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Issue #3 - May 6, 2019

POLICY BRIEF: Income inequality among Philadelphia's workforce

During recent budget hearings in Philadelphia City Council we learned of the efforts municipal departments are making to include underrepresented populations within their management teams. We note in particular City Council’s request for the Free Library to establish a committee on diversity and inclusion, SEPTA’s successful workforce inclusion initiatives, and the City of Philadelphia’s City as Model Employer initiative. The Economy League has long identified inclusion of women and persons of color within various industries and fields across the city as a challenge and opportunity; see the recent conversation about diversity in Philly’s tech scene with Technical.ly Philly, for example.

Inclusion is only the first step to a more equitable labor market. Using 5-year estimates from the 2017 American Community Survey, this week’s policy brief examines income differentials among traditionally underrepresented populations within the city’s workforce.

Top-line findings:

White households in Philadelphia tend to be wealthier than any other racial group, comprising 77% of households that made $200,000 or more in 2017, while Black/African American households tend to be the poorest, comprising 51% of households that made less than $10,000 in 2017
Large wage gaps persist for women and persons of color when compared to white males in the city, though the gap seems to have narrowed within the last two years
Philadelphia’s gaps are somewhat less pronounced for White and Black women than those in peer cities - such as DC, Baltimore, New York, and Boston

FIGURE 1: Income Distribution by Race

Source: Economy League

Using the most recent 2017 five-year estimates from the American Community Survey, we graphed Philadelphia’s income distribution by race and ethnicity. White households tend to be wealthier than any other racial group, comprising 77% of households that made $200,000 or more in 2017, while Black/African American households tend to be the poorest, comprising 51% of households that made less than $10,000 in 2017. The largest proportion of Latinx/Hispanic households (approximately 15%) are also found in the lowest income bracket.

FIGURE 2: Income Distribution by Ethnicity

Source: Economy League

Examining relative earnings by race, ethnicity, and gender, we found that large wage gaps persist for women and persons of color when compared to white males in the city, though the gap seems to have narrowed within the last two years.

FIGURE 3: Proportional Earnings by Race, Ethnicity, and Gender in Philadelphia

Philadelphia’s Income Distribution in Context

Finally, we compared relative earnings by race, ethnicity and gender in Philadelphia to peer cities such as Boston, New York City, Baltimore, and Washington D.C. and found a relatively consistent pattern of earnings stratified by race and ethnicity. (See Table 1.) Typically, White populations earn the most, followed by Asian populations, then Black/African American populations, and finally Latinx/Hispanic populations. Interestingly, gender stratification is much more pronounced among Whites than among Asian, Black/African American, or Latina/Hispanic populations, which saw smaller earning gaps relative to their male counterparts during these years.

The data suggest that Philadelphia’s gaps are somewhat less pronounced for White and Black women than those in the comparison cities. For example, in 2017 while White women earned $0.78 for every White male dollar (WMD) nationally, in Philadelphia White women earned $0.95 for every WMD; Black women nationally earned $0.62 for every WMD while Black women in Philadelphia earned $0.65 for every WMD. On the other hand, Asian males and females in Philadelphia fare significantly worse, relatively speaking, than Asians in peer cities or the nation as a whole. These findings may be a result of wider income distributions within these other geographies, which, other than Baltimore, tend to be richer overall than Philadelphia.

Regardless of these relative bright spots, the data show clearly that non-White populations have rarely earned above $0.75 for every WMD in Philadelphia, in peer cities, or in the nation as a whole. This is a reminder that we have a long way to go toward pay equity.

Source: Economy League

DROPPING KNOWLEDGE: Work & Equity

Opportunity Occupations Revisited: Exploring Employment for Sub-Baccalaureate Workers Across Metro Areas and Over Time | Federal Reserve Bank

This new report from Federal Reserve researchers in Philadelphia and Cleveland dives deep into the causes and consequences of economic polarization in the US. Causes include automation as well as increased levels of global trade and lower rates of unionization. While the current economic expansion might be historic in length, job growth has been either for high-wage jobs that require college degrees, or at the low-wage, low-skill end of the spectrum. To better understand these new labor market dynamics, the Fed has advanced the concept of “opportunity occupations”— jobs accessible to workers without a bachelor’s degree and typically paying above the national annual median wage.

The Geography of Brain Drain in America | CityLab

Workers with higher skills tend to move more frequently than those with lower skills. This has created a growing divergence between places based on their ability to attract, retain, and cluster highly educated and skilled workers and to develop high-tech startup companies. The states along the Boston–New York–D.C. corridor; on the West Coast; and Illinois, Texas, Colorado, Arizona, and Hawaii have performed the best. Those in parts of the Midwest, the Great Plains, New England, the Southeast, and especially the Deep South experienced the most brain drain.

FOR YOUR CONSIDERATION

Is America Missing 2.5 Million Women Workers? | Aspen Institute

Despite record low levels of unemployment, labor force participation has been dropping among both white men and women. However, men have recovered more fully from the impact of the Great Recession than women; research from Aspen suggests that there are as many as 2.5 million fewer women in the labor force than prior to the Great Recession, at a cost of $100 million a year in lost earnings to the economy. While in 1990 the US boasted the highest rates of female labor force participation among OECD countries, by 2010 it had been surpassed by many of them.

Women Did Everything Right. Then Work Got ‘Greedy.’ | NY Times

Women in the US have made enormous gains in educational attainment, yet gender gaps in earnings are huge. This is because the "returns to working long, inflexible hours have greatly increased. This is particularly true in managerial jobs and what social scientists call the greedy professions, like finance, law and consulting — an unintentional side effect of the nation’s embrace of a winner-take-all economy. It’s so powerful… that it has canceled the effect of women’s educational gains."

Why Wages Are Finally Rising, 10 Years After the Recession | NY Times

Though labor markets are as tight as they have ever been, wages have been stagnant for most of the recovery from the Great Recession. This month the Department of Labor reported that wages are finally rising, and in contrast to earlier in the recovery when most gains were concentrated at the top, over the past year low-income workers have experienced the fastest increases. One possible cause of the faster growth at the bottom: minimum-wage increases in cities and states across the country.

FOOD FOR THOUGHT

The economic argument behind the green new deal | MIT Technology Review
MIT economist Mariana Mazzucato discusses proposals for a Green New Deal, putting a positive spin on much-maligned industrial policy. For her, industrial policy is counterproductive when it is about subsidizing or boosting narrow sectors for political reasons. But broad direction setting is about making markets. "The mainstream economic framework sees policymaking as just fixing market failures. You’re waiting for something to go wrong, and then you bandage it up. But a green transformation needs to be more ambitious. It should be about co-creating, co-sharing markets alongside the private sector."