On Thursday, Mayor Jim Kenney will propose his seventh budget for the city of Philadelphia. As municipal budgets usually go, it will include spending on big and small programs that are both critical and discretionary. Particularly during this recovery period — in order to grow our economy, reduce poverty, improve quality services, and make our city safer — it is imperative that the city invest in creating jobs and growing businesses in Philadelphia.
Philadelphia has maintained one of the slowest job growth rates in the country, with above-average unemployment and a 24% poverty rate. In an effort to address this, City Council enacted a sweeping Poverty Action Plan in 2020 that included substantial investments in housing stability, criminal justice reform, workforce development, and education. Additionally, Council and the mayor have worked to address local school funding, most recently by making major changes to the city’s 10-year property tax abatement and by conducting thorough hearings on how to best allocate nearly $1.3 billion in direct aid to the School District of Philadelphia from the American Rescue Plan.
Recent budgets have also made significant investments in gun violence reduction and blight remediation. In 2021, the city dedicated $155 million to anti-violence efforts that support grassroots organizations, out-of-school programming, and targeted community investment grants. Likewise, in an aggressive citywide campaign in 2019, substantial general fund revenues were directed to cleaning up hundreds of vacant lots and abandoned buildings throughout the city.
But these investments alone are not enough. In order to maximize Philadelphia’s economic recovery, the city must also invest in job creation and business growth. Everyone, from heads of companies to heads of households, agrees that having more gainfully employed people will result in reduced violence and less blight in Philadelphia. Furthermore, whether we work for ourselves or for someone else, more dollars flowing throughout our city means more revenue for improved public services.
It’s been almost two years to the day since the COVID-19 pandemic mandated citywide work stoppages and business closures. Due to the incredible efforts of many brave people in both the public and private sectors, we are fortunate to finally have vaccinations up and infections down. However, the economic emergency that devastated businesses’ ability to grow and maintain their workforces still exists.
Compounding the pandemic crisis is the fact that Philadelphia has historically had difficulty growing and attracting employers. Data compiled by the Pew Charitable Trusts show that Philadelphia has lower business density, fewer start-ups, and fewer large private employers than comparable cities. Moreover, regional and national competitors such as Boston, Columbus, Ohio, and Detroit are outpacing Philadelphia when it comes to job growth.
A major reason for these findings is the fact that Philadelphia has the nation’s highest wage tax and is the only major city that taxes businesses twice. If you consider that companies, like people, weigh cost factors when deciding where to locate, then it only makes sense that many businesses of all sizes — and their jobs — are located just outside the city limits to stay competitive.
“Philadelphia has the nation’s highest wage tax and is the only major city that taxes businesses twice.”
Additionally, the city must continue to make it easier to run a business locally by reducing bureaucratic red tape, complex regulations, and prohibitive fees. Arizona State University’s “Doing Business North America” 2021 report ranks Philadelphia 60th out of 82 U.S. cities.
In order to improve our standing nationally and attract more employers, we must make interactions with local government easier. It would help tremendously if more elected officials regarded local businesses the way we Philadelphians view our sports teams: with a sense of kinship. When Philadelphia’s businesses win — we all win. Not only in the form of access to quality goods, services, and amenities, but also in the form of increased city revenue, good jobs, and a vibrant city.
Some will undoubtedly claim that incentivizing employers to grow in the city means a guaranteed reduction in city services. But this does not need to be an “either-or” moment. The city can maintain services while also investing in job and business growth. The nearly $1.4 billion of direct revenue from the American Rescue Plan has helped the city realize higher than projected surpluses, thereby allowing for these relief funds to be spread over a period of years.
Local officials can use this money to maintain robust service delivery while monitoring trends that show better-than-anticipated revenues. As Philadelphia continues to rebound, investing in economic growth will strengthen our recovery and help the city be prepared for when these funds are ultimately depleted.
More than any other time in recent history, Philadelphia’s leaders must invest in job and business growth during this budget cycle. Doing so will enhance an ecosystem that allows for good-paying jobs, increased spending with local businesses, reduced violence and blight, and improved public services. As companies in Center City and neighborhood commercial corridors make decisions about where to locate and grow, we should be nurturing and welcoming them for the job-creating engines they are. Investing in business growth will promote a safer, more prosperous Philadelphia.
Susan Jacobson is the chairperson of the Greater Philadelphia Chamber of Commerce. Regina A. Hairston is the president and CEO of the African American Chamber of Commerce of Pennsylvania, New Jersey and Delaware. Also contributing to this article were: Jennifer Rodriguez of the Greater Philadelphia Hispanic Chamber of Commerce; Khine Zaw of the Asian American Chamber of Commerce; Zach Wilcha of the Independence Business Alliance; and Valarie Cofield of the Eastern Minority Supplier Diversity Council.