Philadelphia: Is The City Of Brotherly Love’s Middle Class Vanishing?

The city of Philadelphia has witnessed something familiar to many U.S. urban centers over the past generation – an apparent mass exodus (or disappearance) of its middle class.

According to a recent study by the Pew Charitable Trusts, the percentage of Philadelphia residents who can be described as “middle class” has plunged from 59 percent in 1970 to 42 percent in 2010. That data reflects how Philadelphia has transformed itself from a dynamic manufacturing-based economy into a service-based metropolis sharply divided by a huge poor (mostly minority) population, an ever-shrinking middle class, and a wealthy elite. Indeed, almost half (47 percent) of Philadelphians are now “lower class,” this figure having surged from 30 percent in 1970, highlighting a plunge in the city's taxpaying base.

The proportion of “upper-class” city residents, meanwhile, remained essentially flat, edging down to 10 percent from 11 percent from four decades ago. For those in the middle – they remain overburdened by taxes and diminishing services such taxes pay for. (Pew Charitable defined “middle class” as households having an annual income range of $41,258 to $123,157, in 2010 dollar terms.)

Consider that while Philadelphia’s middle-class population dropped by 17 percent (as a proportion of the city’s total number of residents) over those 40 years, nationally, the U.S. middle-class citizenry fell by 10 percent – from 61 percent to 51 percent between 1971 and 2011, according to another study by Pew Research Center, a unit of Pew Charitable Trusts. The hemorrhaging of the middle class has scarred broad swaths of the city. Pew revealed that in 1970, 80 percent of Philadelphia's census tracts boasted middle-class-majority populations. By 2010, that proportion plummeted to about 30 percent. "The middle class in Philadelphia has changed in dramatic ways," said Larry Eichel, a director of the Philadelphia program of Pew, the Philadelphia Inquirer reported. "The decline was quite large -- and larger than what you would see nationally."

The Pew survey suggests that upward mobility has essentially stalled. The study also underscored the changing nature of education and its role in obtaining jobs and upward mobility. In 1970, almost half (44 percent) of Philadelphia's middle class did not even have a high-school diploma. By 2010, that figure dropped to 8 percent. Also, only 18 percent of the middle class had any college education in 1970 – by 2010, one-half of the middle-class had been to university. Similarly, the types of jobs that the middle class work at also changed radically. In 1970, one third (33 percent) of Philadelphia's middle class were employed in manufacturing and construction jobs, the biggest single category. In 2010, more than half (53 percent) of the middle class worked in finance, insurance, real estate, business, and professional services (versus a figure of 28 percent in 1970). The latter data underscored the necessity of a college education for entry into the middle-class in the early 21^st century. "I have no doubt that what's going on in Philadelphia is more severe than the nation as a whole," David Elesh, an associate sociology professor at Temple University, told the Inquirer.

Some Philadelphia government officials were not surprised by Pew's grim findings. "The real question is what do we do going forward," said Alan Greenberger, the city's deputy mayor for economic development. Looking ahead, unless Philadelphia dramatically improves conditions related to jobs, crime and education, the exodus of tax-paying middle-class residents is likely to persist. The Pew study indicated that about one third (34 percent) plan to depart the city within five to 10 years if things don’t get better.

However, the Pew data should also be viewed through another prism – the overall population of Philadelphia has plunged by 22 percent (some 422,000 people) between 1970 and 2010. Meanwhile, the suburbs around Philadelphia ballooned in population – increasing by 870,000 residents between 1970 and 2010, a 30 percent spike.

Interestingly, the percentage of middle-class residents in Philadelphia's suburbs have also decreased by the same magnitude as the city itself -- but the key difference is that the proportion of upper-class people in suburbia has jumped -- from 16 percent in 1970 to 27 percent in 2010. In essence, as much of the urban environment became impoverished, the outlying suburbs have prospered.

But Pew found some good news here – there are now more black members of the middle-class in Philadelphia. In 1970, about one-quarter (26 percent) of the city's middle class was black -- by 2010, that figure stood at 42 percent. For whites, whose overall numbers have fallen, they now account for about 54 percent of Philadelphia's middle-class, down from 74 percent in 1970.

Pew also qualified its report by pointing out that the patterns of loss of the middle class (and the overall population) have slowed down since about 2000 – meaning, that in recent years the city has somehow retained some of the middle-class taxpayers it desperately needs to remain a viable, sustainable place. But the 'stabilizing' figures are rather small. Between 2000 and 2010, Philadelphia's population edged up by 8,456 residents (an increase that is below 1 percent), while the city's percentage of middle-class adults slipped from 43 percent to 42 percent.

“A vibrant and substantial middle class is widely considered essential for economic health and social stability in any community,” Pew said in a statement. “The challenge for Philadelphia, operating in a climate of budget cutbacks and tax fatigue, is to maintain and grow its middle-class population without shortchanging the needs of lower-income residents. And in Philadelphia, those needs are vast.” Pew also noted that existence of some government measures which are designed to relieve financial and other burdens on the city's middle-class, including a 10-year tax abatement on housing construction and renovation, as well as the development of more charter schools.

However, some academics question the methodology behind Pew's latest findings. Dr. Eugenie L. Birch, a professor of urban research and education and chair of the graduate group in city planning city & regional planning at the University of Pennsylvania, noted that Pew had an extraordinarily wide definition of “middle class” – i.e., from about $41,000 to $123,000 -- encompassing a very broad span of incomes and related lifestyles. “That is a pretty high cut-off,” she said. “And there is no standard definition of middle class.” Dr. Mark J. Stern of Penn's School of Social Policy & Practice and Co-Director of the urban studies program, concurred, explaining that the way Pew defined middle class – by using the metro area median income as its standard – the final data has been distorted by increases in the income gap between the suburbs and the city. “Obviously, the broader increase in inequality in American society also explains part of the increase,” he added.

Nonetheless, Birch concedes that the middle class of Philadelphia (however one defines this segment of the community) are indeed more susceptible to negative factors that would prompt their departure relative to many other urban regions. She cited, among other things, a totally dysfunctional public school system (excluding a few magnet high schools); high murder and violent-crime rates; high property and wage taxes; as well as the attractiveness and better job prospects found in the suburbs.

Philadelphia's appalling school system, Stern noted, stems partially from the low percentage of public education costs paid by the state – which has led to an accelerating increase in the suburban/urban gap in both school quality and tax rates. Stern also criticized the Pew study for failing to accurately identify “poor people.” “Even using the Census Bureau’s more accurate 'supplemental poverty measures,' the city’s poverty rate is actually in the low 30 percent range now,” he said. “[But] the growth of Latino poverty has been a big driver of the increases in the poverty rate over the past five years. This is partly [due to] migration and partly [to] job losses.”

Like many old manufacturing cities of the Northeast and Midwest, Philadelphia has witnessed dramatic changes in its racial profile over the decades. Indeed, race must be considered in a city with a fractured racial history like Philadelphia. In 1970, when Frank Rizzo -- who had a notoriously volatile relationship with blacks -- served as police commissioner, just prior to becoming a highly controversial mayor, the city was 63.8 percent white, 33.6 percent black and just 2.4 percent Hispanic. By 2012, the city was 44.3 percent black, 36.6 percent white, 13 percent Hispanic and 6.8 percent Asian (in 1970, the Asian population was negligible).

However, what is striking about these data is that “white flight” out of Philadelphia into the suburbs did not necessarily coincide with the departure of the middle class, suggesting that many middle-class blacks have also fled the city. “The white flight part of the story occurred during the early part of the [Pew] study’s time period,” Stern noted. “Currently, white flight is not really an accurate description of population changes.”

As for the future, Birch does not think that Philadelphia faces the ugliness of a Detroit-type bankruptcy/doomsday scenario. She noted that 38 percent of Philadelphia households earn at least $50,000 and that the city boasts a relatively strong "eds and meds" (education and health care) sector which provides jobs and generates funds from research activities. For example, Penn receives $750 million in external funding annually. Other promising sectors of the Philadelphia economy may be found in energy, legal services, telecommunications and tourism, she added. Stern points out that there are actually two sides to Detroit's collapse – the fiscal crisis and a socio-economic “death spiral.” “Fiscal crisis is always possible in a city [like Philadelphia], but I don’t see a socio-economic spiral [here],” he noted.

Birch also is sanguine that Philadelphia's population has some stabilized since 2000, making it rather unique among the aging post-industrial U.S. cities. “Philadelphia cannot sit on its hands and watch,” she warned. “It needs to strengthen its economic base, deliver basic services and make the city a more welcoming place for higher income groups.”