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Regional Direction

A Review of 2021's Leading Indicators

It seems appropriate for the last Leading Indicator of 2021 to reflect on our work this past year and review lessons learned. We also want to hear from you, our readers, about what you think we should cover in 2022; please take our 2022 Topic Poll.

 

A Review of 2021 Leading Indicators

We began the year with a two-part series measuring potential employment recovery for Greater Philadelphia’s Accommodation and Food Services sector and the Professional and Business Services industry. We tracked the rate of employment gains for both industries from April to October 2020 and predicted when each might see a return to pre-pandemic employment levels, based on the previous six months of employment growth rates. We estimated that the Accommodation and Food Services sector might not see full recovery until January 2022, while the Professional and Business Services industry was on track for recovery by April 2022. As we stated at the time of writing, our modest predictions were dependent, of course, on potential COVID resurgences, public health mandates, and the impact of national social movements. Recent data from the Bureau of Labor Statistics demonstrate that the Delta variant and what has been called the “Great Resignation” have indeed impacted employment recovery for these industries. As of the most recent employment estimates (September 2021), Greater Philadelphia’s Accommodation and Food Services sector employment still lags pre-pandemic levels by over 37,000 jobs, while the region’s Professional and Business Services industry reached and surpassed pre-pandemic employment levels this past July [1]. The lag in Accommodation and Food Services employment likely reflects a reexamination of job quality among low-wage workers who continue to seek or advocate for new positions with pay and benefits that better align with their needs.

 

FIGURE 1: Our analysis of employment decline in Greater Philadelphia’s Accommodation and Food Services Sector showed a 55 percent drop in industry employment between March and April 2020, a rate of decline 3.7 times greater than the metropolitan region as a whole.

 

NOTE: Data obtained from the U.S. Bureau of Labor Statistics, Current Population Survey, Not Seasonally Adjusted Monthly Employment

 

Following our examinations of potential employment recovery in the metropolitan region, we took a closer look at the dynamics of poverty and affordability in the city itself. While detailing updated poverty estimates across the city’s racial and ethnic groups and tracking pay inequality, our investigation into the city’s affordability culminated with our four-part Looming Housing Affordability Crisis series that detailed the growing gap between household incomes, home values, and rent. We found that, while Philadelphia is often considered an affordable city compared to other peer U.S. cities, the combination of wage stagnation and a tightening real estate market were leading to rapidly rising home prices and increases in the rent-burdened population - those spending more than 30 percent of their income on rent [2]. This looming affordability crisis results from two concurrent trends: (1) wage stagnation within the city and (2) a growing residential population (a trend that has been on the uptick since the early 2000s), leading to higher demand for housing. With recent housing development in the city more focused on the luxury market, affordable options continue to be grossly inadequate for lower-income Philadelphians.

 

FIGURE 2: Our analysis of housing affordability in Philadelphia detailed how the average Philadelphian had to spend between 3 to 4 times their annual household income to afford a home in the city.

 

SOURCE: Data were obtained from one-year estimates of the U.S. Census Bureau’s 2005 through 2019 American Community Survey.

NOTE: Sampling errors occurred in the 2017 American Community Survey in Philadelphia. All estimates made in 2017 should be interpreted with caution.

 

By late spring of 2021, we sharpened our focus on equity by examining the region’s living wage, the impact of the pandemic on Greater Philadelphia’s tech workforce (a piece covered by Technical.ly Philly), and the relationship between gentrification and policing. The latter analysis was led by our former Economy League intern, Christion Smith. Smith’s comparison of normalized police stops among gentrifying and non-gentrifying neighborhoods found that police presence and stops were far more likely to occur in more impoverished neighborhoods rather than those that have gentrified. The findings from this descriptive analysis raised serious questions about racial profiling in majority Black and Latinx communities in the city.

 

FIGURE 3: Our analysis of stop-and-frisk patterns in Philadelphia's changing neighborhoods showed that there was an average of 3.2 police stops for every violent crime reported in non-gentrifying neighborhoods - 1.3 and 1.8 times the rate of gentrifying and other wealthier neighborhoods, respectively.

 

SOURCE: Data were obtained from 2014 through 2019 Philadelphia Police Department crime incident reports, vehicle and pedestrian investigation reports, and five-year estimates of the 2019 American Community Survey.

 

At the onset of the summer of 2021, we began a series comparing the City of Philadelphia’s economic competitiveness with both the surrounding suburban counties of our metropolitan region and among large peer U.S. cities. Comparing employment, average annual pay, and private establishment growth, we found that Philadelphia remains the economic powerhouse of our metropolitan region, largely outpacing the surrounding suburbs across measures. Compared with peer cities, however, Philadelphia remains less economically competitive. It offers fewer employment opportunities and maintains a much smaller business ecosystem than many of its peers. Trends seem to be moving in a positive direction for Philadelphia, however, since wages are rising faster than in many peer cities, and we seem to outpace many peers in small business growth. Continued focus on growing the diverse and small business ecosystem as well as increased investment in talent development – such as the public school system, colleges and universities, and professional training programs – could further boost Philadelphia's economic competitiveness.

 

FIGURE 4: In part 4 of our Philadelphia’s Economic Competitiveness series, Philadelphia had the smallest count of private establishments of the 15 largest U.S. cities, but saw the second highest growth rate from 2012 to 2018.

 

SOURCE: U.S. Census Bureau’s 2012 through 2018 County Business Pattern estimates combined with 2012 through 2018 Non-Employer Statistics estimates (the most recently available estimates).

 

We also spent some time in the late summer examining ways the COVID-19 pandemic impacted housing evictions and the distribution of federal relief to local restaurants – efforts led by our intrepid intern Samuel Hausner-Levine. In both cases, we found a disproportionate impact in outlying neighborhoods surrounding Center City and University City. Majority Black neighborhoods saw evictions rebound faster than other neighborhoods, while resturants in these same neighborhoods received proportionally less federal relief than their Center City counterparts. We also explored possible explanations behind the city’s declining homeownership rate in recent years.

 

FIGURE 5: Our analysis of the distribution of Restaurant Revitalization Funds in Philadelphia shows how funding largely concentrated in Greater Center City – even when normalizing by the approximate number of Food and Accommodation establishments per zip code.

 

SOURCE: U.S. Small Business Administration and the U.S. Census Bureau’s 2019 County Business Patterns

NOTE: The U.S. Census Bureau’s 2019 County Business Patterns survey does not list any establishments in the NAICS accommodation and food services sector for zip code 19110 in Center City. The map does not include calculated values for RRF coverage rates or grant amount per establishment for this zip code.

 

In the final quarter of 2021, we delved into the impact of inflation on the local economy and population. This series was led by our current intern extraordinaire, Haseeb Bajwa. It began by demystifying inflation with details of how it is measured and the components of the Consumer Price Index. We then compared inflation in Greater Philadelphia with other large peer U.S. metropolitan regions. Overall, we found that Greater Philadelphia remains relatively resilient in the face of price surges when compared to peers. Our region’s general affordability and “slow-growth” economy has mitigated the impact of price surges in housing or food experienced in other parts of the country. Even when tracking inflation inequality and wage stagnation, Greater Philadelphia seems more resilient than many of its peers. Our findings attracted the attention of major media outlets such as Axios and the Philadelphia Inquirer. Our inflation work also suggests that our region may emerge from these precarious times less scathed than many other parts of the country.

 

FIGURE 6: Part 2 of our Inflation in Greater Philadelphia series compared Greater Philadelphia’s average annual inflation rate with other large U.S. metropolitan regions.

SOURCE: Consumer Price Index for all Urban Consumers (CPI-U) from the U.S. Bureau of Labor Statistics

 

The Continuing Legacy of Inequality

A noticeable trend, underlying the various topics we covered in 2021, was the interplay of legacy structural inequalities manifesting in contemporary trends. Our region, and the country more broadly, continues to operate utilizing a legacy of racialized and gendered policies, institutions, and decisions. No matter what the issue—whether it is income inequality, affordable housing, policing, or quality employment opportunities—we continue to see a disproportionate impact on low-income communities, communities of color, women, and LGBTQ communities. This legacy of inequity runs deep and will continue to adapt and manifest with every new economic tremor and trend.

 

The nation’s recent bout of inflation illustrates how legacy issues manifest in contemporary life. While the current trend of inflation largely results from the pandemic’s economic lockdowns and constricted global supply chains, our recent series detailed how individuals in lower-income brackets experience a disproportionate impact from the price surges brought on by inflation. Inequitable access to quality employment opportunities stemming from a myriad of structural issues—like underfunded public education, limited and misaligned workforce development programs, financial barriers to accredited higher education institutions, and the massive impact of the criminal justice system—have locked many inner-city workers of color into low-wage or low-quality employment. These low-wage occupations tend to suffer the most from wage stagnation in Philadelphia [3]. Thus, low-income communities of color often feel the tightest squeeze of price surges brought on by inflation since their pay—and the federal minimum wage—has largely remained the same for over a decade. Additionally, our analysis of inflation inequality demonstrated that the items in highest demand for lower-income communities saw proportionately higher inflation than items consumed by higher-income brackets. Thus, the burden of inflation falls disproportionately on populations excluded from quality education and employment opportunities, while simultaneously limiting their access to necessity items.

 

FIGURE 7: Part 6 of our Inflation in Greater Philadelphia series demonstrated that lower-income populations bear the greatest cost burden on necessity items.

SOURCE: Average Share of Total Real Consumption, 1984-2012 estimates from LaVaughn M. Henry’s Income Inequality and Income-Class Consumption Patterns methodology and the Consumer Price Index for all Urban Consumers (CPI-U) within Philadelphia-Camden-Wilmington, PA-NJ-DE-MD MSA.

NOTE: Categories were grouped based on items in the Consumer Price Index for all Urban Consumers (CPI-U) within Philadelphia-Camden-Wilmington, PA-NJ-DE-MD MSA. Averages were taken for lowest and highest quintiles for easier interpretation.

 

Even as macro-level trends improve in Philadelphia, the legacy of inequality persists. The city’s population gains in the past two decades marked a reversal of long-lasting decline and disinvestment in the city. The influx of largely middle-class non-Hispanic white populations into the city spurred new demand for business formation and housing. The market responded with new construction catering to higher-income populations, such as luxury townhouses and condominiums. Our analyses have shown, however, that homeownership in the city is declining and the proportion of rent-burdened residents remains consistent. Disaggregation by race and ethnicity also shows that the city’s Black and Latinx populations face the largest barriers to affording their homes or rent. As the city’s real estate market becomes more competitive—especially in the neighborhoods surrounding Center City and University City—lower-income communities of color will continue to bear the brunt of rapid price increases, predatory development, and gentrification-induced displacement.

 

FIGURE 8: Part 4 of our Inflation in Greater Philadelphia series illustrates how wage stagnation in Philadelphia is making homeownership more difficult.

 

SOURCE: Monthly Redfin Housing Market estimates from 2012 to 2021 and the Average Hourly Wage of Total Private Employment from the U.S. Bureau of Labor Statistics.

NOTE: The non-seasonally adjusted Average Hourly Wage of Total Private Employment was converted to real dollars and multiplied by 2080 to simulate an annual salary estimate.

 

These examples demonstrate that with each new social or economic trend our region faces, the burden will most often fall on those with the least power and agency to advocate for new solutions or changes. Until we address these structural inequalities by constructing new institutions and policies crafted with recognition of what Andre Perry called “policy violence” [4], progress will always be hampered and unequal.

 

An Eye Toward 2022

Our review of this year’s Leading Indicator topics also guides us towards new lines of inquiry in the coming year. As always, we will look to both established and new data resources to construct our analyses. We anxiously await the release of the U.S. Census Bureau’s 2020 estimates across multiple geographies so that we can monitor different trends across the counties, municipalities, and neighborhoods in our region. Similarly, we will continue to monitor updated inflation estimates for Greater Philadelphia from the Bureau of Labor Statistics to better understand how our region is progressing.

 

The interplay of historical structural inequalities and contemporary trends will continue to drive our work. We will continue to focus on the impact of macro-level trends on different population segments in the region. Though the city and the region have made some undeniable gains along many economic and social metrics in the past three decades, we will examine the ways that financial and policy decisions—during the period of deep fiscal crisis in the early 1990s—aided or hindered inclusive and equitable economic growth and competitiveness.

 

We will also continue to examine the lasting impacts of the COVID-19 pandemic in Greater Philadelphia. At the time of this writing, cases of the Omicron variant are rising in Philadelphia and restrictions on gatherings are being recommended. The pandemic has touched many facets of our local economy and will continue to do so. The economic impact of the work-from-home regime in Greater Philadelphia needs to be investigated. Similarly, and building on previous work, we will continue to examine the interrelationship between residents’ health and economic well-being as well as health equity issues.

 

We also welcome topic suggestions from you, our readership. Please feel free to email us with thoughts and ideas, and take our 2022 Topic Poll here, we’d be grateful.

 

A Heartfelt Thank You

Leading Indicators is a publication of the Economy League of Greater Philadelphia’s PolicyHub initiative. It is made possible by the support of the Economy League’s Board of Directors. We would like to especially thank a few Board companies that have gone above and beyond with financial support for PolicyHub, namely Exude, Ballard Spahr, and Independence Blue Cross.

 

Additionally, we thank the members of the PolicyHub Advisory Committee, chaired by the unimpeachable Lara Rhame of FS Investments. With the committee’s guidance and Lara’s leadership, we will continue to do our best to produce analyses that are timely, useful, and—ideally—interesting.

 

Finally, many of these Leading Indicators would have been impossible without the help of our extraordinary stock of 2021 interns. It is an honor and privilege to meet these young students at the beginning of their career journeys and act as a temporary mentor. To Christion Smith, Samuel Hausner-Levine, and Haseeb Bajwa, we thank you for quickly adapting to our fast-paced environment, offering your expertise, and forming a team of data enthusiasts with Mike. We know that you are all on the path to great and exciting futures.

 

See you all in 2022! 

 

Works Cited

[1] U.S. Bureau of Labor Statistics. 2021. “State and Area Employment, Hours, and Earnings: Philadelphia-Camden-Wilmington, PA-NJ-DE-MD.” Current Employment Statistics. Washington D.C.: U.S. Department of Labor.

 

[2] The Pew Charitable Trusts. 2018. American Families Face a Growing Rent Burden. Retrieved from: (https://www.pewtrusts.org/en/research-and-analysis/reports/2018/04/american-families-face-a-growing-rent-burden).

 

[3] Shields, Michael. 2019. “Why Haven’t Philly Wages Increased with Employment Levels? (Part 1).” Leading Indicators, 11 December. Economy League of Greater Philadelphia. Retrieved from: (https://economyleague.org/providing-insight/leadingindicators/2019/12/11/employwagespart1).

 

[4] Perry, Andre M. and Tawanna Black. 2020. “George Floyd’s Death Demonstrates the Policy Violence that Devalues Black Lives.” Brookings, 28 May. Retrieved from: (https://www.brookings.edu/blog/the-avenue/2020/05/28/george-floyds-death-demonstrates-the-policy-violence-that-devalues-black-lives/?preview_id=811746).