How hard has pandemic hit Philly economy? Pew study uncovers, projects answers

Shrinking job market, working from home will impact the city for years beyond, the study says

PHILADELPHIA (KYW Newsradio) — A study from the Pew Charitable Trusts showed not only how the COVID-19 pandemic impacted the Philadelphia economy, but gave researchers information to make future projections about the city's economic climate.

Larry Eichel, senior adviser for the Philadelphia Research and Policy Initiative at the Pew Charitable Trusts, said it was clear that a shrinking job market coupled with employees working from home had a negative impact on the city's economy.

"What we really wanted to do here was try to quantify it,” Eichel said. "We just really wanted to sort of lay out what's at stake here."

He said that remote work by suburbanites is considered a particular threat to the economy. A look at employment patterns showed that employees who were working from home hindered the Philadelphia city government's ability to raise revenue.

The study estimated that between now and 2026, Philadelphia will lose about $572 million from nonresident wage taxes, losses that would not have happened had the COVID-19 pandemic not occured.

"When those people don't come into the city, they don't pay the parking tax. They don't buy things. They don't go to restaurants. They don't go to bars,” Eichel explained.

“We also think that there's ultimately a risk that their employers will, by creating suburban locations that they can attach those workers to, exempt them from the wage tax.”

He explained that researchers mapped out four possible scenarios, based on varying numbers of jobs generated by the Philadelphia economy.

Eichel said that from the worst-case to the best-case scenarios, there was a $1.6 billion difference in revenue over the course of five years.

"To put that in perspective, that's about 7% or 8% of the city's local revenue,” he explained.

Eichel said that while the outlook for 2022 is closer to the bottom of their projections than the top, he explained that a worst-case City of Philadelphia budget scenario won't likely be felt in at least the next year or two.

"The city has said that it is going to be using all of the $1.4 billion it received from the federal government under the American Recovery Plan," Eichel said.

The study warns that in the long term, the loss of revenue could lead the city to have to make hard decisions, either by cutting expenditures or raising taxes.

Click here for the Pew Charitable Trusts study.

For more from KYW Newsradio:
Download the Audacy App
Listen live
Listen on your smart speaker

Featured Image Photo Credit: Getty Images