What's behind Philly's strong job market? | Crain's Philadelphia

What's behind Philly's strong job market?

  • Co-working spaces like Pipeline provide startups and entrepreneurs with flexible work space throughout the city. | Photo courtesy of the Philadelphia Department of Commerce

  • Philadelphia-based tech startup Curalate has been expanding at a rapid clip, forming partnerships with companies like Google and Facebook and opening additional locations across the country. | Photo courtesy of the Philadelphia Department of Commerce

Philadelphia has made dramatic employment gains since the depths of the Great Recession when the number of workers in the city dropped to 652,600. In the eight years since that 2009 low, the number of workers in the city has grown by more than 40,000—and prospects for adding more jobs are looking up this year as well.

Manpower’s quarterly survey predicts net employment in the Philadelphia metropolitan area will increase a net 19 percent in the third quarter, compared with 17 percent nationally and just 5 percent in the same quarter last year.

Part of the reason for the city’s ability to create new jobs may just be its ability to attract millennials. Among the top 30 major metropolitan regions in the U.S., Philadelphia is seeing the fastest growth in millennials, according to Matt Cabrey, executive director of Select Greater Philadelphia.

“This is due to many factors including affordability, walkability, quality of life, job and career growth and more,” said Cabrey, whose group promotes 11 counties around the city as part of the Philadelphia Chamber of Commerce.

Patrick Eiding, president of the Philadelphia Council AFL-CIO, which is made up of more than 100 local labor unions representing 200,000 workers, said gentrification in general is a strong draw, attracting millennials from the suburbs. That in turn has encouraged businesses to locate within the city limits.

“Employers want to have their businesses in places where people want to work,” Eiding said.

Since the 2009 employment low, the city has been gaining jobs steadily — 16,200 last year to bring the total to 699,600. This year is on pace to end with a gain of more than 12,000 jobs, the latest figures from the Bureau of Labor Statistics indicate. In the Philadelphia metropolitan area, which includes parts of South Jersey and Delaware, jobs are averaging 945,600, compared to 932,800 for 2016.

Construction, “eds and meds” and IT boost employment

The strongest sectors right now, according to Manpower’s quarterly survey, include construction, durable goods manufacturing, transportation and utilities, information, financial activities, business and professional services, and the fields of health and education.

“Philadelphia is in a much better position than in earlier years, especially in construction,” Eiding said. “Quite a few hotels are being built. The Comcast building is a huge project. Ports will be expanding in coming years. … We have natural gas development in a couple of terminals here. Construction [jobs] are not permanent jobs but permanent jobs will come from it.”

Lauren Cox, a spokesperson for the Philadelphia Department of Commerce, noted an increase in advanced manufacturing in the city and the region. That’s a positive development, she said, but ultimately may require fewer employees as technology grows more sophisticated.

Then there’s the “eds and meds” sector. Traditionally, education and health have been anchors for the city, according to Cox, and those institutions continue to add jobs, as Manpower’s survey indicates.

“During recent trade missions to Europe and Asia, the sectors that consistently received the most interest were education and life sciences/healthcare,” she said. “Much of this is driven by innovation and collaboration among public/private partnerships in the higher education space. Penn, Temple and Drexel are all examples of this in the city. We also consistently heard from tech companies looking to enter the U.S. market and bring innovative solutions to our urban infrastructure needs.”

Another strong sector locally is the information technology industry, which has seen an average growth rate of 4.4. percent since 2001, according to the Greater Philadelphia Chamber of Commerce.

“As other industries continue to become more reliant upon tech, we know that jobs in this sector will continue to grow,” Cox said. “Philadelphia is working to maximize this growth of jobs in this sector.”

Breaking ground on innovation

Two new projects underway will boost the tech industry locally. One is the new Comcast Technology and Innovation Center, which Cox said will add an estimated 1,500 direct jobs to Center City and hundreds more at companies that cluster around it.

Then there’s the Innovation District in the works, which she described as a “catalyst for business and talent attraction, as well as job creation.”

The district—sponsored by Comcast, Drexel University, Children’s Hospital of Philadelphia, FMC, Independence Blue Cross, PECO, University City Science Center, University of Pennsylvania, University of Pennsylvania Health System and Vanguard in 2015—spans parts of Center City and University City. A recent Brookings Institution analysis of the 1.5-square mile area said the city needs to promote coordination in the area’s advanced industry clusters, like precision medicine to help advance research and commercialize it. It also recommended leveraging resources to support training and mentorship programs as well as prepare low-income residents from surrounding communities for jobs within the district. Brookings said a strong connection between University City and Center City should focus on  developing stronger ties among employment hubs and major innovation assets.

A recent “win” for the district, Cox said, is the Cambridge Innovation Center’s new community space, set to open sometime next year. The startup incubator, which has locations around the country, will focus on supporting local entrepreneurs and startup founders.

Philly isn’t resting on its laurels

Despite the positives, Eiding noted that there still are “a lot of folks that are hard-pressed for work.” The answer, he said, is workforce investment and training programs, and an education system that provides Philadelphia children with the skills necessary to land those jobs.

“People don’t realize the association between companies and education,” Eiding said. “There’s a direct correlation. Training folks beforehand for industries will make them want to come here.”

The chamber of commerce, meanwhile, is focused on reducing burdens from taxes and regulations, supporting the creation of a talent pipeline and improving alignment of business and development resources, Cabrey said. He noted several tax policies in place designed to boost businesses, including Keystone Opportunity Zones, which allow for the tax abatements in certain areas, and Keystone Innovation Zones, which offer up to $100,000 in annual saleable tax credits to young IT and life science firms.

“Another positive change to our tax policy beginning in 2016 was the exemption of the first $100,000 in gross receipts for all businesses,” he added.

And finally, he noted that the city council recently established a special committee to review city code and identify outdated or confusing regulations that might impede business.

Mayor Jim Kenney, meanwhile, is actively recruiting businesses through the Gateway Philly program, offering $500,000 in incentives to companies that sign one-year leases and bring at least 20 employees into the city.

August 8, 2017 - 4:37pm