Moving Up or Running in Place? Examining Economic Stability and Mobility in Philadelphia

Upward economic mobility. It is the basis of the American Dream — that we can work and save and, through time, continually move up the ladder of success.

But for too many Americans, this analogy of the economic ladder doesn’t just fall short, it seems entirely out of place. Instead of a ladder, these workers and their families find themselves on something more akin to a treadmill. They continue to put one foot in front of the other, yet they feel as if they’re stuck in place. Even worse, some feel as if the incline on their treadmill is increasing, so they’re not just staying in place but they’re working harder to do so. And with that, their American Dream doesn’t just remain out of reach but is moving further away.

The lived experiences and economic realities of these workers and their families are impacted by both pillars of the Federal Reserve’s dual mandate. First, we know matters of price stability directly impact families, especially those already working hard just to meet their basic living expenses. And then there is the Fed's second charge — maximum employment. I have written before that while there may be a textbook definition of maximum employment — the highest level of employment the economy can sustain to maintain stable 2 percent annual inflation — I take a broader view that the quality of available jobs is just as important as the quantity of those jobs.

The concept of economic mobility is one in which the team at the Philadelphia Fed has long been engaged through Research in Action Labs and our Reinventing Our Communities (ROC) program. Now, alongside organizations engaged in this work, we are taking an even deeper dive. Through focus groups with dozens of residents across Philadelphia, specifically, our researchers published a study that challenges the conventional understanding that merely getting a job, any job, will make one more economically mobile. The report outlines, in very real terms and in individuals’ own words, the struggles they face when it comes not just to economic mobility but economic stability.

“For many of us, we’re focused on surviving in a world that is constantly changing,” said Danielle, pictured at right, a Philadelphia resident who recently participated in a conversation about the city’s economic conditions hosted at the Philadelphia Fed. “Economic mobility assumes that people are not in survival mode.”

For me, the first takeaway is that the way we have historically measured economic stability of low-income households may no longer work. Many times, our view and assumptions have been set to the federal poverty line (FPL) and whether someone earns above or below that level. Yet even a family making twice the FPL may find itself in a situation similar to that of a family at or below that level. These are families living a new reality, subsiding at or below the ALICE Threshold — a measure created by the United Way for households that are asset limited, income constrained, and employed.

These individuals and families are doing everything right but are not able to move forward because of a variety of factors beyond their control, which I’ll touch on in a moment. And until they reach that sense of stability — that their job won’t disappear, that their wages won’t be cut, or that they won’t have to rely on a series of short-term side hustles to make rent or pay their bills on time and in full — upward mobility is off the table. As one study participant reported, “It’s hard to remember what you make; mostly you stress about what you have to spend.” These are the families stuck on the treadmill.

For these individuals, there are tools such as the Philadelphia Fed’s Occupational Mobility Explorer, which they can use to visualize and chart an upwardly mobile career path, with increasing wages, based on the skills they bring to the workplace.

But as we learned from the study, wages are just one barrier facing workers and families living at or below the ALICE Threshold, and simply seeking a bigger paycheck won’t materially change their sense of economic stability. That’s because these families measure stability by more than the number on their paycheck. Does the job provide them a sense of stability and consistency? Is potential employment located in an area that is easily reachable? Does the job provide potential flexibility given at home responsibilities for childcare or eldercare? Do they have an underlying health concern that a health insurance benefit won’t fully cover? The list can go on.

“Economic mobility, for now, is about stability and making ends meet,” said Lois, a Philadelphia resident who recently participated in a conversation about the city’s economic conditions hosted at the Philadelphia Fed. “I can’t go upward if I can’t afford my bills and what I have today.” Also pictured at right, Theresa Singleton, Ph.D., senior vice president and community affairs officer, at the Philadelphia Fed.

Finding long-term solutions to the economic mobility problem will require broad input from the business world, community leaders, nonprofit organizations and philanthropists, workforce and community development professionals, and academic researchers.

This cross-sector approach takes center stage today, as the Philadelphia Fed, along with several partners, kicks off the Economic Mobility Summit here in Philadelphia. Over the next two days, local and national representatives of the various industries and sectors I just mentioned will examine this issue from all angles. The summit promises to be an enlightening convening, with actionable takeaways for everyone to consider.

These approaches are how complex challenges should be resolved, with careful consideration and input from all stakeholders — including workers. And when we do that, we can get more families off the economic treadmill, back on the economic ladder, and dreaming once again.