The Economic Impact of COVID-19: Philadelphia’s Working Poor and ‘On-The-Edge’ Populations
EDITOR’S NOTE: During this unprecedented time of disruption and uncertainty, the Economy League’s Leading Indicators newsletter will provide a series of weekly data briefs focused on assessing the economic impact of the COVID-19 pandemic - with a special focus on the most vulnerable segments of Greater Philadelphia’s economy. Times like this call for decision-making informed by concrete evidence and impactful research. We aim to make Leading Indicators, and our PolicyHub initiative more broadly, a resource for the region’s policymakers and civic leaders, especially as we look toward post-pandemic reconstruction. If you have ideas for data stories, please email us or take our survey.
The first brief in this series focuses on unpacking the scale and scope of Philadelphia’s "working poor" and "on-the-edge of poverty" populations. As the COVID-19 pandemic continues to halt economic activity across the city, these groups may be disproportionally impacted since many of their employment options are tied to low-wage, foundational-skilled occupations in the service sector.
Key Takeaways
- At 22 percent, Philadelphia still retains the highest proportion of residents 16 years or older living in poverty among the ten largest U.S. cities in 2018.
- Roughly 27.2 percent of all of Philadelphia’s part-time/part-year salaried workers 16 years or older are living in poverty as of 2018.
- Only 3.6 percent of all of Philadelphia’s full-time salaried workers 16 years or older are living in poverty as of 2018.
- Approximately one in five Philadelphians are living on-the-edge of poverty – meaning they are only making slightly more than the official federal poverty threshold.
- With roughly 40 percent of the city living in or on-the-edge of poverty, a post-pandemic reconstruction strategy will need to prioritize the needs of these vulnerable populations or the city will be burdened with an even higher poverty rate for years to come.
The Working Poor
Philadelphia is often referred to as the “poorest” of the largest U.S. cities. Per Figure 1 below, 22 percent of Philadelphians lived in poverty in 2018 – ahead of the second highest concentration in San Antonio, Texas by five percentage points. While meaningful (and unconscionably large), this aggregate figure encompasses a large and diverse population in Philadelphia that faces unique circumstances – particularly in the wake of the COIVD-19 pandemic.
One subset of the impoverished population that will be disproportionately affected by the pandemic are the “working poor.” According to the Bureau of Labor Statistics, the working poor consist of individuals whose income falls below federal poverty thresholds even though they spent at least 27 weeks or more in the past year working or looking for work [1]. These individuals could be employed part-time or full-time (or are actively seeking employment), but they are earning less than minimum income. For perspective, a single person working 40 hours a week at the federal minimum wage of $7.25 an hour makes approximately $2,000.00 more per year than the official poverty level [2]. With the working poor are earning much less, layoffs or a loss of hours can be disproportionately damaging since their current earnings are already not meeting their financial needs.
Using data from the U.S. Census Bureau’s American Community Survey, we compared both the poor and working poor populations among the top ten U.S. cities in Figure 1. Philadelphia has not only the highest proportion of residents living in poverty, but also the highest proportion of part-time/part-year salaried workers 16 years or older living in poverty at 27.2 percent. In a prior Leading Indicator, we discussed how much of Philadelphia’s recent job growth came from an increased demand for low-wage, foundational-skilled occupations in the service-sector. As the pandemic continues to negatively affect a large portion of the city’s service sector, competition for the city’s remaining low-wage employment opportunities may increase.
NOTE: Data for this graph were obtained from one-year estimates of the U.S. Census Bureau’s 2018 American Community Survey. Full-time and part-time/part-year employment status while living in poverty are used as a proxy measure of the “working poor.” The population only includes residents 16 years or older for whom poverty status was determined.
While Philadelphia has a high proportion of part-time/part-year salaried workers living in poverty, only 3.6 percent of full-time salaried workers 16 years or older are living in poverty. A few cities, like Phoenix, Los Angeles, and those in Texas, have a much higher portion of their full-time workforce living in poverty. Previous research has noted that full-time Latinx/Hispanic salaried workers are more likely to be members of the working poor than any other racial or ethnic group [3]. Cities with higher concentrations of these populations tend to see a higher proportion of full-time salaried workers living below poverty. Philadelphia’s full-time working poor may be working more hours than their part-time counterparts, but they are still susceptible to the same disproportionate financial impact brought on by the COVID-19 pandemic.
Living on the Edge of Poverty
Another population that will disproportionately feel the effects of the COVID-19 pandemic are the individuals living just above the poverty threshold – or living on-the-edge of poverty. These individuals have an income 100 to 200 percent greater than the federal poverty level. This equates to a single person without dependents making between $12,760 to $25,520 a year in the continental US and Washington D.C. [2]. They may not be classified as working poor, but their circumstances are similar. Many are living paycheck to paycheck, and any changes to their employment (e.g. loss of hours, furloughs, layoffs, etc.) can easily push these individuals into poverty – adding to the city’s already sizeable impoverished population.
Figure 2 compares the on-the-edge of poverty populations with the impoverished populations of the top ten largest U.S. cities and the nation. Nearly one in five Philadelphians 18 years or older were on-the-edge of poverty in 2018. Like the figures for full-time working populations living in poverty from Figure 1, cities like Phoenix, Los Angeles, and those in Texas have the highest proportion of on-the-edge populations among the top ten largest U.S. cities. This may, again, correlate with these cities’ higher concentrations of Latinx/Hispanic residents [3].
NOTE: Data for this graph were obtained from one-year estimates of the U.S. Census Bureau’s 2018 American Community Survey. Poverty status was determined by the ratio of income to poverty level in the past 12 months. Individuals living in poverty had a ratio of income to poverty level of 0.99 or less, while individuals on-the-edge of poverty had a ratio of income to poverty level between 1.0 and 2.0. The population only includes residents 18 years or older for whom poverty status was determined.
As of 2018, Philadelphia’s working-poor and on-the-edge of poverty populations are roughly the same size - 22 percent and 19 percent respectively. These populations are at high-risk of unemployment and further impoverishment as a result of the ongoing pandemic.
A Look Forward
Before the COVID-19 pandemic, over a fifth of the city’s population were living in poverty while just under a fifth was on-the-edge of poverty. It is highly likely that the economic impact of the pandemic will be especially detrimental to these poorer populations since mandated non-essential business closures have largely affected the low-wage, foundational-skilled occupations of the service sector that largely employs these groups. While city and state leaders have no choice at present but to impose these preventative measures to slow the progression of COVID-19, it is critical to recognize that the impact of such measures will fall disproportionately on the most marginalized workers.
As we look toward the post-pandemic city, equity will require a strategy that prioritizes the needs of the working poor and those on-the-edge of poverty. We need to be ready to hit the ground running with targeted workforce development programs linked to employment opportunities, like the West Philly Skills Initiative and the Lenfest North Philadelphia Workforce Initiative. If we fail to do so, we will burden the city with a much higher poverty rate for years to come.
Next Time
In our next Leading Indicator, we’ll dive further into the service-sector industries experiencing the brunt of the economic effects of the COVID-19 pandemic. We’ll see how their size and contribution to the local economy may alter during this time of uncertainty.
NOTE: The proportion of individuals 16 years or older living in poverty in the City of Philadelphia in 2018 (22%) differs from the city’s overall poverty rate of 24.5 percent in 2018 since the former percentage does not account for children under 16 years old living in poverty.
Works Cited
[1] U.S. Bureau of Labor Statistics. 2019. “A Profile of the Working Poor, 2017.” BLS Reports, Report 1079. Retrieved from:(https://www.bls.gov/opub/reports/working-poor/2017/home.htm).
[2] Office of the Assistant Secretary for Planning and Evaluation. 2020. “2020 Poverty Guidelines.” U.S. Department of Health and Human Services. Retrieved from: (https://aspe.hhs.gov/2020-poverty-guidelines).
[3] PolicyLink. N.d. “An Overview of America’s Working Poor.” Retrieved from: (https://www.policylink.org/data-in-action/overview-america-working-poor).