“The reason for Philadelphians’ relatively low income? Poverty,” wrote my colleague Alfred Lubrano in his feature in the series “Broke in Philly.”
From talking to poor people, professors, and one of our city’s most thoughtful bar owners, Lubrano blames Philadelphia’s comparatively slow growth and low incomes on “the loss of 300,000 manufacturing jobs between 1950 and 1980, and still more similar jobs afterward, forcing the creation of generations of unemployed or underemployed people; aspects of racism, which have kept families mired in destitution; and an underperforming school system.”
All true. But poverty is also here because of what isn’t — new businesses, jobs, and investment, at the levels you’d expect in a place that is still the nation’s fifth-largest city.
My old teacher Theodore Hershberg, longtime head of the Center for Greater Philadelphia at Penn, used to tell us that factories have always closed down; that’s not what dooms cities to poverty. It’s the new businesses that never open that determine which cities prosper and attract young people with opportunities, and which cities decay and lose political clout and the investments communities need to stay healthy.
The Philadelphia area is only the 12th-most-popular destination for venture capital investors, far behind Boston and other smaller metros, the National Association of Venture Capital said last week. After a long, slow recovery, the city once again has as many jobs as it did in the early 1990s. But most of the recent growth is in hotels and restaurants, where pay is poor, or in schools and hospitals, which depend on government funding. Manufacturing and “information” jobs continue to decline here, says the Bureau of Labor Statistics.
I asked Dr. Ted, who plans to retire this winter after 51 years studying this region, what’s wrong with our city.
Philadelphia, he acknowledged, has in recent years enjoyed “modest growth [of the] private sector,” even “despite the lamentable state of our local politics.”
But so have most cities. Philadelphia isn’t growing like other big urban centers or the nation as a whole. “Until we can improve the quality of our local leadership, I’m afraid the city will continue to lag behind other places,” Hershberg said.
Why are employers growing in Texas, California, and Florida more than Philly? Why are offices going up and rents rising in Boston, New York, Washington way more than Philly?
This city doesn’t welcome private employers. Hundreds of innovative companies built Philly’s rowhouse neighborhoods — Midvale Steel and Stetson Hats, Baldwin and Brill, Cramp’s and Disston. DuPont, Ford, and GE built work here.
Those factories are gone. Our big employers are Penn, Drexel, and Temple — colleges and hospitals that grew up around ancient, tax-exempt, donor- and aid-financed institutions. There are a handful of successful enterprises — Comcast and the big law firms — that grew here over decades and know how to work with the politicians to get what they want, including public contracts. But there aren’t many, and most of their growth is now elsewhere.
Hospitals and schools only tend to grow as fast as employment and families. Another thing that eds and meds, along with restaurants and hotels, have in common is that they are largely funded by payments from out of town — hospitals by Medicare and Medicaid, colleges by student loans, parent tuition, and research grants, tourism and restaurants by visitors with day jobs elsewhere.
Why don’t more new ideas and homegrown businesses grow big here? Penn is starting to spend millions on keeping its entrepreneurial medicos in town, after getting tired of watching smart biotech and software founders run off to join funders in California, Boston, or New York.
It will take this and a lot more to reverse a longtime trend. Wells Fargo economist Mark Vintner, a Pennsylvania native, reminded me a while back that Pennsylvania has grown at half the national average rate since the Great Depression.
After all that time, maybe it’s intentional? I’ve started to suspect the real reason we don’t grow faster is that people who run things here, despite all their talk about growth, don’t really want it. They are happy with the pace and convenience of life for themselves, as office broker-political adviser-multi-board-chairman Walt D’Alessio told me in a revealing interview last fall. (His kid raised his family in Florida, just like my four oldest moved to New York after college.)
What would happen if Amazon or some other big tech firm really did put 50,000 tech jobs over the Amtrak yard or the Navy Yard? It would be a great thing for the region, in time. But in the short term, it would be pretty disruptive for the few dominant institutions with national interests that are still based here. Comcast engineers and Penn administrators would apply for Amazon jobs, driving up skilled-labor costs. The surge of residents would drive up housing costs, adding to the recruitment burden and maybe threatening entrenched political constituencies in a couple of Council districts.
Maybe that’s why the Amazon hunt was led most prominently by the B team of John Fry, the ambitious president of Drexel, who is looking for corporate partners after scaling back ambitious plans to boost enrollment; and Jerry Sweeney, whose Brandywine Property Trust is the city’s dominant office landlord (what other big city has just one?).
Meanwhile, the Democrats who have run City Council since the 1950s are continually coming up with new city-only labor laws that please progressive Democratic voters but annoy current and prospective employers, as the chamber of commerce keeps reminding us.
We get it — our reps love working men and women. But Philly isn’t attracting employers, these laws haven’t helped us to do so, and we’re falling further behind.
Poverty and underfunded public services are one result. So is political dependence: This is a city that depends on wealth generated elsewhere and redistributed, in a nation that lately isn’t eager to redistribute more. Opportunity, and our bright young people, keep heading elsewhere.
But we have, as my colleague points out, no shortage of poverty.