Pew report: City's middle class is shrinking

Lifelong Philadelphian Linda Watts, who raised her children in the city, moved to Hatboro in 2006. Crime had risen in Olney. MICHAEL BRYANT / Staff Photographer
Lifelong Philadelphian Linda Watts, who raised her children in the city, moved to Hatboro in 2006. Crime had risen in Olney. MICHAEL BRYANT / Staff Photographer
Posted: February 26, 2014

The Philadelphia middle class, a backbone of economic vitality that once made up the majority of residents in most of the city's neighborhoods, has declined in steep numbers since 1970, from 59 percent to 42 percent by 2010, according to a report released Monday, the first of its kind.

The precipitous decline of adults within this long-celebrated class occurred widely across the city and most sharply before 2000, sparing only chunks of Far Northeast Philadelphia and Roxborough and smaller pockets elsewhere. Those areas remained majority middle-class as of a few years ago, said the Pew Charitable Trusts, which spearheaded the study.

The data capture what has been sensed and dreaded by policymakers for years: Philadelphia is decidedly poorer than when it was a manufacturing powerhouse, losing even a greater share of higher-taxpaying middle-class residents than the nation as a whole, and failing even to see increases in its upper-class population to match other cities that fared better.

Whether middle-class Philadelphians fell into a lower-income class, moved into the suburbs, or died is not shown by Pew's analysis, as researchers have found such detailed tracking to be elusive.

But the share of lower-class Philadelphians spiked from 30 percent to 47 percent as the middle class shrank, underscoring the sheer scope of the city's declining tax base and growing impoverishment. The percentage of upper-class Philadelphians went from 11 percent to 10 percent during the four decades.

A recent snapshot of Philadelphia compared against other cities showed that only Baltimore and Detroit had higher percentages of lower-class households, and smaller percentages of upper-class households, than Philadelphia, Pew found.

Academics and others said Philadelphia's treasury was a major casualty, as was the chance of upward mobility for those who remained in or below the city's shrunken middle.

That is because middle class residents pay more, spend more, use fewer services against the taxes they pay, and are a stepping-stone for those seeking to climb the income ladder.

"We want people to understand that the middle class in Philadelphia has changed in dramatic ways," said Larry Eichel, a director of the Philadelphia program of the Pew Charitable Trusts, which ran the study. "The decline was quite large - and larger than what you would see nationally."

Harvard economist Nathaniel Hendren said places with a higher share of middle-class residents seemed to offer the richest opportunities for children to do financially better than their parents, according to research.

In that regard, Philadelphia's data are unsettling.

"One would want to be concerned that the same factors that are causing the middle class to erode would be potentially leading to lower rates of upward mobility," said Hendren, when told of the Pew findings.

Alan Greenberger, the city's deputy mayor for economic development, was not startled by the findings. "This shouldn't surprise anybody," he said. "The real question is what do we do going forward."

Philadelphia's 17 percentage-point drop was severe against the nation as a whole: The U.S. middle-class population fell 10 percentage points during roughly the same four decades, from 61 percent to 51 percent between 1971 and 2011, according to an earlier survey by Washington-based Pew Research Center.

The extent of the change was felt across a wide swath of local geography. Eight of every 10 census tracts in the one-time industrial powerhouse were majority middle class in 1970, Pew found. By 2010, only three of every 10 were, with entire sections of the Lower and Great Northeast seemingly hollowed out, as one example.

Pew defined middle class as adult Philadelphians in households with incomes of $41,258 to $123,157, in 2010 dollars. Those figures were based on percentages of the median income for the region, to better reflect local incomes and cost of living.

Philadelphia's loss occurred during the city's well-known exodus of hundreds of thousands of residents and jobs as manufacturing took a backseat in the American economy. Almost all of its suburban county neighbors, meanwhile, enjoyed big bumps in employment, population, and household income during the years studied.

The profile of the middle class in the city also changed radically. The bar of entry has risen for anyone aspiring to be in the group long heralded as embodying economic self-sufficiency and opportunity.

In 1970, 44 percent of the city's middle class lacked even a high school diploma. By 2010, only 8 percent did. Similarly, only 18 percent had any college education in 1970. Forty years later, fully half did, Pew found.

And rather than 33 percent of the middle class working in predominantly manufacturing and construction jobs - the single largest category within the middle class of 1970 - 53 percent now hold jobs in finance, insurance, real estate, business, and professional services, compared to just 28 percent four decades ago.

"The penalty for those who don't complete high school is getting bigger and bigger," said David Elesh, an associate sociology professor at Temple University, who studies quality of life and economics in the region.

The Pew findings, Elesh said, were "not a big wow," given that the city's once-formidable manufacturing base steadily eroded through the 1970s and beyond.

"I have no doubt that what's going on in Philadelphia is more severe than the nation as a whole," he said.

Elesh and others said migration, death, and poverty were the factors behind Philadelphia's big middle-class loss, particularly as higher-wage blue-collar jobs disappeared, city schools became more unattractive to middle-class residents, crime rose in once-quiet enclaves, and better jobs began cropping up farther away from the city.

Helping prove this is lifelong Philadelphian Linda Watt, 63, who moved to Hatboro a few years ago. The Kensington native and longtime Olney resident works as a patient accounting representative for Penn Health System in Center City, but decided to leave.

Crime had risen considerably in Olney by the time she moved out in 2006. Her husband had died a few years earlier, and Watt wanted to live near her daughter - a woman raised and educated in Philadelphia, but now, like many of her generation, making a home in the suburbs.

"I moved because my children didn't live near me," said Watt.

With Teamsters truck-driving wages from her husband and part-time cash from Watt's old job at a (now-defunct) Clover store in the neighborhood, the family earned enough for decades to live comfortably middle-class lives in Olney, a largely rowhouse neighborhood off Roosevelt Boulevard.

Watt's son and daughter both attended Philadelphia public schools, so there was no need for tuition - an increasingly costly burden taken on by middle-class Philadelphians as schools continue to deteriorate because of inadequate funding.

Pew said its polling found that crime, job, and school issues were top on the minds of middle-class residents contemplating leaving Philadelphia.

A third (34 percent) of today's middle class said they definitely or probably would leave the city in five to 10 years, Pew found.

Along with ample reason for concern, the study found positive change for some. In 1970, only 26 percent of the city's middle class was African American. By 2010, 42 percent had joined the group. (Whites made up 74 percent of the city's middle class back then, compared to 54 percent more recently.)

Among them is 30-year-old Jason Hines of North Philadelphia. Hines said he was comfortably middle class, working 72 hours a week in Center City as both a full-time security guard and part-time housekeeper in two skyscrapers.

A graduate of a two-year culinary-arts program at the Art Institute, he has been busy paying off what he said were $62,000 in student loans, all in the hopes that he may one day run his own restaurant.

"Right now, I owe 38 [thousand] and some change," Hines said.

That's not to say that Hines saw it all as rosy. The U.S. economy is still struggling to return lost income to all but the very wealthy following the global financial meltdown of 2008. And none of Pew's findings took into account the uncommon debt burdens confronting today's younger adult households.

"The economy is bad," Hines said. "There's not that many jobs for people who are trying to work."

His own siblings have encountered mixed results in trying to get settled financially, he said.

"I just work and try to get through day by day," Hines said.

Eichel said it was Pew's hope that policymakers would seize the findings to explore ways of retaining the households in Philadelphia's shrinking middle.

"Because the drop has really slowed down, there's an opportunity to keep that population here," Eichel said. "This is tough stuff because there aren't a lot of easy answers to how to do it."

Greenberger said the city would remain focused on trying to attract businesses that could provide middle-class wages, partly to help retain the new and younger residents who have helped reverse the city's population decline in recent years.

"We're seeing a reemergence of the population," he said. "But it's a slow curve."


BY THE NUMBERS

59

Percentage of Philadelphia's adult population in 1970 that was considered middle class.

42

Percentage of Philadelphia's adult population in 2010 that was considered middle class.

See graphics showing the decline in Philadelphia's middle class over the years, A10.


mpanaritis@phillynews.com

215-854-2431

@Panaritism

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