in a nutshell: Consumers are vanishing, but financial obligations [for businesses] are not.” There are more than 3 million servers in America’s restaurants, and with strict prohibitions on dining out in a growing number of major cities, they and their employers, both already operating on thin margins, will go under unless there is a massive infusion of very low- or no-cost capital to aid them and other leisure and hospitality businesses that are bearing the initial brunt of social distancing orders.
In any case, it seems as though the carnage will be widespread, as consumer confidence declines; consumption constitutes nearly three-quarters of US economic activity. The potential bright spots at the moment in the private sector economy may be manufacturing, which was already suffering from labor shortages and may be loath to lay off hard-found skilled workers, and tech firms like Amazon, Google, and Facebook. In any event, unemployment claims are already surging, up 30% this week, the largest spike on record.
What is the prognosis here in Philadelphia? Philadelphia’s economy has three main drivers - eds, meds, and hospitality. On the bright side, of a total workforce of roughly 704,000 employees in the City of Philadelphia, 227,000 (32%) are in the relatively stable eds-and-meds sectors. The biotech and manufacturing sectors may be able to weather the crisis as well, though they constitute a very small share of overall employment. On the other hand, the leisure and hospitality sector, perhaps the most vulnerable overall sector at present, employs about 74,000 people. Food-related hospitality businesses account for more than 53,000 jobs, according to the Economy League’s 2019 Good Eats report, of which roughly 45,000 work in restaurants and bars. The Accommodations and Arts, Recreation, & Entertainment sectors, virtually shut down by social distancing policies, account for another 20,000 workers or so. The air transport industry, reeling from the dramatic drop in travel, employs 9,000. And on top of all of this, thousands of Philadelphia’s college and university students have decamped for home, depriving the market of their purchasing power, along with the probable downstream effects on institutional supply chains as, for example, dorm cafeterias at Penn, Drexel, Temple, Saint Joe’s, LaSalle, et al are no longer feeding students.
Finally, it’s important to note that the City of Philadelphia’s main revenue sources are wage and business taxes, and it is reasonable to expect significant shortfalls in coming months. To help mitigate some of the impact on small business, today the city announced the creation of a $9 million small-business relief fund. A group of prominent Philadelphia restauranteurs have also called on local, state, and federal officials to provide swift help to both workers and employers in their industry. Nine hundred airport workers were laid off last week, and city official said to expect “massive” layoffs. In short, the local impact of this crisis is and will be broad and deep.
… but it is not an equal-opportunity crisis
However, in a city like Philadelphia, already burdened with a very high poverty rate and low rates of labor force participation particularly in communities of color like North Philly, a large population of low-wage service sector employees, the COVID-19 crisis will almost certainly fall disproportionately on the shoulders of Black and Latinx Philadelphians.
Two recent articles provide incisive framing for the necessity of an equity agenda. Brookings Institution scholar Andre Perry’s “Black Americans were forced into ‘social distancing’ long before the coronavirus,” draws an analogy between redlining and other structurally racist private and public policies and the social distancing much of the planet is now being urged to practice: “For decades,” Perry writes, “Black people and Native Americans have been subject to a different kind of social distancing in America: segregation, discrimination, and devaluation.” Perry’s own research has quantified some of the immense losses suffered by African American homeowners due to residential segregation, in the hundreds of billions of dollars.
In addition to these ‘de-gentrification’ losses, Perry notes the consequences of occupational segregation, which has consigned a disproportionate number of people of color to precisely the sorts of service sector jobs that are most likely to be in harms’ way during the COVID-19 pandemic. “Black workers,” he writes, “are overrepresented in occupations that require face-to-face contact, such as health care support, personal care, and protective services, as well as in gig-economy jobs. While business in these sectors has been rising during the pandemic, the nature of these jobs places workers at greater risk for contracting the virus.” (To his list I would add essential municipal employees, who are largely African American, at least in urban centers like Philadelphia.)
Similarly, Hilary Beard’s piece in Colorlines, “Ring the Alarm: COVID-19 Presents Grave Danger to Communities of Color” notes that the adverse health impacts of COVID-19 are highly likely to be disproportionately concentrated in communities of color. “Racism has created an uneven playing field in this country,” says Dr. Camara Jones of Emory University. “COVID-19 is about to expose and wreak havoc on that uneven playing field unless we organize and strategize to act.”
Let’s not let a serious crisis go to waste…
The bottom line: While public health officials and the city government deal with the here-and-now of the twin health and economic crises, those of us in the social sector need to put our collective heads together to plan now for the post-COVID-19 reconstruction. We need to tee up programs and initiatives to reboot the Philadelphia economy, prioritizing not just support but post-pandemic growth opportunities for local diverse business and workers of color, too many of whom were already struggling even in supposed ‘good times.’ The Economy League stands ready to do its part, both in thought leadership and in program design and execution.
Fortunately, the city’s Poverty Action Plan, released just before the pandemic truly manifested, contains many worthy strategies, and we urge the administration to make them budgetary priorities. The FY2021 budget needs to ensure robust funding for workforce development initiatives like the West Philadelphia Skills Initiative and the Lenfest North Philly Workforce Initiative, as well as programs and organizations that prepare the small business ecosystem for the return of normalcy, such as the Greater Philadelphia Hispanic Chamber of Commerce’s Latinx Accelerator, PowerUp, 10KSB, StartUp PHL, the Welcoming Center, Entrepreneur Works, and the Economy League’s PAGE Prep program, designed to help diverse local businesses build capacity to leverage growth opportunities in the institutional supply chain. Now is the time for the city to take advantage of historically low interest rates to borrow money to fund major capital projects, to double the size of Rebuild, for example, and to accelerate road and gas and water main repairs to provide entry points for diverse local firms to create jobs and build community wealth in underserved neighborhoods.
In the coming days and weeks we at the Economy League will be attempting to wrap our arms around the collective impact of the crisis on workers and businesses so we can have the information we need to hit the post-pandemic ground running. Follow our data briefs via our Leading Indicators newsletter or on our website.
To quote former Chicago Mayor Rahm Emmauel, let’s “not let a serious crisis go to waste…. it's an opportunity to do things you think you could not do before.” It is time to think and plan big and bold, with equity and inclusion front and center.