26th August, 2020
Racial Diversity and the Philadelphia Economy in a Post-COVID World

Until the recent health crisis, Philadelphia enjoyed ten consecutive years of employment growth from the end of the Great Recession in 2009 through the end of 2019.  However, Philadelphia still lagged behind other major U.S. cities.  Post Brothers has strict standards when selecting properties for apartments in Philadelphia, including only acquiring properties in population dense in-fill areas that are in excellent proximity to major transportation systems, employment centers, and neighborhood amenities.  Post Brothers’ executive team understands that real estate development is inextricably linked to the economic success of our community.

Overall, Philadelphia’s rate of poverty in 2018 was 24.5 percent, the highest rate of the ten largest cities in the United States.  Among African American residents, the poverty rate was 29.4 percent.  This was before the pandemic, which has brought unprecedented disruption to daily life and upended local businesses, with a disparate impact among Philadelphia’s most disadvantaged citizens.  Philadelphia’s unemployment rate rose from 5.9% to 17.7% between February and June 2020.  In contrast, during the last recession, unemployment peaked at 12 percent.

Rebounding from the devastating toll of the Coronavirus will require a potent mix of federal, state, and local support as well as private investment and initiatives to support economic growth.  The recent social justice protests also highlighted economic disparities between the privileged and underprivileged members of society and the need for greater effort to increase business density (more businesses in relation to residents) and business diversity (more minority in ownership serving minority communities) in Philadelphia.

The U.S. Census Bureau shows the disparity by comparing Black-Owned Businesses per 1,000 Black Population in five large cities in the Northeast: Atlanta, Boston, New York, and Washington, D.C.  Atlanta has the highest rate of Black-owned businesses per 1,000 Black residents at 4.7, followed by New York at 3.4.  Philadelphia, by contrast, has only 1.8. Black-owned businesses per 1,000 Black residents.

Black Business Density as a Percent of Total Business Density is also woefully behind its urban peers.  Washington, D.C. has a Black Business Density as a Percent of Total Business Density of 29.4%, followed by Atlanta at 19.1%.  Philadelphia lags the other cities with Black Business Density as a Percent of Total Business Density of 14.6%.  

It is difficult to compare Philadelphia to Atlanta, Boston, New York and Washington, D.C., and there are a number of factors that can help explain economic disparities between cities, including tax policy, municipal budgets, population size, geography, and more.

Philadelphia must overcome the challenges of lower business density in general, compounded by a lower density of Black-owned firms in particular.  It is a formidable challenge, but as lawmakers and business leaders consider the steps needed for a meaningful and sustainable recovery from the economic dislocations caused by the COVID-19 health crisis, it would be wise to consider some of these difficult issues and work toward innovative solutions to encourage entrepreneurship and job growth to reduce the cycle of poverty and unemployment.

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