A few weeks back, I started to examine Philadelphia’s economic future in a post you can read here. This is the second part of a series that will ultimatly make reccomendations to our city's political leadership on how to create a high-road economy in Philadelphia that has a tax-base sufficient enough to support citizens and businesses well into the future.

One of the most common ways that we Philadelphians have measured the relative health of our city has been through an examination of population growth. For instance, the Inquirer devoted front page space, in this article a couple weeks back, to the announcement that Philadelphia was going to maintain its spot as the nation's 5th largest city, having successfully kept Phoenix at bay one year longer. The implication of the Inky story was that Philadelphia was doing something right by not losing as many citizens as it had the year before.

And, it certainly is true that the city has bled population over the past 60 years. There are a lot of reasons for this population loss. However, regardless of how many Philadelphians have emigrated from the city, examining population growth or decline alone is not an accurate way to measure the health of the city’s economy.

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In order to fully understand the health of our city, you need to take into consideration the state of its economy and very specifically the wages paid to Philadelphians, in addition to population growth and loss. A historical perspective on these issues is necessary for a fuller discussion to be had.

The city and county consolidated in 1854 forming the boundaries of Philadelphia as we know it today. During this period of time, Philadelphia began to experience huge increases in population, mostly from immigrants, that were able to fuel extensive industrial growth. Philadelphia got its nickname as the “workshop of the world” because unlike Pittsburgh’s steel mills or Detroit’s auto factories, Philadelphia was an industrial city with a incredibly diverse product output.

Philadelphia’s largest industry during the manufacturing hey-day was textiles. However, we were also known for producing iron, manufacturing steam locomotives, baking bricks, refining sugar, rolling cigars, building ships and much more. The golden era of Philadelphia’s industrial economy allowed the city to grow rapidly because the manufacturing economy constantly demanded new workers who often became new city residents.

The city’s population increased ten fold in just 100 years from 121,376 residents in 1850 to over 2 million in 1950. The largest period of growth was from 1850-1860 with the influx of the Irish Potato Famine generation in which the city’s population almost tripled. There were many other large waves of immigrants from Ireland, Italy, Germany, Poland and the former USSR (and other countries in lesser numbers) well into the 40’s which along with the post-war baby boom, brought Philadelphia’s population to a an all-time high of 2.07 million people according to the 1950 census(an interesting footnote to this population high is that 800,000 or more than 1.

In 1950, 10% of Philadelphia was still farmland. Only 18.3 % of the city’s population in 1950 identified as people of color. Of the city’s 2.07 million residents, over 800,000 were under the age of 18 (1/3 of the city's population as compared to 1/4 today) . More than 1 in 3 Philadelphians worked in some kind of manufacturing job. The unemployment rate was 6.2% and there were 3 times as many men as women in the workforce.

In 1950’s Philadelphia, most households relied on only one wage earner and still managed to enjoy a better quality of life than many in Philadelphia today. This economy was reliant on hundreds of thousands of manufacturing jobs that paid well above minimum wage or even what we would today call a living wage.

This tale should so far be vaguely familiar to all readers. After all, it’s not that much different than other major American cities. What is instructive though, is that Philadelphia’s population grew in proportion to the demands of its economy. Similarly, its population decreased as the manufacturing economy began to contract. And, contract it did.

In 1950, 35% of the city’s workers were employed in manufacturing jobs. In 1980, that number had been reduced 20.9% and today, only 8.8% of Philadelphians work in a manufacturing job, almost half the percent of workers in manufacturing jobs statewide. This decline was beyond the control of just about anybody in Philadelphia, except maybe the captains of industry. The same advances in technology that had made the industrial era possible in the first place were allowing corporations to move their operations wherever they could find the cheapest labor.

Of course the decrease in population in the city is not exclusively related to a loss of manufacturing work. The carrot and stick methods (the carrot being attractive mortgages and other home loans and the stick, which came later, was the practice of redlining urban neighborhoods) developed by auto manufacturers, insurance companies and the US government, among others, who conspired to create the suburbs and a whole new kind of market for goods, obviously had a huge role in depopulating the city.

However, regardless of what caused depopulation in the 60’s, what’s important to note today is that repopulation alone cannot replace the revenue that came with an era when Philadelphia workers earned proportionally more than they do today.

According to the US Census Bureau Philadelphia median household income declined by 12% from 1969 to 1979. It wasn’t until 1989 that median household income got close to 1969 level, but even today, in inflation adjusted terms, median household income is still lower than it was in 1969.

This is an important point and one that is often obscured: simply replacing Philadelphia’s lost population can not restore the kind of prosperity we enjoyed in 1950’s and 1960’s when the wages paid to all workers were proportionally much higher. The change to a service economy and the loss of the wage quality that went away with manufacturing jobs is the real problem that ails the city today.

If we were able to magically add a million new residents to the city tomorrow, we wouldn’t have enough jobs to offer them. Adding population without a strategic economic development plan would result in a greatly increased demand for city services without a corollary increase in city revenue via the wage tax.

This is an idea that needs to explained in more detail and to which I plan to devote my entire next post. Stay tuned…