There has been a lot of press about the improving national unemployment rate. The job market in various fields — namely construction, some manufacturing and energy production — have seen marked improvement. This is good, but this has not translated in jobs in Philadelphia.
The regional (Philadelphia five-county, Southern New Jersey; and Wilmington, Del.) unemployment rate is 8.2 percent, which is .7 percent greater than the national average. The rate for Philadelphia County is 10.1 percent – second highest in the area. Only Salem County, N.J. has a higher rate at 10.7 percent. Salem County is a very rural area that has a significant amount of farm land and one of the smallest populations in the state.
To be fair, most big cities have unemployment rates above the national average. The challenge is that we have held at this rate for the past four years. The rate has hovered between 10 percent and 12 percent during this period. What are we supposed to do with a rate that is this high, especially as we continue to graduate kids from high school and college. Unfortunately, there are not many positions for these kids to move into.
One would think our politicians would try to create an environment that would help attract businesses to Philadelphia. If you watch TV, you may have recently seen some of the commercials sponsored by the State of New York that are appearing on our area network TV channels. The commercials discuss all the things that New York is doing to create a business environment that is favorable to new and established businesses and is aggressively recruiting business to come to the state. Michigan sponsored a similar campaign a few years ago, often using celebrities like actor Jeff Daniels.
The city and affiliated groups spend a lot of money promoting the arts in Philadelphia, in addition to things that help to drive tourism, which are all important and definitely impact business particularly downtown. However, our city has one of the most unfavorable tax structures for businesses, particularly small businesses. Over the years, this has driven many businesses out of the city. In my opinion, this is one of the biggest reasons why so many companies are located in the suburbs. This suburban sprawl has resulted in lower unemployment rates in the counties (Bucks, Montgomery, Delaware and Chester) and less tax revenue coming to Philadelphia.
The only true remedy that would allow us to lower the tax rates would be to control our spending and find a way to lower it. This may require some significant changes within city government, but they are sorely needed. Lowering the wage tax and business taxes will put money back in the pockets of all Philadelphians and we should see marked improvement in our economy.
You may not think that this is a big issue, but I can assure you that having unemployment at 10 percent or higher moving forward will have long-term effects on Philadelphia that may not be reversible.
Good luck with your planning!
The views expressed are not necessarily those of Cambridge and should not be construed as an offer to buy or sell any security.
Jim Heisler, CFP®, CDFA™, CASL™ Family Wealth Services, LLC 8725 Frankford Avenue Philadelphia, PA 19136 firstname.lastname@example.org 215-332-4968