What Does Wage Tax Data Tell Us About Philadelphia's Economy?

Did you know that Philadelphia's Revenue Department releases monthly reports on wage tax data that's broken up by 46 different employment sectors? It's true, and a new blog post from Miguel Garces at the Department of Revenue digs into the data to highlight some of the changes to the city's economy over the last decade. 

The wage tax applies to anyone who works in the City and to residents anywhere they work so it captures more than just city businesses, but it offers an interesting perspective on the local economy nonetheless.

What industries have been shrinking or growing over time? Between 2011 and 2019, Wage Tax collected for every industry in the dataset grew, with collections for Advertising and Other Professional Services, Social Assistance, and Telecommunications almost doubling since the end of the Great Recession. This increase is despite decreases in the Wage Tax rate during that time.* This means that those industries had increases in either the number of employees, average wages, or a combination of the two. Arecent report by the Center City Districtconcurs with this job-growth trend, which showed that there has been nine years of job growth since 2010—an unprecedented upswing in Philadelphia’s recent history. Although that report also bemoans that much of that upswing has been in industries that pay the average worker less than $35k per year.

The largest Wage Tax paying industries in 2019 according to the data are, in order:

  • Hospitals
  • Colleges Universities, and Professional Schools
  • City, School District, and Local Quasi Government
  • Retail Trade
  • Federal Government (including the US Postal Service)
  • Legal Services
  • Construction
  • Transportation and Warehousing

The chart below shows the trend for these eight industries between 2011 and 2018. We can see that there has been strong growth in Wage Tax Revenue for Hospitals, while Retail Trade has struggled, followingnational trends. In fact, that industry was overtaken in 2013 by Colleges Universities, and Professional Schools as the second-largest. In 2014 there was an uptick in Federal Government Wage Tax payments. What local economic forces might have caused that uptick?

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Garces says the Revenue Department wants to get this data into the hands of more stakeholders like policymakers, economists, and other academics who can make use of it to analyze economic trends over time.

To download the data, go to the Revenue Reports page. Revenue also releases reports like BIRT collections by sectorRealty Transfer Tax collections by property type, and Sales Tax collections by industry.

One suggestion they might want to consider for similar research purposes is disaggregating their reporting of BIRT (Business Income and Receipts Tax). If they released revenue by sector with values for both Net Income and Gross Receipts, it would be possible to get a measure of the growth and decline in profitability of different sectors over time. 

As a sidebar, it's pretty great to see how much the culture of open data has become ingrained at City Hall. Technical.ly reported this weekend that the Office of Open Data is actually being dissolved and its functions absorbed by Office of Information and Technology and Office of the Chief Administrator. This is a good development because it means open data practices are being integrated into city departments in a more fundamental way, so much that having an individual office advocating for these practices is no longer seen as necessary.

Recall that back in 2014 when Clarena Tolson was the head of Revenue during the Nutter administration, this was one of the more difficult departments for open data advocates to work with. Fast-forward to 2019, and Revenue is now moving forward all on its own to make this wage tax data machine-readable rather than continuing to release it in PDF format. It's an inspiring example of how sometimes ideas that start out as very controversial can gradually become conventional wisdom and then become standard practice within our public agencies. 

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  • Zachary Armstrong
    commented 2019-11-15 16:47:35 -0500
    Could you please provide a the link to this blog post?