Leading Indicators

Some Thoughts about the Falling Poverty Rate Among Black Philadelphians

In a previous Leading Indicator – detailing the changing distribution of poverty in Philadelphia – we found that the proportion of Black Philadelphians living in poverty in 2019 was at its lowest since 2005. In this Leading Indicator, we explore some possible causes of the decline in poverty among the city’s Black communities, and how this decline may have been undone by the pandemic.

 

Key Takeaways 

  • Between 2006 and 2019, the proportion of Black Philadelphians living in poverty dropped nearly 6 points, from 32.5 to 26.7 percent. 

  • Though at its lowest level in 15 years, the Black poverty rate in 2019 still surpassed the city’s average poverty rate by 3.4 percent. 

  • Between 2011 and 2019, the number of jobs in Philadelphia increased by an annual average rate of 1.4 percent while Black employment grew by 2.6 percent annually. 

  • In 2019, the per capita income of Black Philadelphians was 2.9 percent below the city’s average – a difference of roughly $7,875.00 in 2019 dollars. 

  • Since most of the employment added between the Great Recession and the COVID-19 pandemic were low- or foundational-skill-level occupations, the recent decline in poverty among Black Philadelphians may have largely been undone by the pandemic. 

 

The Decline in Poverty 

Since 1965, the U.S. Census Bureau has calculated poverty thresholds as a working measurement for identifying the number of impoverished persons in the U.S. These thresholds are calculated to account for basic consumption needs in relation to income and are updated annually [1]. Mainly a statistical construct designed to detail the economic vitality of populations within the country, the “poverty line” has long faced criticism from those who believe that the methodology is outdated and fails to reflect the lived experience of poverty [2]. Despite their real limitations, these thresholds can shed some light on the distribution of resources and opportunities in a geographical area. 

 

The December 2020 release of the 2019 American Community Survey makes it possible to track the trajectory of poverty in Philadelphia for the past 15 years. Figure 1 shows that the percentage of Philadelphia residents living in poverty has decreased by 0.5 percent annually. It also shows that the poverty rate among Black Philadelphians declined roughly twice as fast as the city’s overall decline, posting an annual average decline of 1 percent between 2006 and 2019. 

 

FIGURE 1

SOURCE: Data were obtained from one-year estimates of the U.S. Census Bureau’s 2006 through 2019 American Community Survey. 

 

Between 2005 and 2019, the proportion of Black Philadelphians living in poverty dropped nearly 6 points, from 32.5 to 26.7 percent; though at its lowest level in 15 years, the Black poverty rate in 2019 still surpassed the city’s average by 3.4 percent. Relative to other cities, the rates of both overall poverty and Black poverty are still quite high, yet the trends have been moving in a positive direction. What explains the relatively rapid decline in the Black poverty rate in Philadelphia?

 

FIGURE 2 

SOURCE: Data were obtained from one-year estimates of the U.S. Census Bureau’s 2006 through 2019 American Community Survey and total nonfarm employment estimates for the City of Philadelphia from the U.S. Bureau of Labor Statistics’ Current Employment Statistics program. 

 

As the number of jobs increased in the city—following the Great Recession—Black employment also increased. In fact, the growth in employment among Black Philadelphians between the ages of 16 and 64 far outpaced the growth in city jobs. Between 2011 and 2019, the number of jobs in the city increased by an annual average rate of 1.4 percent; Philadelphia’s Black employment annually grew by 2.6 percent during the same time. 

 

Similarly, income levels also rose in the city and for the Black population. Figure 3 details indexed per capita income growth from 2006 to 2019 in 2019 dollars. While figure 2 detailed how Black employment far outpaced the job growth of the city between 2011 and 2019, figure 3 shows that income growth among Black Philadelphians slightly trailed the city during the same time period. By 2019, the per capita income of Black Philadelphians was 2.9 percent less than the city – a difference of roughly $7,875.00 in 2019 dollars. 

 

FIGURE 3

SOURCE: Data were obtained from one-year estimates of the U.S. Census Bureau’s 2006 through 2019 American Community Survey. 

 

This growth in employment and income was largely the result of recovery measures and business development following the Great Recession. Since 2011, the city saw a boon in job growth that increased employment opportunities for its residents. With greater employment came more opportunities to earn wages and build wealth. Thus, the poverty level decreased as more Black Philadelphians were able to find employment.

 

The Need for More Progress 

While the relative decrease in poverty among Black Philadelphians from 2005 to 2019 is a positive sign, the recent economic downturn resulting from the COVID-19 pandemic has disproportionately affected Black Philadelphians and has likely negated much of that progress. Job growth in the wake of the Great Recession was largely in low- or foundational-skill occupations with few opportunities to build sustainable careers and upward income mobility. In a previous Leading Indicator, we detailed how the addition of these mostly foundational-skill jobs in Philadelphia caused wages to stagnate rather than grow. Many of these jobs were also lost because of economic downturn that coincided with the recent pandemic. We have also shown that this recent job loss has been particularly devastating for the city’s Black communities. Thus, while poverty in Philadelphia in general—and within the city’s Black population in particular—was on the decline in recent years, the COVID-19 pandemic may have wiped away the progress made. 

 

Cutting poverty requires intentional and sustained collaboration between the public and private sectors. It will require concerted effort to attract and retain businesses that will emphasize diverse employment and pay family-sustaining wages. It will also require initiatives to help local Black-owned firms achieve scale, and for local workers to build their skills.   

 

Works Cited 

[1] Fisher, Gordon M. 1992. “The Development and History of the Poverty Thresholds.” Social Security Bulletin, 55(1): 43-46. Retrieved from: (https://www.ssa.gov/history/fisheronpoverty.html). 

 

[2] O’Brien, Rourke L. & David S. Pedulla. 2010. “Beyond the Poverty Line.” Stanford Social Innovation Review, Fall. Retrieved from: (https://ssir.org/articles/entry/beyond_the_poverty_line#).