By: Jack Grauer
Who could argue against an idea like “economic recovery?” It sounds so macho and rational in a Roosevelty, let’s-turn-this-Great Depression-around way. And yet it’s vague enough to justify basically anything policy makers feel like doing.
In 2011 and 2013, Former Mayor Michael Nutter poo-pooed rounds of paid sick leave ordinances, arguing they’d potentially hinder the economic recovery. Current Mayor Jim Kenney allocated public funds to the local tourism industry in 2014 and justified it as support for the economic recovery.
But unless you make money off of owning stuff or by investing, it’s unlikely that you’ve recovered much of anything in Philly lately. Actually, you probably work harder now for less money. And you’ve also likely found that your money isn’t worth as much as it used to be when it comes time to pay your rent or mortgage.
Politicians and media usually discuss economic recovery in terms of more jobs. And yeah, unemployment’s definitely down. More Philadelphians work now than they did in 2008. We’ve actually seen a big uptick in the number of multiple job-holders, according to the Bureau of Labor Statistics.
The Philadelphia Inquirer’s got investigative pieces about how wages have stagnated in Philly while it’s gotten more expensive to eat and breathe at the same time. And just because of the way America works, poor people feel this most directly.
City Council President Darrell Clarke says similar things in public relations materials: The economic recovery “has yet to touch the people who are most in need of steady employment,” etc. Again, this is all true. But there’s also more to it than that.
Rental cost per square foot for a studio apartment in Philly has doubled since 2011, according to real estate market analysis firm Zillow’s data. Philly’s price-to-rent cost ratio has also increased. This means landlords now profit more off the same dollar of property than they did in the mid-2000s.
Census data show that tens of thousands more Philadelphia renters now qualify as “cost burdened” or “severely cost burdened” than they did in 2007. Cost burdened households pay more than 30% of their income on housing. Severely burdened households pay more than half.
But homeowners’ fiscal situations have also worsened. Philadelphia homebuyers now borrow almost twice as much against their income to buy property than in the recent past. Home Mortgage Disclosure Act data show the median leverage ratio of home mortgage loans almost doubled between 2004 and 2016.
That’s not to say we should feel especially bad for homeowners all of a sudden or something. Rather, it’s to say the story Clarke and The Inquirer tell about how the economic recovery hurts poor people is incomplete. Pretty much everyone’s worse off financially, nowadays.
If any single group feels no negative effects from the economic recovery, it’s the real estate industry itself. They make out splendidly as long as money moves and properties continue to change owners.
Incidentally, both Clarke and The Inquirer work closely with the real estate industry. Clarke funded 42% of his 2011 election campaign with donations from the real estate sector. Zillow and The Inquirer co-launched “the nation’s largest online real estate advertising network” in 2008, according to the press release.
From the real estate sector’s perspective, the best story politicians and media could tell is, “Yes, look, what’s happening here hurts poor people. But hey, why should that turn rich and middle-income people off from the idea of moving to and/or buying property in Philly?”
Art by John L Hill