Why Philadelphia’s business community rarely gets its way in City Hall
The business community’s disjointed advocacy in City Hall makes it harder to defeat proposals that would increase regulations or taxes, but also sinks the rare opportunity for reform.
On a sunny, April morning nearly two decades ago, scores of people gathered at Broad and Walnut Streets and marched on City Hall.
The usual trappings of a street protest were present: chanting, homemade signs, a speaker pumping music from a flatbed truck. But the demonstrators maintained a strict dress code, with many in suits.
The Chamber of Commerce for Greater Philadelphia, after all, organized the march, which included not one, but two future mayors. Later dubbed the “briefcase brigade,” the 2002 demonstration sought cuts to Philadelphia’s wage tax, a levy on pay blamed for driving businesses, and therefore jobs, from the city.
The protest was successful, and the cuts went ahead. Beyond that single victory, however, the business community gained the promise that reform of the city’s more restrictive — critics would say job-killing — policies was possible, with city government a partner in the effort.
That promise has gone unfulfilled. Today, a shift to the left by city government and the entrenched political might of labor has left a disorganized and siloed business community with little influence in City Hall.
Competing interests and strategies have kept business leaders from speaking with one voice. The chamber — a civic organization that ostensibly advocates for a broad swath of interests — is widely viewed as controlled by the area’s few large companies such as Comcast and Independence Blue Cross. Meanwhile, an alphabet soup of industry associations lobbies for their particular, and often conflicting, interests.
There are myriad theories as to why Philadelphia’s business community has lost its juice in City Hall, from an absence of corporate leadership in what has become a “branch town” to comparatively restrictive campaign finance laws keeping big business on the electoral sidelines.
One undeniable factor is the leftward lurch of city politics over the last five years, with progressive upstarts defeating centrist candidates in Democratic primaries and the remaining establishment fearful of voting against the newcomers, lest they attract challengers.
The 2015 election of Councilmember Helen Gym, a progressive stalwart who previously badgered lawmakers as a public schools advocate, was the first major step in translating left-wing activism into City Hall policy. In a statement, Gym said she is “unapologetic about standing up for working families’' and proud to have “fought big corporate interests.” But, she added, that doesn’t mean Council’s new posture is antigrowth.
“We have to get out of antiquated viewpoints that pro-worker is antibusiness,” Gym said. “It’s an unhealthy mind-set, and it goes against a long history in Philadelphia of labor-management collaboration to build a prosperous economy that benefits everyone, not just the CEOs.”
All the while, Philadelphia ranks among the worst U.S. cities in which to do business, with a uniquely burdensome tax structure and longer wait times to get city approvals. Unlike other cities, Philadelphia taxes both profits and revenue. The city takes longer to process paperwork and makes firms go through more steps to modify their buildings, Arizona State University researchers found.
The diminished influence has some in the business community concerned that the city will fail to build on modest job-creation gains. From 2009 to last year, the decade between the Great Recession and the coronavirus pandemic, the number of jobs in Philadelphia grew by about 1.2% annually, while Boston, New York, and Atlanta posted average annual employment growth of 2% or more, according to the Center City District. New jobs in those cities have also been higher-paying, with Philadelphia’s gains coming primarily in the low-wage service sector.
The fact that jobs grew in Philadelphia during that period, along with the rebirth of Center City, can produce a deceiving sense of prosperity that undermines the urgency for longer-term strategies around job creation, said Gerard Sweeney, who is president and CEO of Brandywine Realty Trust. Sweeney helped lead the most recent attempt at reforming the wage and business taxes, which foundered in 2017.
“The city is so mired in the rearview mirror, as opposed to looking forward and laying out a five- or 10-year plan,” Sweeney said. “I think that’s where the business community needs to be more assertive.”
Susan Jacobson, who chairs the chamber’s board, said the organization focuses on building bridges in City Hall for the singular goal of job creation.
“We have a very good working relationship with the mayor, and we have relationships with City Council where we need to find that common ground and have got to work together,” said Jacobson, the founder and CEO of the public relations firm Jacobson Strategic Communications. “We are not the opposition party. We’re not a political arm. So it’s really our job to find a way to promote job growth.”
Jacobson said the chamber strives to advocate for all kinds of businesses but acknowledged the unique role the city’s largest employers play.
“The chamber represents over 2,000 businesses and over 600,000 employees, so we represent — and have actually worked really hard to represent — all different kinds of business,” she said. “However, we do have big businesses, and they play an important civic role.”
The possibility of a business community show of force like the briefcase brigade seems remote in today’s more progressive Philadelphia political arena, said Charles Pizzi, who came up with the idea for the march as the chamber’s then-president and CEO.
“We’re in a different time, and I don’t know even if that would even work,” said Pizzi, the Independence Blue Cross board chair and a former Tastykake CEO. “Politically, it’s far better [for elected officials] to put forth issues where they’re infringing on businesses, like business is the one to be blamed for a lot of the city’s ills.”
Worker protection agenda
In a single session this month, Council passed bills opposed by the construction, hotel, and car-sharing industries, as well as legislation adding requirements for companies that vie for city contracts. The most significant legislation passed in the Dec. 10 meeting was the creation of a 1% tax on residential development — a new levy in what was already the nation’s most heavily taxed big city.
Whether these measures are good for the city is debatable, and opposing sides invariably argue their position is part of the solution to Philadelphia’s roughly one-in-four poverty rate, the highest of any big city.
There’s less argument, however, about the perception that the relationship between the public and private sectors has been souring for several years.
Over the last five years, Mayor Jim Kenney’s administration and a group of labor-friendly Council members have made Philadelphia a national leader in worker protection laws. Philly has adopted cutting-edge policies protecting domestic workers, guaranteeing consistent schedules for service workers, and prohibiting parking attendants from being fired without just cause, among others.
While progressives say the policies help the working poor earn a family-sustaining living, the affected industries often argue the measures raise the cost of doing business, limiting the number of jobs.
There are, however, areas of broad agreement between the city and the business community, especially on the need to increase aid to small businesses in neighborhood corridors, many of which are Black-, Latino- or Asian American-owned. But despite that shared commitment, the city spends only $0.59 per capita on economic development for small or minority-owned firms, a Center City District report found. By comparison, Washington spends $6.60 per capita, while Boston allocated $3.43 and New York $0.92.
Michael Rashid, whom Mayor Jim Kenney recently appointed as the city’s commerce director, said that while he understands many in the business community view City Hall as a hostile environment, the administration is working to change that.
“I recognize that that is a perception among some people,” said Rashid, former CEO of the Medicaid provider AmeriHealth Caritas, which is majority-owned by Independence Blue Cross. “That is not our intent, and we intend to show by our actions some major, major initiatives to help Philadelphia be more business-friendly.”
Rashid said he is leading an effort to cut red tape. And the Kenney administration has also voiced support for the chamber’s Recharge and Recovery PHL plan to turn around the pandemic-induced economic downturn.
Council President Darrell L. Clarke said he doesn’t believe there is a problem with the city’s relationship with business. He noted that Council members consult with industry representatives when shaping legislation and highlighted initiatives like a $10 million program to clean neighborhood business corridors and reforms to the business income tax that effectively exempted the smallest businesses.
“Is there from time to time some concern about a particular piece of legislation by members of the business community or categories of the business community? Yes, but that’s not different than any other group,” he said. “We understand the importance of creating jobs in this city.”
Clarke said that to improve the city’s economy, he prioritizes investing in job readiness programs over tax reform. He noted that Amazon declined to locate its second headquarters in Philadelphia, citing the city’s relatively unskilled workforce.
“We’ve got to prepare our folks for these job opportunities,” Clarke said.
Before Council held sessions virtually due to the pandemic, its Thursday morning meetings attracted a swarm of lobbyists who milled around the fourth floor of City Hall attempting to line up votes for bills their clients favored and prevent other proposals from coming to the floor.
For better or worse, the hired pinstripes were there to do the bidding of big business, and the relative difficulty of their jobs at any given time is one measure of corporate influence. In recent years, the job has been getting harder, said John Hawkins, a lobbyist who represents business groups in the development, hotel and auto industries, among others.
In the past, it was easier, Hawkins said, for lobbyists to quietly kill bills that their clients thought would be harmful to their businesses by sounding the alarm to sympathetic Council members. That’s not the case anymore, he said.
Hawkins doesn’t expect that dynamic to change unless business interests become more politically active and counter the recent electoral success of progressive groups. In the meantime, he’s advising clients to adjust expectations.
“Until the business community is able to impact elections in their favor, it’s incumbent on business to demonstrate to Council how each industry positively impacts their communities,” Hawkins said.
The business community’s recent forays into electoral politics haven’t gone well. In 2019, Kendra Brooks of the left-wing Working Families Party made history by winning one of the two at-large Council seats reserved for non-Democrats, stealing a seat the GOP held for 70 years.
When it became clear Brooks had momentum, the chamber made a clumsy last-minute attempt to help the Republican candidates, including a text message campaign warning of socialism taking over City Hall.
The Working Families Party and progressive labor unions vastly outspent the chamber in that race. Campaign-finance reports show the chamber’s PAC raised about $235,000 in 2019, while the campaign arm of the Working Families Party raked in more than $1 million.
The political shift is also embodied by Kenney, who in 2002 marched in the briefcase brigade but in 2015 won the mayor’s race with the backing of progressive and labor groups. He succeeded Michael Nutter, who also joined the 2002 march.
Kenney still believes wage tax reduction is a worthy long-term project — the budgets passed in the fat years of his first term included modest rate reductions. Yet his tenure has been stamped by moves that have made many in the business community grumble, including the cascade of worker protections adopted with his blessing and the creation of the nation’s first soda tax, Kenney’s signature achievement.
“We’ve continued to try and reduce wage taxes, reduce business taxes — up to the pandemic, which has upended our finances in a really tremendous way,” said Jim Engler, Kenney’s chief of staff.
Engler said the administration is seeking to balance the goal of creating a more business-friendly environment in the city with the need to protect workers.
“Both sides continue to need attention. We have to listen to the needs of the business community. We’ve tried to do that throughout the pandemic,” Engler said.
Lack of unity
The business community’s disjointed advocacy in City Hall makes it harder to defeat proposals that would increase regulations or taxes, but also sinks the rare opportunity for reform.
The chamber, for instance, surprised many when in 2017, it opposed a notable effort to wind down the city’s highest-in-the-nation wage tax.
That proposal — the brainchild of Paul Levy, CEO of the Center City District, and Brandywine Realty’s Sweeney — would have paid for significant cuts in the wage and business taxes with increases in commercial real estate tax. But the plan, which required a change to the state constitution, failed to win support in Harrisburg after the chamber’s opposition.
Sweeney said he believed the chamber opposed the plan, which was supported by Kenney and a coalition of labor and other business groups, in an effort to stay in the good graces of Council President Clarke, who was against it.
“Sometimes the chamber tries to be all things to all people and offend no one,” Sweeney said.
The inconsistent nature of the business community’s advocacy makes it easy for natural opponents to derail any initiatives and more difficult for potential allies to stick their necks out in support.
“It’s hard to distill, from the administration’s perspective, the business community into one single voice,” Engler said. “There are different interest groups with different perspectives and different interests that we’re trying to manage in the same way we are with individuals on the worker protection side.”
Steven Scott Bradley, who chairs the African American Chamber of Commerce and serves on the Greater Philadelphia Chamber board, said that while the two groups don’t always align, that’s not necessarily a bad thing.
“Our businesses are small and most of the businesses in the Greater Philadelphia Chamber are corporations, but they’ve been supportive,” Bradley said. “I think it’s healthy for the business community that we’re not just lined up, and one voice speaks for the whole community. … No big brother controls the business community.”
Judith von Seldeneck, who chaired the chamber at the time of the briefcase brigade, said there is still an opportunity to turn things around if the business community gets organized.
“Somebody needs to stand up and be the leader and bring together all these various constituencies,” said von Seldeneck, the founder of executive headhunting firm Diversified Search Group.
Jacobson and von Seldeneck pointed to the Recharge & Recovery PHL campaign as a critical opportunity for the business community to lead. While the plan itself is, so far, a vague list of recovery goals, it’s the product of a diverse task force wrangled by the chamber that includes big and small business, labor, and higher education. The coalition is still meeting.
“In many ways, it’s sort of like the briefcase brigade because it’s brought together all these various constituencies,” von Seldeneck said.
A new tax
Another example of the inability of business groups to get on the same page was the fight over the construction tax. Clarke championed the measure to finance $400 million in bonds for his affordable housing and antipoverty plan, the Neighborhood Preservation Initiative.
Most development industry groups opposed the tax, but the Building Industry Association, or BIA, which primarily represents residential developers, supported it.
Part of the group’s motivation was likely strategic. The votes needed to pass the tax appeared in hand from the start, making it seem wiser for the BIA to work with Council to make the bill more palatable than to oppose it and lose.
And in a city where Council members have ultimate power over land-use decisions in their district — thanks to the tradition known as “councilmanic prerogative” — it doesn’t hurt residential developers, who often need zoning variances, to align themselves with the winning side.
Leo Addimando, who leads the BIA, said that he recognizes affordable housing is a “seminal issue” and was happy to partner with Council on attempting to tackle it. That doesn’t mean, however, that Addimando doesn’t want to see a different attitude toward the private sector from Council overall.
“It’s very difficult when you don’t know on any given issue who your friends are in Council, you don’t have a strong leader in the mayor’s office, and you think you’re constantly under assault without any actual thoughtful planning or dialogue,” he said.
Ben Connors, head of the General Building Contractors Association, said that the adoption of the new construction tax amid an economic downturn shows that the development industry needs to take a new tack.
“It seems unlikely that the political winds are going to change and you’re going to get a more moderate City Council,” Connors said. “We have to work hard and make sure this Council and any future Council recognizes that we have the same goal.”
Council’s business-friendly caucus
The business community does have allies in Council.
“It’s a short list,” said Anna Shipp, executive director of the Sustainable Business Network of Greater Philadelphia, which advocates for small business.
She pointed to Allan Domb, a condominium magnate, and Derek Green, a lawyer and former small business owner. (They were also the only Democrats who voted against the construction tax during a crucial committee hearing, but Green ended up voting for it on final passage.)
“Our members feel a disconnect in what people in Council are saying about their care for small business and what they’re doing legislatively or otherwise,” she said. “It’s been pretty frustrating.”
Green said he has been trying to be more vocal about the plight of small businesses during the pandemic because of their importance to the city’s economic recovery.
“We’ve got to do more to help the businesses that have been successful in our city, and the pandemic has only demonstrated that even more so,” Green said. “Ultimately they’re going to hire people in our city and provide jobs in our city.”
Several politicians seen as business-friendly are rumored to be considering entering the 2023 mayor’s race, including Domb, Green, City Controller Rebecca Rhynhart and state Rep. Jared Solomon (D., Phila.).
Another potential candidate is Council Majority Leader Cherelle L. Parker, who has aimed for the middle ground by stressing job creation while also backing pro-worker measures she says will ensure any new jobs are family-sustaining.
“If you just talk about creating jobs and all we see is low-wage positions that don’t offer any permanent position or health care, then we’re not talking about families,” Parker said.
Jacobson, the chamber chair, said the next major test for city leaders will be the looming budget crisis caused by the pandemic.
Last spring, Kenney and Council plugged a $750 million budget gap through a mix of tax hikes and spending cuts. Given the continued grim economic news and Congress’ refusal to provide direct aid to cities in the latest pandemic relief package, they’ll have more painful decisions in the first half of 2021.
“If we can continue to work together, I truly believe the elected officials will realize that, if we tax our way out of a pandemic, we basically will end up devastating small and midsize Black and brown businesses,” Jacobson said.
Staff writer Christian Hetrick contributed to this article.
The Future of Work is produced with support from the William Penn Foundation and the Lenfest Institute for Journalism. Editorial content is created independently of the project’s donors.