Philadelphia enters the post-pandemic era with fewer jobs and potentially less tax revenue compared with before the health emergency, according to a new research paper by the Pew Charitable Trusts released Wednesday.
As of September 2021, the city lost 7.6% of its total jobs since March 2020, and due to remote work and other factors, the net impact could be as many as 19,000 fewer workers in the city each day, according to the study.
The number of people physically working in Philadelphia may drop between 11,300 and 18,900 per workday through 2025—with the biggest declines in professional and business services, government, health care and social assistance, and finance and information sectors, Pew estimated.
The shift toward work from home will “probably continue to substantially reduce the number of people in the city during the day, likely reducing demand for office space, public transit, and restaurants and retail establishments — and also lowering wage tax revenue,” the study found.
The impact on the local economy because of the expansion of remote work may extend further than initially suspected, said co-author Larry Eichel, senior adviser to Pew’s Philadelphia research and policy initiative. Those who still live in the city but work from home, for example, will likely spend less if they are not commuting to an outside workplace, the report said. The paper was based on research performed for Pew by a team at Econsult Solutions Inc.
Philadelphia, which saw its economy perform well in the decade before the pandemic, has seen those advances unravel as the city recovered more slowly from the virus fallout than other major U.S. metropolitan centers, the study said.
As of September 2021, the number of jobs in Philadelphia was 7.6% lower than it had been in 2019, down 56,000 from a base of roughly 740,000.
The national jobs number fell 2.6%. In other large East Coast cities, New York’s job total was down 10%, Washington’s was down 6%, and Baltimore’s was up 1%.
Since the arrival of COVID-19, the city has underperformed the national recovery, with lingering job losses, particularly in the low-wage sectors, with Black and female workers hit the hardest, Pew found.
Other post-pandemic trends that could create a weaker local economy in Philadelphia include more online purchasing, fewer retail stores, a decline in business travel, and general loss of cities’ attractiveness as places to live.
The report tracked broad implications for the city’s tax base, its budget and policies going forward.
In the decade before the pandemic, Philadelphia’s economy was the strongest it had been in 50 years, featuring slow but steady growth in population and employment, as incomes rose and the poverty rate declined from the highs following the subprime mortgage crisis.
The number of jobs in the city rose to 740,600 in 2019 from 657,400 in 2010, and unemployment fell to 5.6% from 10.3%. Although that was still above the national rate, it was the best in Philadelphia in years.
The Pew research into the shape of the local economic recovery will be ongoing, Pew officials said. The next report is due out in several weeks, Eichel said. “This project should continue well into next year. It’s a pivotal time for the city, and the project gives leaders facts to make policy.”
Changing wage tax base
Remote work may have significant long-term implications for Philadelphia’s wage tax, which has produced nearly half the city’s tax revenue in recent years. This tax applies to suburbanites who commute into and work in Philadelphia as well as all working city residents, regardless of where their jobs are located.
The potential share of remote workers could be between 14% and 27% of employees — or between 97,500 to 183,200 people — in Philadelphia.
Econsult estimated that 14% to 27% of the people who had jobs connected to workplaces in Philadelphia in spring 2021 — 97,500 to 183,200 — and were not working remotely before the pandemic will work remotely some or all of the time going forward.
“The remote work data is obviously speculative, because we don’t know exactly what is going to happen. But this is a serious attempt to give leaders the data they need, and suggests major changes in the way the city operates,” Eichel said.
Pew’s finding echo reports from the Center City District, which amplify changing job numbers, transit and parking and real time pedestrian counts. Those reports are available here at: www.centercityphila.org.
Center City District this month also released a survey of 114 firms in Center City and University City focused on the intentions of firms regarding remote work, and found that uncertainty over schools and childcare is also affecting workers’ decision to return to the city. ”Many schools and day care centers have adopted an on-again, off-again mode as new cases are reported,” the survey found. Also, the balance is tipping in favor of employees, the survey found.
After two years of disruption, while 21% of Center City and University City employers anticipate reducing their physical real estate and office footprint, primarily because of a greater reliance on remote work, 79% expect to maintain or expand the amount of space they occupy, the survey found.