Making the Most of Philadelphia’s Upswing

Last week I blogged about Pittsburgh Mayor Bill Peduto’s misplaced confidence in government energy mandates to grow the Steel City. On the other side of Pennsylvania, Philadelphia Mayor Jim Kenney has also claimed his intention to adopt and uphold the Paris Agreement. Kenney claims,

President Trump’s decision to withdraw from the Paris climate agreement goes against the interests of Philadelphians. . . Local progress on climate change will improve Philadelphia’s economy, reduce illnesses caused by air pollution, and help protect our residents.

Yet the city’s economy continues to struggle despite an ambitious eight-year-old climate change initiative, called “GreenWorks,” which seeks to reduce the city’s emissions by 80 percent come 2050. The city is barely gaining population, public schools are failing, and poverty is widespread. In fact, this month PhillyMag published a piece warning about the coming Philadelphia “Jobs Crisis.”

Mayor Kenney and local officials could do more good by focusing on these five pressing economic problems:

  1. Population Stagnation: In greater Philadelphia, the population gain of 1% over the last four years lagged the national average of 3%. As a result, the region fell from the 6th largest metro area in 2015 to the 7th in 2016.
    • As recently as 2005, the Philadelphia metro area enjoyed the 4th largest population in the nation.
    • If not for steady birthrates and an influx of international immigrants, the region would have lost population in recent years.
  2. Failing and Dangerous Schools: For decades, Philadelphia’s public schools have been marked by academic failure, school violence, and financial mismanagement.
    • According to the PSSA, only 18 percent of students are proficient in math, while 32 percent are proficient in Reading.
    • Results from the 2015 national NAEP are worse. Just 14 percent of 4th graders were proficient in reading and 15 percent of 4th graders were proficient in math.
    • The latest safe schools report finds Philadelphia schools experienced 35 cases of arson, three reported cases of rape and 275 cases of assaults on teachers and staff in 2015-16.
  3. Widespread Poverty: Philadelphia’s 26 percent poverty rate is the worst among the nation’s 10 largest cities. Philadelphia also has the most people in deep poverty (under 50% of the poverty level) among the top ten cities.
    • In the neighborhoods of northern Philadelphia and Kensington, the poverty rate is close to double the city’s rate, surpassing 44 percent.
  4. A Crushing Tax Burden: Years of big-government policies have created a crushing tax burden that has led to the highest effective rate on families making just $25,000 a year.
    • Soda Tax—Last year, Philadelphia imposed a 1.5 cent tax per ounce on soda, diet soda, and other sugary drinks. This tax falls disproportionately on low-income earners. The tax was billed as a way to fund pre-K and community centers, but almost one-fifth of the money will go toward other purposes.
    • Cigarette Tax Hike—The city’s per-pack cigarette tax increased from $3.60 to $4.60 in 2016, making Philadelphia’s cigarette tax the third highest among the nation’s big cities. Like the soda tax, the cigarette tax raises money on the backs of the city’s poorest residents and encourages smuggling.
    • Wage Tax—Philadelphia's wage tax is nearly four times that of the median rate in the region. Officials have acknowledged the tax's pernicious effects and offered numerous proposals to reduce it. One proposal moving through the legislature would reduce the wage tax by shifting the tax burden onto businesses. However, this tax shift does nothing to address Philadelphia's overall high tax burden.
  5. Below Average Income and Job Growth: The median household income in Philadelphia was just $38,253 in 2015. That's less than $15,636 less than the national average. The city’s job growth rate between 2010-2015 was a mere 1.1 percent—significantly below the nation’s average of 2.2 percent.

Philadelphia’s stagnant economy, high taxes and above average poverty mirror the problems of Pennsylvania as a whole. Increasing educational choice for parents, emphasizing work in anti-poverty programs, and lowering taxes will do more to spur innovation and grow the birthplace of our nation than any series of government mandates.