Philadelphia’s poverty rate is improving, but it remains the poorest big city in America

Philadelphia’s poverty rate is the lowest it has been in nearly two decades — but vast disparities exist between racial groups, with communities of color bearing the brunt of the city’s economic struggle.

At the same time, median household incomes grew last year, but those gains were entirely overshadowed by the high rate of inflation.

And Philadelphia remains the poorest big city in the nation. But its 21.7% poverty rate is close to that of Houston, meaning that the city could shed its longtime and unwanted title in the coming years if trends continue.

That’s according to new data for 2022 released Thursday by the U.S. Census Bureau, part of an annual trove of estimates detailing social, demographic, economic, and housing trends for the nation’s large counties and cities.

Taken together, the findings show a mixed economic picture for a city that has long been dogged by a stubbornly high poverty rate that many experts consider to be central to other challenges, including crime, housing insecurity, and educational attainment.

Economists, advocates, and elected officials say that there’s little reason to cheer, and that more than 1 in 5 residents living in poverty is still high by national standards.

“When you think about the issues of violence, you think about the poverty rate, they’re all connected,” said Bishop Dwayne Royster, executive director of the group POWER Interfaith, which advocates for racial and economic justice. “It has to do with the disinvestment in — and really the dehumanization of — some people in Philadelphia.”

And some said city leaders must develop a bolder plan to reduce poverty.

“We have very challenging circumstances before us and we tend to come up with artisanal, boutique solutions,” said Bill Golderer, president and CEO of the United Way of Greater Philadelphia and Southern New Jersey. “The fact is 380,000 of our neighbors are struggling with daily circumstances that result from poverty, and we don’t have a long-term, focused, and measurable approach to how we are going to tackle this.”

Philadelphia’s poverty rate has been in decline since 2011, when it was 28.4%, and continued to drop at a steady pace, even through the pandemic. According to the estimates, the 21.7% rate in 2022 is down a percentage point from 2021.

The median household income in Philadelphia has also climbed steadily since the Great Recession. The estimate for 2022 was $56,500, a 7% increase from 2021 and 15% higher than the inflation-adjusted median income in 2005.

But the post-pandemic surge in inflation — which reached 8.1% in 2022 — wiped out those gains for the average Philadelphia family. The net effect is that Philadelphia’s median household income in 2022 was lower than the inflation-adjusted estimate from the previous year.

“What matters is real income after inflation, so that’s not good news,” said Mark Zandi, chief economist at Moody’s Analytics, who is based in Chester County.

He said some of the improvement in the poverty rate can be attributed to pandemic-era support from the federal government that is not likely to continue to the same degree, “a cautionary note” for the city.

Zandi also said he was troubled by findings that showed large gaps between communities of color and white residents. In 2022, non-Hispanic white residents had an estimated poverty rate of 12.7%. But a third of Hispanic residents live in poverty, and the rate among Black Philadelphians — 25% — is nearly twice as high as that of white residents.

“That’s a very unhealthy situation, and I don’t think that’s conducive to a well-functioning city,” Zandi said.

Philadelphia also continues to hold the stigma associated with being the poorest big city in the country, but Houston, the city with the next-highest level of poverty, has a rate only a percentage point lower, at 20.7%.

The gap between Philadelphia and Houston is well within each city’s margin of error (+/- 1.6 percentage points for Philadelphia, and +/- 0.9 percentage points for Houston), meaning that the poverty rates in Philadelphia and Houston could be considered statistically tied.

The difference in poverty between Philadelphia and the large city with the lowest poverty rate — Austin, Texas, a newcomer this year to the top 10 list — is considerable. Austin’s poverty rate of 11.1% is nearly half that of Philadelphia’s.

But Philadelphia is not alone in dealing with stagnating purchasing power.

Nationally, median household income, when adjusted to 2022 dollars, has declined every year since 2019. Income for the typical U.S. household was $74,600 in 2022, down from $78,300 in 2019.

Royster said he sees Philadelphia’s economic situation compared with other cities as a result of disinvestment in neighborhoods where poverty is concentrated. He cited underfunded schools in communities of color as a particular concern.

“We have to stop demonizing poor folk,” he said, “and start looking at the ways that laws and policies have created an underclass in Philadelphia for a very long time.”

City Council President Darrell L. Clarke, whose North Philadelphia district is home to some of the city’s poorest neighborhoods, said that poverty trending down is a “significant signal” that can be attributed in part to work the city has done to connect residents to benefits, adopt new tax-relief measures, and expand affordable housing.

But Clarke cautioned that there is still long-term work to be done.

“I don’t want people saying, ‘Well, our numbers are going down, we’re OK,’” he said. “There’s still a set group of people who still continue to be in poverty. So we got to go pull them out before we start patting ourselves on the back.”

Council and other city officials partnered with the United Way and a handful of grassroots community organizations to develop the Poverty Action Plan, a blueprint to lift 100,000 Philadelphians out of poverty by 2024. Doing so would reduce the poverty rate to about 19%.

The plan, centered around a public-private partnership called The Promise, was launched in 2020 — just days before the coronavirus pandemic swept over the city and launched the nation into unprecedented economic turmoil. City officials remain optimistic about the plan’s potential.

But Golderer said that the impact of investment is often delayed, and that The Promise is not a cure-all.

“The problem is with a leadership class that has either given up, or doesn’t know what to do, or is unwilling, or is afraid of failure,” he said. “But the future of Philadelphia hangs in the balance. This is not a status quo that is sustainable.”