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October 2023

Philadelphia’s Quarterly Labor Market Report Prepared by Philadelphia Works, Inc.

Using the latest available data, this quarterly update offers insight into Philadelphia’s labor market, industry mix, and economic development. In 2018, Philadelphia’s institutional and community leaders collaborated to develop a comprehensive workforce development strategy. This document, Fueling Philadelphia’s Talent Engine, calls on Philadelphia Works, Inc. to serve as the city’s hub of labor market and economic reporting and analysis. Under this mandate, this quarterly report provides insight into key measures of economic activity, providing leaders across public and private institutions an easy-to-access update on how Philadelphia’s economy and labor force continue to evolve.

Contents Overall Employment Trends

Page 03

The most recent data available on Philadelphia’s economy.

Employer Demand

Page 10

Philadelphia’s Labor Force.

Page 16

Appendix: Detailed Tables

Page 21

Exploring recent trends in employer demand through job postings and other sources.

Demographic, social, and economic characteristics of Philadelphia’s labor force.

Detailed employment information for important industries and occupations in Philadelphia.

For more insight into Philadelphia’s labor force, economic characteristics, and the ongoing recovery from the COVID-19 employment crisis, visit the Philadelphia Works website. © 2023 Philadelphia Works | All rights reserved.

“Continued economic growth is critical to the future of our city and region, and is dependent upon a strong, skilled workforce.” Fueling Philadelphia’s Talent Engine

Executive Summary By Fall 2023, Philadelphia’s economy has emerged from the COVID-19 pandemic tasked with navigating the “new normal”. While overall employment has recovered at or beyond pre-COVID levels in most industries, Philadelphia business leaders & residents have been navigating economic uncertainty surrounding inflation, rising interest rates, and labor shortages. From this report, Philadelphia Works hopes to highlight a few main economic trends: • Summer 2023 saw an uptick in the unemployment rate in Philadelphia County. From June to August, the unemployment rate in Philadelphia County rose by 0.8 percentage points to reach 5.4%. In comparison, the unemployment rate had fallen 0.6 percentage points from January to June 2023. • Despite the uptick in the unemployment rate, the growing labor force in Philadelphia bodes well for the economy. The labor force grew by roughly 7,100 from June to August 2023 - over twice the amount added from January to June. • Inflation in Philadelphia as measured by the Consumer Price Index (CPI) stood at 3.9% in August 2023, well below the August 2022 reading of 8.1%. • While overall average wage growth has cooled in Philadelphia, the overall cost of labor (both wages and benefits) has risen in the region. The Employment Cost Index (ECI) in Philadelphia rose 6.6% year-over-year in the second quarter of 2023, compared to 3.9% year-over-year the same time last year.

Past and Present:

A Region on the Rise Over the past decade, employment in Philadelphia has witnessed strong growth. By February 2020, the total number of employed Philadelphians had grown by more than 120,000 individuals – a more than 15% increase – since 2010. In the over three years since the start of the COVID-19 pandemic, overall employment in Philadelphia has made a strong recovery. Many of Philadelphia’s largest industries are at or above pre-COVID employment levels, and Philadelphia’s overall labor force surpassed preCOVID levels by a significant margin in August.

5.4% Aug 2023 Unemployment Rate City of Philadelphia

745,900

While there may be a variety of factors driving total Aug 2023 labor force growth, in August 2023 the total number of Estimated Total Labor Force unemployed Philadelphians increase by over 5,000. City of Philadelphia Having unemployed remain in the labor force by actively +5,300 from February 2020 levels seeking work is much better than workers who stop participating in the labor force and become long-term unemployed. Figure 1: Labor Force and Total Employment in Philadelphia: January 2010 to August 2023

Source: Philadelphia Works Analysis of Data from the BLS LAUS (pulled 10/12/2023)

The New Normal

Figure 2: Unemployment Rate, February 2020 vs. August 2023

While Philadelphia’s overall employment levels suggest emergence from COVID-19 recovery, the Philadelphia economy is now facing new challenges resulting from inflation woes in the last year. For months, the unemployment rate remained low despite raising inflation, leading economists and businesses leaders to question how the economy would respond in the long term. Inflation peaked in Summer 2022, but Philadelphia’s unemployment rate remained below 6.0% for most of the summer. In 2023, the unemployment rate reached a low of 4.0% in April, before rising to 5.4% in August 2023.

Figure 3 Philadelphia Labor Force, January 2020 to August 2023

Source: Philadelphia Works Analysis of Data from the BLS LAUS (pulled 10/12/2023)

New Normal: Philadelphia Region Relative to other large cities, Philadelphia’s regional economy has proven to be resilient. Philadelphia is one of four top metros to have maintained positive job growth since COVID, despite having cooler year-over-year growth (Figure 5). Figure 4: Employment Change Relative to Pre-Pandemic Employment, February 2020 to August 2023

Figure 5: Relative Employment Change Year-Over-Year, August 2023

Table 1: Regional Employment by Industry Sector in Philadelphia MSA, August 2023

Source: Philadelphia Works Analysis of Data from the BLS, LAUS and CES (10/15/2023) 6

New Normal: Recent Unemployment Claims Following trends in Philadelphia’s official unemployment rate, Pennsylvania CWDS data suggests a recent uptick in initial unemployment claims. In the third quarter of 2023, there were roughly 14,500 initial unemployment claims, up from roughly 13,200 in the second quarter of 2022.

Figure 6: Reported Educational Attainment of Philadelphia Claimants, July to September 2023

In addition, third quarter unemployment claims totals stood at only about 7,500 in 2022.

Top Reported Occupations Home Health Aides Security Guards Warehouse Workers Customer Service Representatives Cashiers Stock Clerks & Order Fillers

Figure 7: Monthly Initial Unemployment Claims by Philadelphia Residents, Previous 24 Months

Source: Philadelphia Works Analysis of Data from the PA CWDS (pulled 10/15/2023)

Figure 8: Distribution of Philadelphia Businesses and Employment by Establishment Size, Q3 2022

10%

of all Employment is in Businesses with Fewer than 5 Workers

Over 60% of all Philadelphia businesses employ fewer than 5 workers. However, these firms make up just 10% of the city’s total employment.

62%

As of the most recent CWIA data, businesses staffing between 10-19 employees saw the largest growth in employment from the previous quarter (+3.1%). These businesses make up roughly 10% of all establishments in Philadelphia County.

of Philadelphia Businesses Employ Fewer than 5 Workers

Figure 9: Percent Change in Philadelphia Employment by Establishment Size Over Previous Quarter, Q3 2023 4% 2% 0% -2% -4% -6% <5

5-9

10-19

20-49

50-99

100-249 250-499 500-999

1000 & Over

Source: Philadelphia Works Analysis of Data from the PA CWIA (pulled 10/15/2023)

Figure 10: Occupational Employment Change by Median Wage in Philadelphia, 2022 to 2023

74% Of employment declines were concentrated among occupations with median wages lower than $25 per hour.

60% Figure 11: Occupational Employment Change by Typical Degree Requirements in Philadelphia, 2022 to 2023

Of employment declines were among occupations typically requiring no formal educational credential.

During the recovery from the Great Recession, occupational growth in Philadelphia was highly bifurcated by wage and education. Gains were concentrated among low- and highpaying opportunities, following a national pattern of growing income inequality. Declines in lower education and lower wage occupations were sharp, but have evened out.

Source: Philadelphia Works Analysis of Data from the Lightcast (pulled 10/15/2023)

Employer Demand:

Employer Demand: Overall Trends Philadelphia employers have shown recovering demand for labor over the last two years. However, this quarter saw a decline in job postings, following national trends of dampened demand. Lightcast scrapes local job postings to provide data on employer demand based on occupation, industry, and a variety of other details. According to the latest estimates, the total number of job postings in Philadelphia slightly rose in the third quarter of 2023. Postings had remained strong over much of 2022 despite persistent inflation, with the expected seasonal fluctuations.

53,600 Unique Job Postings this Quarter

+2,670 Change in Total Postings Over Previous Quarter

Figure 12: Monthly Job Postings in Philadelphia County, Previous 18 Months

Source: Philadelphia Works Analysis of Data from Lightcast (pulled 10/15/2023)

Top Posting Employers University of Pennsylvania Comcast Temple University Health System Children’s Hospital of Philadelphia PEN American Center Motion Recruitment Penn Medicine City of Philadelphia UnitedHealth Croup

Top In-Demand Certifications

Top In-Demand Skills

Driver’s License

Project Management

Registered Nurse

Marketing

First Aid CPR

Nurse

Basic Life Saving (BLS)

Auditing

Certified Public Accountant (CPA)

Accounting

Basic Cardiac Life Support

Finance

Advanced Cardiac Life Support (ACLS)

Data Analysis

Source: Philadelphia Works Analysis of Data from Lightcast (pulled 10/15/2023)

Employer Demand: Wage Growth in Pennsylvania Statewide*, Leisure and Hospitality stands apart as having the strongest year-over-year wage growth as of August 2023, whereas Educational and Health Services and Trade and Transportation continue to rank bottom in terms of year-over-year growth.

Figure 13: Pennsylvania Year-over-Year Wage Growth, August 2023

However, overall private wage growth in Philadelphia County has slowed this summer, suggesting the Fed’s efforts to calm inflation with interest rates has worked.

Table 2: Year – Over – Year Change and Most Recent Average Salary, Pennsylvania August 2023 Year-Over-Year % Change

Year-Over-Year Change

Most Recent Average

Leisure and Hospitality

4.7%

+$0.87

$19.38

Finance and Insurance

3.8%

+$1.68

$46.40

Mining, Logging, and Construction

3.2%

+$1.17

$37.62

Manufacturing

2.9%

+$0.90

$31.77

Information

2.3%

+$0.96

$42.61

Professional and Business Services

2.0%

+$0.77

$38.46

Private Employment

1.9%

+$0.57

$30.76

Trade and Transportation

1.7%

+$0.44

$26.15

Education and Health Services

1.6%

+$0.40

$26.00

Industry

*Data for wage growth by industry is reported statewide due to limited availability at a local level

Source: Philadelphia Works Analysis of Data from BLS CES (pulled 10/12/2023)

Employer Demand: Wage Growth

Figure 14: Employment Cost Index, Wages and Salary, Year-OverYear Change by Quarter

Private wage growth and the Employment Cost Index (ECI) are two ways to measure the cost of labor. While average wages have cooled in Philadelphia, the ECI in has risen sharply in recent months. The ECI is the primary metric used by the Federal Reserve to monitor inflation because it considers the overall cost of labor (wages and benefits), instead of just average wages. A rising ECI is a sign of potential inflationary pressure. Rises in the ECI may lead to employers increasing their prices to offset the increased cost of labor. Figure 15: Year-over-Year Increase in Average Hourly Wage, All Private Employment, 2022 to Present

Source: Philadelphia Works Analysis of Data from BLS, ECI and CES (10/15/2023)

Employer Demand: Inflation

Figure 16: Year-over-Year Change in Core vs. Goods Inflation, Philadelphia Metro

Like the United States, Philadelphia battled record high inflation in the summer of 2022. Since the start of 2023, however, overall inflation as measured by the Consumer Price Index (CPI) has cooled in both Philadelphia and the United States. Beyond the CPI, economists can separate inflation between core goods and services to better understand inflation’s impact. In the Philadelphia metro area, there was a rotation between core and goods inflation between 2021 and 2022, where services inflation rose sharply to overcome core goods. While services inflation remained above core goods in 2023, they both cooled from last summer’s readings.

Figure 17: Bimonthly Year-Over-Year Inflation According to the Consumer Price Index, 2021 to Present

Source: Philadelphia Works Analysis of Data from BLS CPI (pulled 10/15/2023)

Resident Workers:

Resident Workers: Philadelphia’s Labor Force While Philadelphia’s labor force has grown in recent years, employment outcomes vary by race, ethnicity, and educational attainment. Using data available from the American Community Survey, this section presents the demographic characteristics of Philadelphia’s workforce. These figures represent individuals living in Philadelphia, regardless of where they work. By age and binary sex, individuals between the ages of 25 and 34 make up the largest portions of Philadelphia’s population and labor force. For both men and women, labor force participation among these age cohorts is between 80% and 87%, higher than the overall rate of 64.2%.

Figure 18: Population and Labor Force Participation by Age and Binary Sex, 2021 Female

Male

Long-term growth in the city’s labor force has been driven by an increase in participation among women and an increase in population among individuals 25 to 34. Again, these figures represent Philadelphia residents and therefore do not capture workers commuting into the city, a demographic that is much more likely to be older.

Source: Philadelphia Works Analysis of Data from the ACS, US Census Bureau (pulled 10/15/2023)

62%

Resident Workers: Philadelphia’s Labor Force Residents of color are more likely to be out of the labor force and unemployed. Among American Indian, Asian, Black and African American, and Hispanic or Latino residents, labor force participation was much lower, and unemployment was much higher, than for their white peers.

Labor Force Participation Rate Among Black and African American Philadelphians in 2021

Figure 19: Rates of Unemployment and Labor Force Participation by Race and Ethnicity, 2021 70% 60%

25%

75% 60%

20%

63%

61%

60%

20%

50%

15%

13% 40%

10%

30% 6%

20%

Uneployment Rate

Labor Force Participation Rate

80%

10% 0%

0% American Indian

Asian

Black or African American

Labor Force Participation

Hispanic or Latino

Wh ite

Unemployment

Figure 20: Rates of Employment and Labor Force Participation by Race, 2021 Employed

37%

Labor Force

39%

Wo rking Age Population

58%

Asian

47%

Black or African American

45%

Other Race or Multiracial

43%

Wh ite

Source: Philadelphia Works Analysis of Data from the ACS, US Census Bureau (pulled 10/15/2023)

52%

Resident Workers: Philadelphia’s Labor Force By educational attainment, individuals with less than a bachelor’s degree are more likely to be unemployed and less likely to participate in the labor force. For those with less than a high school diploma, employment outcomes are significantly worse.

Labor Force Participation Rate Among Philadelphians with less than a High School Diploma in 2021

Figure 21: Rates of Unemployment and Labor Force Participation by Educational Attainment, 2021 Labor Force Participation Rate

100%

90% 80%

14%

12%

78% 11%

68%

60% 50%

14%

90%

70%

16%

10%

53%

40%

30% 20%

Unemployment Rate

While Philadelphia has seen great improvements in educational attainment over the past decade, more work is needed to both upskill residents for available opportunities and ensure that lower-skilled employment opportunities are high-quality.

10% 0%

0% Less than High School Diploma

High School Diploma or Equivalent

Some College or Associate's Degree

Labor Force Participation

Bachelor's Degree or Higher

Unemployment

Figure 22: Rates of Employment and Labor Force Participation by Educational Attainment, 2021 Wo rking Age Population

11%

Labor Force

27%

Employed

26%

30%

23%

24%

35%

41%

43%

Less than High School Diploma

High School Diploma or Equivalent

Some College or Associate's Degree

Bachelor's Degree or Higher

Source: Philadelphia Works Analysis of Data from the ACS, US Census Bureau (pulled 10/15/2023)

Resident Workers: Philadelphia’s Labor Force Philadelphia is intrinsically connected to its suburban neighbors. Nearly half of all primary jobs in the city are held by workers that commute from outside the city limits. Commuting patterns have greatly changed in the years since COVID-19, however Census LODES data for 2021 is yet to be released. Notably, according to 2021 ACS 5-year estimates, Philadelphians are utilizing public transit at a rate still much lower than pre-COVID. Figure 23: Inflow-Outflow of Workers and Residents by Density of Employment in Philadelphia, 2019

400,000

15% Of Resident Workers Relied on Public Transportation in 2021

17% Of Resident Workers Had No Access to a Vehicle in 2021

Live and Work in Philadelphia

340,000 Commute In

266,000 Commute Out

Source: Philadelphia Works Analysis of Data from the ACS, US Census Bureau (pulled 10/15/2023)

Appendix:

Appendix Table 1: Largest Detailed Industry Sectors in Philadelphia, Q1 2023 From the Quarterly Census of Employment and Wages, this table shows the 15 largest industry sectors by total employment. These data are released on a roughly six-month delay. Data pulled 10/12/2023

Appendix Table 2: Most Specialized Detailed Industry Sectors in Philadelphia, Q1 2023 From the Quarterly Census of Employment and Wages, this table shows the 10 most specialized industry sectors by total employment. These industries are disproportionately important to Philadelphia’s economy. These data are released on a roughly six-month delay. Data pulled 10/12/2023

Source: Philadelphia Works Analysis of Data from the BLS, QCEW

Appendix Table 3: Detailed Industry Sectors in Philadelphia with Largest Year-Over-Year Growth, Q3 2 From the Quarterly Census of Employment and Wages, this table shows the 10 industry sectors with the largest annual employment growth. These data are released on a roughly six-month delay. Data pulled 10/12/2023

Appendix Table 4: Detailed Industry Sectors in Philadelphia with Largest Year-Over-Year Declines, Q1 2023 From the Quarterly Census of Employment and Wages, this table shows the 10 industry sectors with the largest annual employment declines. These data are released on a roughly six-month delay. Data pulled 10/12/2023

Source: Philadelphia Works Analysis of Data from the BLS, QCEW

Appendix Table 5: Largest Occupations in Philadelphia with Employment Change from 2019 to 2023 Based on estimates derived from the Quarterly Census of Employment and Wages, this table shows the 25 largest occupation by total employment. These data are released on a roughly nine-month delay. Data pulled 10/12/2023

Table 1: Regional Employment by Industry Sector in Philadelphia MSA, November 2021

Source: Philadelphia Works Analysis of Data from EMSI Burning Glass

For comments or questions about the contents of this document, please reach out to data@philaworks.org.

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Philadelphia's Quarterly Labor Market Report