Why and How to Solve the Problem of Poverty in Philadelphia

Poverty reduction is a citywide objective of paramount importance for Philadelphia. For this Present Value post, ESI Principal Lee Huang speaks with Harold T. Epps about why it is so important to tackle this issue and how the City can lift households out of poverty at scale. Epps is a prominent civic leader who has built a solid reputation in both private and public sectors. Privately, he has focused on positioning organizations for sustained growth and successfully managing change. Publicly, he oversaw and implemented policies to help both small businesses and major corporations in Philadelphia thrive.

Epps previously served as the Director of Commerce in the City of Philadelphia for the duration of Mayor Kenney’s first term. As Director of Commerce, he helped to coordinate activities along neighborhood commercial corridors with small businesses and entrepreneurs, major real estate development projects, large-scale business attraction and retention efforts, as well as efforts to increase minority-owned business contracting opportunities.

Huang: Harold, the poverty rate in Philadelphia has generally trended down in the roughly 20 years you’ve been here, but it remains high relative to other big cities. And post-COVID, many people worry that Philly and other urban areas are in danger of backsliding, like they did in the second half of the 20th century. Why is this issue worth paying attention to, and what’s a realistic goal for us to work towards?

Epps: Twenty percent is a marked improvement over the high-water mark of 27 percent in 2010. But it still means about 142,000 households in the city are living below the poverty line which is unacceptable. Lifting as many of those households as possible out of poverty is a moral imperative. It’s also good for the city as a whole, because increasing income levels among lower-income households will yield a significant multiplier effect on the local economy, as those newly earned monies get re-spent locally, supporting additional jobs and generating new tax revenues. I would love to see us get to under 100,000 households living in poverty by 2030, which (assuming a little bit of overall population growth) would put us in the low- to mid-teens in terms of poverty rate, squarely in the middle of the pack of big cities.

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Huang: Just to substantiate your statement that lifting households out of poverty is good for the city as a whole, I ran the numbers on that and you’re right. Let’s say, for example, that each of those 42,000 households goes from making 75% of poverty level household income to 125%. For the typical household size of 2 to 3 people, you’re talking about roughly $11,000 more in household income per year. Times 42,000 households is almost a half a billion dollars in new household income sloshing around the local economy every year. And you’re correct, a lot of that gets spent immediately and locally.

According to our local models, just the spending associated with that aggregate household income increase would generate economic activity supporting an additional 2,400 jobs in the city economy and generate over $80 million in annual wage, sales, and business tax revenues for City government. That doesn’t even count the likely bump in property tax revenues the City and the School District will see as demand for more and better housing lifts our property tax base and helps pay for municipal services and public schools. So, this seems like a worthy aspiration to work towards. How do we get there?

Epps: As a member of the board of trustees of Community College of Philadelphia and board chair, workforce development comes to mind, and specifically making sure that the College is doing its job to connect students from our public schools to gainful employment in strategically important local industries. And that’s going to take skills development and real-world exposure during students’ time at the College, as well as active partnerships with large-scale employers whose ability to thrive in the competitive industries they’re in depends in large part on their access to a trained workforce. Health care and life sciences come to mind as sectors that are critical to our region’s quality of life and economic competitiveness, where the opportunity is there for job opportunities at scale that pay a living wage and can represent pathways out of poverty for households all throughout the city.

Huang: I agree that we should lean into our existing strengths in the “eds and meds.” But where else warrants attention to really move the needle on poverty reduction?

Epps: I am on the board of the Economy League for Greater Philadelphia and co-chair its Philadelphia Anchors for Growth and Equity initiative, which works with the big institutions in the city to re-localize more of its spend to minority- and woman-owned businesses. Take food for example. We tend to think of either end of the “farm-to-table” supply chain, namely the ag workers on one side and the restaurant and grocery workers on the other side. It would be great to work towards these workers, disproportionately people of color, making a higher wage, a living wage. And there is a bunch of economic activity in between these two extremes, and those jobs do pay well but those functions are often automated, suburbanized, or off shored. Can we think strategically with our major employers in the city to create more employment opportunities in processing, transportation, and logistics? That would make a huge difference in creating pathways to living wage jobs for so many Philadelphia households.

Huang: What do you take from your experience as Commerce Director for the City that can help us make a dent towards our high poverty rate?

Epps: The need for a skilled and educated workforce is critical to the recruiting and retaining employees in the city. Continued job growth is vital to the city and the region. Job growth and continued increases in wages and salaries are an important component to reducing the number of individuals in poverty. The City and Commonwealth must prioritize workers earning a living wage!

Huang: In sum, we have a huge problem that represents a huge opportunity for us to make a difference for so many households that will have a positive impact on the city, and while this is a daunting challenge it is also an achievable task.

Epps: Yes. If we work together and commit to continued improvement in our public education systems (K-12), I believe Philadelphia will have a bright future. Determined, energetic, and intelligent Philadelphians will benefit Philadelphia and the region.

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Citations:

Philadelphia is ‘America’s poorest big city.’ Here’s what that actually means, WHYY Philly poverty rate sees largest drop in 10 years, but we’re still the poorest big city, The Philadelphia Inquirer