Philadelphia Businesses Are Moving Beyond the Pandemic

Three full years after the beginning of the worldwide shutdowns caused by COVID-19, Philadelphia has reached two milestones—one negative, another positive—that suggest the city’s economy has moved into a new phase following the height of the pandemic. According to The Pew Charitable Trusts’ business and jobs recovery dashboard, bankruptcy filings by Philadelphia-based businesses are approaching pre-pandemic levels. And the total number of full-time jobs in the city is now consistently above emergency levels and still rising for certain sectors.

Both indicators reflect business conditions that are no longer driven by pandemic-focused conditions or emergency measures, but more by high interest rates, labor issues, a looming credit crisis, and other somewhat conventional economic factors. Pew’s indicators on business bill payments and credit usage also now look like non-crisis patterns.

The bankruptcy indicator now shows numbers more typical of the days before the infusion of emergency grants and loans early in the pandemic. According to U.S. bankruptcy court data, seven Philadelphia-based businesses sought either liquidation or reorganization protection in March, the highest monthly total since early in the pandemic. During the first quarter of 2023, there were 11 liquidation and reorganization filings, the second highest quarterly total since the pandemic began. In contrast, during the majority of the pandemic, the average has been four filings per month. (See Figure 1.)

Although bankruptcy filings reflect only a fraction of business failures, Philadelphia’s trend mirrors a national upswing in filings attributed to companies now facing economic difficulties without the financial cushion of pandemic-related emergency loans and grants. The federal Economic Injury Disaster Loan program and Paycheck Protection Program, plus state, local, and private programs, altogether provided hundreds of millions of dollars that suppressed bankruptcies in Philadelphia for more than two years, even during normally busy springtime filing periods. Now, high interest rates and lending cutbacks are hitting businesses that lack those cushions. It should be noted that bankruptcy filings do not represent anywhere near a full count of businesses that shut down or restructured during the pandemic.

On jobs, recently revised federal data tracked in Pew’s jobs chart put the number of full-time nonfarm positions in Philadelphia in March 2023 at 763,300. That was 3.8% more than in March 2019. The upward revision by the U.S. Bureau of Labor Statistics (BLS) in March also indicates that Philadelphia employers passed their pre-pandemic job total in June 2022 and have restored more jobs than BLS previously estimated. (These numbers come from the BLS’s Current Employment Statistics not seasonally adjusted; each data release includes a revision of the previous month, and each March release includes additional revisions of the 21 prior months.)

While positive, the revised numbers still show Philadelphia lagged other major cities and the country overall in job recovery. Meanwhile, some employment sectors escaped the COVID-19 era faster or more consistently than others: Finance and insurance jobs grew past their pre-pandemic level 18 months ago, but restaurant, bar, and hotel jobs still haven’t completely returned. (See Figure 2.)

Business credit health and credit usage also now reflect a post-crisis economy. Businesses have reduced their credit balances because, economists say, interest rates are high and banks have pulled back on extending credit. In March 2023, the median credit balance across all Philadelphia businesses ($3,300) was its lowest since November 2020, according to Experian credit bureau numbers tracked by Pew’s credit balance indicator.

At the same time, the share of Philadelphia businesses running seriously late on their bills in March 2023 remained near early-pandemic levels (5.2%), with the notable exception of financial institutions. According to Pew’s delinquency indicator from the Experian credit bureau, around 9% of Philadelphia financial service firms—the highest share since 2020—have been running seriously late on bills to their own creditors since December 2022. This reflects the recent sharp blow to banks from rising interest rates and follows a relatively strong record on delinquency and job recovery in Philadelphia during the crisis periods of the pandemic. (See Figure 3.)

All told, three years of pandemic-driven disruption in Philadelphia’s economy has largely given way to a new phase of economic challenges and opportunities for the city.

Thomas Ginsberg researches topics including businesses, jobs, the economy, and demographics for The Pew Charitable Trusts’ Philadelphia research and policy initiative.