Philadelphia’s local economy before COVID-19 times was very optimistic. The wage tax revenue was projected to be stable. According to the city’s consultants, the number of employees grew considerably compared to the previous year. However, in 2021, the consultants projected a downward shift in employment as the state reaches full employment. Philadelphia real GMP growth will also slowdown in the following years from 1.9% to 2020 to 1.7% to 2021 to 1.2% in 2022 and onward. Collection from sales tax grew 6.3% in the first financial half of 2020 compared to the previous year, considerable growth in income, and a stable, supportive market. Tax revenue from realty transfer grew 14.5% and transferred tax 7.3% from the previous year. Philadelphia was well-prepared for the recession in 2008.
Projections from the COVID-19 impact will significantly influence the local economy. The three main sectors of Philadelphia are medical institutions, hospitality, and the education sector. Education and medication services are more stable and hold 32% of the total workforce. The leisure and hospitality sector makes for a tiny proportion of the workforce; however, it continues to practice intense social distancing. Wage tax revenue is the primary source of income for the city. There will be a sharp decrease in the revenue from the unemployment resulting from the pandemic.
COVID-19 is a present financial and medical crisis that continues to rattle the world. Even though the economies were strong in 2020, stay-at-home orders were issues. Travel bans were implemented. Schools and education intuitions were closed. Non-essential businesses were also closed, and customer chains and supply chain processes were disturbed. Massive layoffs and furloughs resulted in a considerable percentage of unemployment. Consumption shanked from consumer’s physical purchase as they preferred to purchase online.
Philadelphia Economic Growth Trends Forecast
The police department will maintain the scale of its force and continue to train new cadets. It will introduce unbiased training. Anti-racism training and body-worn cameras will be a part of the practice. The department intends to reduce overtime in the coming year and reduce court overtime as well. The managing director will restructure anti-violence efforts by launching the evidence-based initiative. There will also be fewer demolitions this year. The prison will also reduce spending to mirror the reduced prison population; eliminating vacancies will further reduce the running cost. One cadet will guard in place of two, and food and medical costs will also be reduced.
Health centers will remain open throughout the year to battle the pandemic and help further prevention and infections. Medical running costs will be reduced by reducing hours in the evening shifts. Legal and custodial positions are going to be eliminated. Vaccines will not be purchased from private funds for city employees. The awareness campaign regarding the health of the children will be curbed. A drug survey shall be delayed. A more effective approach towards bathrooms to prevent Hepatitis A from spreading will also be put in place. $9 from other resources will leverage $1 from local general reserves, so any reduced or cost cut from the city will impact the budget ten times.
The city authority will significantly contribute to the education sector by increasing funding from $30 million to $252 million. The school district faces vast gaps in its budget due to the pandemic that may result in elongated financial consequences. To aid this gap, the administration intends to increase the tax from real estate transactions. Hence, the Philadelphian children receive a quality education and avoid severe spending cuts in education in the future years. Community College of Philadelphia intends to launch the Octavius Catto Scholarship and other smaller programs.
Libraries and recreation centers will remain open but will stay operational for reduced offers as per COVID-19 guidelines. Social distancing and lack of funding will affect the summer programs this year. City pools will remain closed as well as musical gatherings. Libraries intended to focus on programs that focus on early childhood programs and labor development. Funds toward art programs, non-profits, and special events will either be reduced or eliminated. Offices of Arts, Creative economy, and City representatives shall be closed. However, they will remain operations to minimal functions. Furthermore, the Mural Arts Program and Museum of Art will face reduced funding as they showcase the ability to fundraise externally.
Federal legislation to fund affordable living situations and homelessness will aid the residents. This will let the city eliminate general funds and introduce specific funds directed at the office of homeless services. This will allow the funds to be used effectively. The city officials will prioritize providing homes, utilities, and essential repair services to prevent mortgage foreclosures.
The federal government allocates huge sums with grants, loans, and tax cuts to the local state governments. This support is needed more than ever before in this time of recession and encouraging inclusivity to prevent strikes and unlawful situations. Due to this reason, limited funds will be available to partnerships, organizations intended to attract international businesses, and store renovations. The Office of Workforce Development will be eliminated. Some resources and functions will transfer to the commerce department as mentioned in the future strategy regarding economic development.
Philadelphia Industries and Economic Areas
The most essential economic strong points of Philadelphia are as follows:
- Public Safety Sector
- Public Health Sector
- Education Sector
- Community Services and Facilities
- Recreation Centers
- Housing Sector
- Labor and Workforce Sector
- Administration Sector
The local authority intends to install a citywide information system to connect the city and digitize ease processes. Spending and activities have been identified that may not occur at this time because of the pandemic. Replacement of fire and police radios has been delayed as this would require gathering people in large gatherings. Programs and facilities have been consolidated and continued to be revised as they were opened at different points under the pandemic to adhere strictly to the COVID-19 guidelines.
Developing industries and first-world countries have started taking steps to recover from the present crises. Long-term effects will be diverse depending on the state of the nations.
Short-term responses foremost include health and firm public services to benefit the well-being of the community. Comprehensive policies must be set in place to accommodate long-term growth. The governance must be improved, and further investment in education and public health will be required.
Future economies need to be more resilient. This can be achieved by gathering human and physical capital and training them in times of need or whenever required. These kinds of opportunities will provide jobs and business ventures towards the near normal.
Long-term impacts from the pandemic include damaging of investment channels leading to fewer investments and depreciation of physical and human capital that might foreclose business. Loss of schooling will reduce the supply of competent labor and is most likely to strain the national workforce with accumulated unskilled and unemployed laborers. The potential national output of the economy will reduce significantly. Pre-existing shortcomings and vulnerabilities will surface and would also need attending-to before they snowball.
Philadelphia State Economic Growth Trends Forecast
The governor of Philadelphia intends to call the general assembly to allocate $145 million to compensation security fund regarding workers to support and rebuild the businesses most harmed by the pandemic.
The pandemic is responsible for significant workforce disruptions and layoffs, mostly affecting low-wage works, people of color and disabilities, and particular industries. The road to recovery is paved with strategic investments in the labor force, especially those affect by the coronavirus, to result in well-paying, stable, and secure jobs. The governor proposes an injection worth billions of dollars to support the workforce toward employment and remove barriers surrounding employment opportunities.
The governor intended to invest in public transport. The pandemic has also proven the digital divide present in the education sector of Philadelphia school. The Redevelopment Assistance Capital Program
has been created to gap such divide and to remove asbestos, lead, and other harmful material from schools when the students return.
The new administration intends to work closely with the federal government to broaden flood mitigation scope, removing contaminants from buildings, provide green infrastructure and reliable transportation facilities that complement road and bridge upgrades.
The governor is effectively pursuing to increase the minimum hourly wage rate from $12 with an annual increase of $0.5 to reach the minimum rate of $15 in the following five years. This increase in wage rate is significant than ever before when the essential workers are struggling to purchase food and provide a roof over their families.
The budget of the current year is intended to focus on the core services such as education and hospitality. It also wants to maintain fiscal stability to support a recessing economy. The targets set under the budget of the set five-year plan have been reached with thoughtful decisions without any assumptions provided by the department.
The government intends to recover funding cuts from the essential services. The decisions will be made with racial equality. The impact of the pandemic and its consequent results on people of color will be prioritized to remove any suffering.
The five-year plan revolves around philanthropic commitments by partnering with other parties to deliver funds and necessary essential services. The decisions will also be made considering public policy, input from departments, and other stakeholders involved. Efficiency, delays, and idle processes will be recognized.