Why are Philadelphia families underwater?

While Philadelphia’s poverty rate hovers at around 25% (according to the latest census data), even families earning $75,000 are under tremendous pressure and few options.

In Philadelphia, a whopping seven out of ten families earn $75,000 or less, all of whom are underwater.   

Our latest report, 水下：费城沉没的家庭是什么, finds that there are three main drivers behind the spiraling cost of raising children.

CHILD CARE. HOUSING. HEALTH CARE.

Though firmly ensconced in the middle-class, Philadelphia families earning $75,000 annually have barely anything left over after covering the basics – likely around $40 per week. 

One of the basics is quality child care, a necessity for working parents. But with the median cost of care in Philadelphia at $11,700 per year for an infant and $9,830 for preschool, placing just one child in care for families earning $75,000 will cost them 15% of their income.  

Underwater shows that families earning $50,000 are in the same boat, even counting for child care and health care subsidies that higher-bracket families aren’t eligible for. Unfortunately, only 45% of eligible children will receive a child care subsidy due to inadequate state funding of the Child Care Works program.

Adjusting for their more modest means and typically lower-cost basics, these families are still likely to end up with less than $30 a week to cover everything beyond the basic expenses; without child care, that means less than $6,500 annually for those everyday extras.

Housing takes the biggest share of Philadelphia family budgets, comprising 28% of income for $75k families and 35% for $50k families.

The combined cost of just child care and housing can take up almost half of families’ incomes, and sometimes even more.

Even in the best circumstances, neither family has much to sock away for retirement, college savings, let alone emergency funds. It’s a secret that many hard-working families bear but their shame is misplaced as their circumstances are of no fault of their own.

From child care to health insurance premiums, the cost of raising a family is on the rise.

Health insurance premiums are rising across the board and out-of-pocket costs for health conditions such as asthma, ADD, and weight issues increase the burden on families.

Most Philadelphia families are covered through an employer, but the share employers pay increased by $1,210 on average since 2013, reducing their ability to raise long-stagnant wages.

SCHOOL FUNDING CRISIS THREATENS TO SINK NEXT GENERATION

Meanwhile, Philadelphia schools have long suffered underfunding by the state, particularly in 2012 when massive cuts compelled the layoffs of nearly 4,000 teachers and staff and the shuttering of 23 schools.

With no meaningful state investments in the city’s public schools in sight, City Hall has made significant funding increases every year. Compared to 2012, the School District of Philadelphia had nearly $690 million more in 2018, and the greatest share of that money is flowing to the schools with the most low-income students. Such investments have paid modest dividends in academic achievement, with graduation rates up by 4% and test scores rising by 3%.

But hopes of a dramatic turnaround for the District are dashed every year as skyrocketing state mandated costs dwarf state funding increases. From 2010 to 2018, the costs of pensions, special education, and charter school payments have ballooned by $1 billion while state funding has only risen $200 million, leaving local taxpayers on the hook for the balance for the foreseeable future. What’s more, the School District of Philadelphia ranks 486th out of 500 PA districts in per student spending once student need, such as poverty, is taken into account.

Without additional funding, the District will be in deficit by 2022.

But the greater cost is the pronounced struggle most students face in underfunded classrooms, directly threatening the promise of upward mobility for the next generation.

In Underwater: What’s Sinking Families in Philadelphia, PCCY recommends a slate of key actions policymakers can take to support Philadelphia’s beleaguered middle-class.

CLICK HERE FOR OUR FULL PHILADELPHIA REPORT, INCLUDING OUR POLICY RECOMMENDATIONS

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