Broke in Philly

Remote Work Among Factors Threatening Philly's Pandemic Recovery: Report

Philadelphia has been battered not just by remote work but also by “changes in the labor market, growth in online purchasing, and reduced business travel,” according to the report

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Philadelphia is lagging the rest of the country when it comes to economically recovering from the COVID-19 pandemic, and it will have to contend with pandemic-era challenges like the rise of remote work “for years to come,” according to a new report by the Pew Charitable Trusts.

As of September 2021, Philadelphia still had 7.6% fewer jobs than it had in 2019, whereas the rest of the nation only had 2.6% fewer jobs, according to the report, authored by Larry Eichel, a senior advisor to Pew’s Philadelphia research and policy initiative. The pandemic job losses have hit Black people, women and people without a college degree especially hard, the report found.

Philadelphia has been battered not just by remote work but also by “changes in the labor market, growth in online purchasing, and reduced business travel,” according to Eichel.

Depending on how prevalent remote work becomes going forward, it could have “significant long-term implications” for Philadelphia’s wage tax, which in recent years has produced nearly half of the city’s locally generated tax revenue, the report found.

Before the pandemic, 34% of people working in Philadelphia came from outside the city, while 25% of working Philadelphians went the other way – to jobs outside the city, according to the study.

Now, Philadelphia could be staring at a future where there are 26,000 to 56,000 fewer workers commuting into the city, and 15,000 to 32,000 fewer Philadelphians commuting to work outside of the city, according to the report.

That could result in 11,000 to 19,000 fewer workers in Philadelphia per day, predominantly from the professional and business services; government; health care and social assistance; and finance and information sectors, the report found.

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The impact of that net loss of workers would be twofold: Suburban commuters, who tend to have higher incomes, would not use as many goods and services from Philadelphia businesses. All the while, Philadelphians who stay behind to work within city borders would not necessarily ease the burden on local businesses.

The report noted that while the U.S. Travel Association predicts a “return to normal,” for all segments of the travel industry by 2024, remote work options could reduce travel expenses for businesses. Citing Econsul, Pew noted that a decrease of even 10% in business travel could cost Philadelphia about $100 million and lead to job losses in leisure and hospitality, retail and other sectors.

Meanwhile, Philadelphians who already have jobs in the city or who can do their suburban jobs from within city limits may not necessarily boost Philadelphia businesses, according to the report. That’s because workers who stay home “will likely spend less money each day than if they went to a workplace outside their home, with multiple food, beverage, and retail options nearby."

A rise in online spending could also hurt brick-and-mortar stores, which were already struggling to compete with ecommerce even before the pandemic.

The city will also have to contend with a rise in people permanently leaving during the pandemic.

Before March 2020, the average number of people leaving the city was about 1,400, the report noted. But, citing records from the U.S. Postal Service, Pew found that between March 2020 and July 2021, roughly 2,600 people a month left Philadelphia despite the number of people moving in staying the same and the residential market remaining strong.

“Fewer residents means less economic activity, which leads to fewer jobs,” the study noted.

Another factor slowing Philadelphia’s recovery is the decline of the workforce during the pandemic, the study concluded. Several sectors, including leisure and hospitality, have struggled to find staff and will eventually fill now-vacant positions or have to make do with fewer workers due to rising wage demands or because they just can’t find people willing to take the jobs.

Eichel did offer a glimmer of hope, however: residential investment and demand remains high, suggesting Philadelphia “may remain competitive for certain types of economic activity as a result of its location, its cultural and recreational amenities, and its affordability relative to other major East Coast cities.”

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