A Review of 2022's Leading Indicators
In our last Leading Indicator of 2022, we 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 2023; Please Take our 2023 Topic Poll.
Reviewing Themes for 2022 Leading Indicators
In 2022, our Leading Indicators largely hewed to a comparative approach, benchmarking common socioeconomic metrics and trends of Greater Philadelphia with its peers across the nation. Two key areas we focused on throughout the year were inflation and impact of the COVID-19 pandemic on the labor market in Greater Philadelphia. We also conducted an in-depth comparison between Philadelphia and Detroit, in preparation for the annual Greater Philadelphia Leadership Exchange (GPLEX), to shed light on socioeconomic trajectories of the two cities. Lastly, we focused on indices and databases—created by the Economy League of Greater Philadelphia or other regional institutions—to improve benchmarked comparisons and shed new light on previously inaccessible comparisons, like the economic impact of anchor institutions.
Inflation in Greater Philadelphia
Throughout 2022, we kept tabs on the localized impact of inflation as rising prices remained a key concern for the nation. Disruption in supply chains from COVID-19 and the onset of war in Ukraine created enormous inflationary pressures on prices throughout the year. In the first half of 2022, Greater Philadelphia experienced its highest inflation rate in over 40 years going as high as 8.8% in June 2022. Despite its high inflation, prices in Greater Philadelphia remained lower than in peer metropolitan areas like Greater Phoenix and Greater Atlanta which experienced double-digit inflation rates between June 2021 and August 2022. Fortunately, prices in Greater Philadelphia started decreasing in August 2022 and have continued to decline as of October 2022 (the next estimates for December 2022 will not be released until early in 2023). The main driving force behind this decrease in regional prices comes from the Energy and Transportation sectors. Energy prices decreased from a high of 46% to 22.5% in Greater Philadelphia between June and October 2022. Similarly, the Transportation sector saw its inflation rate decrease by 12.5 percentage points between April and October 2022. In fact, most sectors in Greater Philadelphia are experiencing a cool-off period in the last quarter of the year, except Housing. Inflation has taken a toll on housing and rental costs in the region, and it still is unclear what the future will hold for the region’s housing affordability. This will be a topic we take a closer look at in 2023.
FIGURE 1: Our October 2022 update on inflation in Greater Philadelphia compared price changes by CPI items since August 2021 in the region.
Source: Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers (CPI-U)
Remote Work and Labor Market Shifts in Greater Philadelphia
The U.S. labor market has seen seismic changes since the COVID-19 pandemic, such as the Great Resignation and the shift to remote and hybrid work regimes. We dug deeper into how these changes panned out at the local level through a series of labor-focused Leading Indicators. Using the latest estimates on remote work from the U.S. Census Bureau’s 2021 American Community Survey, we found that 23.8% of the total employed population in the City of Philadelphia worked remotely in 2021 compared to only 5% in 2019. This trend was observed across the 20 largest U.S. cities as well, where the average proportion of remote workers jumped from 6.4% in 2019 to 26.2% in 2021. We also conducted a breakdown of remote work by gender and ethnicity and found that a larger proportion of female employees shifted to remote work in 2021 at 24% compared to 21.1% of male employees. Given that women tend to be more burdened with the unpaid labor of family and household caregiving, this finding is unsurprising. Philadelphia’s Black and Hispanic workers experienced the lowest shift to remote work, whereas white workers saw the largest increase. Similarly, people working in office-based occupations, like Management and Sales, shifted to remote work at a much higher rate compared to more customer-facing and locationally specific jobs in the Service, Construction, and Transportation sectors.
FIGURE 2: Our analysis of remote work in Philadelphia showed changes in proportion of remote working populations by demographic and economic groups before and after the COVID-19 pandemic.
Source: U.S. Census Bureau’s 2019 and 2021 American Community Survey one-year estimates
In our analysis of the overall impact of the COVID-19 pandemic on Philadelphia’s labor market, we found that the city has experienced a modest recovery in its labor market compared to other large peer cities. In fact, most peer cities are experiencing a relatively positive build-back of their labor markets since the start of the pandemic in 2020. However, Philadelphia’s recovery in the Leisure and Hospitality sector and Education and Health Services sector, the two hardest hit sectors in the pandemic, trails behind its peer cities. Both sectors have not seen the level of growth in private establishments since the pandemic when compared to other peer U.S. cities. Philadelphia’s Education and Health Services sector is recovering more slowly compared to its Leisure and Hospitality sector.
FIGURE 3: Our analysis of the impact of COVID-19 on urban labor market showed that Philadelphia has experienced decent recovery in its labor market compared to its peer cities.
Note: Each line represents change in average value of nine quarters before the pandemic and nine quarters after the pandemic.
Source: Bureau of Labor Statistics’ Quarterly Census of Employment and Wages and American Community Survey.
Detroit and Lessons from GPLEX
A highlight of our comparative analyses in 2022 was our deep dive series comparing various aspects of Detroit and Philadelphia to better inform the cohort of 150 Philadelphia civic and business leaders who attended the Greater Philadelphia Leadership Exchange conference in October 2022 in the Motor City. In our series of Detroit-focused LIs, we learned some key differences and similarities between the two cities: first, while both cities have proportionally larger Black residential populations than any other racial or ethnic group, the proportion of Black Detroiters is twice that of Black Philadelphians as recently as 2020. Second, the economic makeup of Philadelphia and Detroit’s home county of Wayne County looks very similar. The top 4 out of the 5 largest industries by private employment are the same in the two areas; however, Manufacturing plays a much more important role in Wayne County’s economy than in Philadelphia. We also learned that the relatively underdeveloped public transit system in Detroit has hindered its economic growth and prosperity. Greater Detroit’s public transportation system serves an urban population and land area almost 30% smaller than SEPTA in Greater Philadelphia, and it averages far less trips per 100 residents when compared to SEPTA. Finally, coming out of GPLEX 2022, we also learned that the philanthropic community in Detroit plays a much larger role in the fiscal health of the city than in Philadelphia.
FIGURE 4: In Part 4 of our GPLEX 2022 leading indicator series, we explored the state of public transit in Greater Detroit and Greater Philadelphia.
Source: National Transit Database
Databases and Indices for Comparative Analysis
This year we also introduced various data tools and indices that can help policymakers and other think tanks conduct better comparative analysis. The Economy League’s Historic Neighborhood Data Tool, created internally, makes historic analysis of Philadelphia’s neighborhoods easier by aggregating decennial census tracts from 1950 through 2020 to static neighborhoods. This tool accounts for unique decade-to-decade census tract changes while reflecting Philadelphia residents’ definitions of their neighborhoods. This neighborhood data tool can allow for more robust longitudinal analysis by policymakers and other think tanks, e.g., showing the historic mass exodus of white residential populations from Philadelphia.
FIGURE 5: We introduced a Historic Neighborhood data tool that can be used to analyze local trends in Philadelphia, like the “white flight” from the city since 1950.
Source: U.S. Census Bureau
We also explored the Anchor Economy Dashboard (AED) developed by the Federal Reserve Bank of Philadelphia, a first-ever national dataset and website that quantifies the economic and social impact of anchor institutions like hospitals and higher education institutions. This database allows us to quantify the impact of anchor institutions in regional economies. We found that the economy of Greater Philadelphia is highly dependent on its anchor institutions when compared to other similarly populous U.S. metropolitan regions. This database has the potential to unlock regional socioeconomic characteristics that can better quantify and explain the role of anchor institutions in their economies.
FIGURE 6: We explored the Anchor Economy Dashboard created by the Federal Reserve Bank of Philadelphia and found slightly positive correlations between reliance of economies on anchor institutions and health and education access.
Note: All values are log values. Each point is a U.S. metropolitan or non-metropolitan region colored by its population size.
Source: Anchor Economy Dashboard by Federal Reserve Bank of Philadelphia
Finally, we also introduced the preliminary parts of a comprehensive similarity index being developed at the Economy League. This index will operationalize the complex interplay of various regional socioeconomic characteristics allowing for more robust benchmarking and comparative analysis. We highlighted the interaction between crime rate per 100,000 residents, ethnic heterogeneity, and real GDP per capita and found that Philadelphia lies closer to many less populous and less diverse U.S. counties due to the city’s lower GDP per capita and high crime rate. In our effort to conduct high quality comparative research, we will continue developing this index in 2023 to create a better picture of similarities and differences across regions in the U.S.
FIGURE 7: We introduced a benchmarking index being developed by the Economy League that explores multi-dimensional relationships between socioeconomic indicators in U.S. counties.
Source: American Community Survey, Bureau of Economic Analysis, ICPSR
An Eye Towards 2023
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 are especially interested in continuing our analysis of remote and hybrid work in Greater Philadelphia in 2023. By looking at migration patterns in Greater Philadelphia since the pandemic and tracking corresponding places of employment, we hope to build on our previous research on Greater Philadelphia’s labor market.
We will also continue to monitor the localized impact of inflation using updated inflation estimates for Greater Philadelphia from the Bureau of Labor Statistics. Through this analysis, we hope to understand which sectors in Greater Philadelphia continue to feel the long-term price shocks from COVID-19 and need the most attention by policymakers in 2023.
In addition to thematic topics, we are also excited to delineate benchmarking indices created by the Economy League to construct robust comparative analysis in 2023. Building on our previous Leading Indicator about the potential of multi-dimensional index, we hope to build a Similarity Index next year that will create a comprehensive picture of counties and metropolitan regions that can be used for more effective comparisons by policymakers and practitioners.
We also welcome topic suggestions from you, our readership. Please feel free to email us with thoughts and ideas, and take our 2023 Topic Poll here, we’d be grateful.
A Heartfelt Thank You
Leading Indicators is a publication of the Economy League of Greater Philadelphia. 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.
We are also especially excited this year to have added Haseeb Bajwa (MA, Penn 2021) to the team as the full-time Research Analyst! Haseeb has taken on the mantle of Leading Indicators and is pushing it into new innovative directions. We’re so excited to see what he has in store for 2023!
Also, our Leading Indicators were amplified with the help of a series of intrepid interns in 2022. To Song Zhong and Elizabeth Burdett, we thank you for your expertise, insights, and assistance in producing our Leading Indicators for the Greater Philadelphia community.
See you all in 2023!