#CityCloseUp, Philadelphia: In America’s Birthplace, is Innovation Benefitting the Inner City?

Written by Kathleen O’Shea

Philadelphia may be associated with history and tradition, but the city is by no means clinging to the past. The home of the nation’s first library, hospital, medical school, and zoo continues to innovate and challenge the status quo. Building on this legacy, Philadelphia is increasingly recognized for the supportive environment it offers entrepreneurs.

Damian Salas, assistant dean of Drexel University’s Close School of Entrepreneurship, recently described Philadelphia’s start-up community as “coming of age…cement[ing] a foundation of a start-up culture that will rival other regions, like New York, Boston, and Austin.”

But are the benefits of this entrepreneurial and innovative environment reaching all of Philadelphia’s residents? Are inner city residents benefiting equitably from Philadelphia’s growth?

According to ICIC’s analysis, five percent fewer people are living in Philadelphia’s inner city in 2014 than in 2009. Several census tracts that were in the inner city in 2009 have improved and no longer meet our criteria. These are largely concentrated in the neighborhoods surrounding Center City, like Graduate Hospital and Bella Vista, and along the Delaware River in neighborhoods like Bridesburg and Port Richmond—all areas well-recognized for their rapid change.

But it is not all good news. As our map shows, the “inner city” still represents a large part of the city, and over half of Philadelphia’s population lives there (54 percent in 2014). And poverty and unemployment have worsened. The share of people in the inner city living in poverty increased from 34 percent in 2009 to 38 percent in 2014. In the same period, unemployment increased from 17 percent to 21 percent.

The City of Philadelphia recognizes the challenges of its inner city and since 1999, ICIC has been a partner on several economic development initiatives. In 2009, ICIC partnered with the Philadelphia Industrial Development Corporation (PIDC) to create a plan for expanding and retaining industry in the city, protecting employment opportunities and tax revenue in the sector, and evaluating the supply of industrially-zoned land to meet projected needs. By leveraging Philadelphia’s industrial clusters, there is abundant opportunity to provide good jobs to inner city residents. Paying $50,000 a year on average, industrial jobs offer family-supporting wages and typically include benefits packages. Though often city residents experience barriers to employment because of low education levels, industrial jobs offer career pathways to economic advancement—jobs range from entry-level apprenticeships to highly-skilled technical positions.

In addition to a focus on industry in its economic development initiatives, Philadelphia has also been a hub of thought and practice leadership around anchor institutions. When the University of Pennsylvania was looking to develop a comprehensive plan for economic and community development in the distressed West Philadelphia neighborhood, then President Rodin utilized ICIC’s framework for anchor institutions to help guide the university’s efforts. Penn’s West Philadelphia Initiative was critical to improving the neighborhood’s housing, schools, public safety, real estate, and business environment. It is widely cited as a best practice for other anchor institutions looking to revitalize their surrounding neighborhoods.

In recent years, Philadelphia has continued to build on its legacy as an innovator when it comes to anchor institutions and economic development. In 2014, the City of Philadelphia’s Office of the Controller launched the Anchor Procurement Initiative with a report outlining the significant impact on the city’s economy if its anchor institutions used more local businesses for their goods and services.

Philadelphia recognizes that the city’s economic growth depends on supporting local businesses, including those in the inner city. Philadelphia’s innovative environment was recently recognized by the Knight Foundation’s Knight Cities Challenge, which provides grants to visionaries across the country looking to change the future of their cities. In 2016, four of the 37 winners were in Philadelphia (behind only Detroit as the city with the most winners). Winners included The Institute of Hip Hop Entrepreneurship, a job training initiative for low-income youth looking to pursue a career in the music industry, and 20 Book Clubs, 20 Cooperative Businesses, which will launch book clubs in 20 Philadelphia neighborhoods for participants to study cooperative businesses and form their own.

ICIC has also been engaged in efforts to support inner city businesses in Philadelphia. With the support of Bank of America, Santander, Drexel University, and Senator Vincent Hughes, ICIC’s Inner City Capital Connections (ICCC) program returned to Philadelphia for the third consecutive year on June 23, supporting over 200 businesses in the city throughout the program’s tenure. ICCC offers executive education and access to capital to inner city companies looking to grow their businesses.

Additionally, ICIC partners with Goldman Sachs 10,000 Small Businesses to offer capital and education programming each year to entrepreneurs in Philadelphia. “Goldman Sachs 10,000 Small Businesses has provided Philadelphia with an entrepreneurial boost demonstrated in the job creation and increased revenues our small businesses are already showing,” said former Mayor of Philadelphia Michael A. Nutter. “It has also helped executives at these small businesses to network, share resources and collaborate so they can handle larger projects.”

The impact of Philadelphia’s businesses on the inner city continues to be recognized. At ICIC and FORTUNE’s 2015 Inner City 100 Awards, five Philadelphia firms were honored as being among the fastest growing inner city companies in the country. One Philadelphia digital marketing firm, Seer Interactive, was placed on the list for the second consecutive year. Boasting nearly $9.5 million in revenue in 2014, Seer Interactive is a leader in the Search Engine Optimization (SEO) industry, with clients including Linkedin, Harvard University, Crayola, and Sunoco. The company continues to have great impact on its community, encouraging employees to participate in volunteer work, and hiring 50 percent of its employees from the inner city.

It is evident that Philadelphia is a leader among peer cities in its efforts to create an innovative business environment and promote entrepreneurship. The city has also been a pioneer in its work with anchor institutions, and support for inner city businesses is indeed growing. However, more targeted economic development strategies for Philadelphia’s inner city are necessary in order to generate jobs and increase economic opportunity for the city’s most vulnerable residents. ICIC looks forward to continued engagement with stakeholders in Philadelphia as they work to promote equitable growth for all of the city’s residents.