WORLD 
Economy & Fed Viewed from across the Schuylkill river, the Philadelphia skyline reflects several years of hard-won economic transformation.
Commercial buildings are still being erected to stand alongside the medical, educational and financial institutions that serve as the backbone of Philadelphia’s new economy.
But during the past six months this former manufacturing powerhouse, which has reinvented itself during the past decade as a highly skilled economy, has been affected by a jump in unemployment that could compound the city’s problems with poverty and violent crime.
Poor Philadelphians have lost their jobs as skilled residents have continued to find work in “Eds and Meds” – the city’s booming education and healthcare sectors.
“There are two Philadelphias. There is the more prosperous labour market for many – but not all – white-collar professionals in education, healthcare and finance, and then there is a pretty large urban underclass,” said Mark Price, an economist at the Keystone Research Center, a Pennsylvania think-tank.
US payrolls have declined for four consecutive months, but job losses have to date been moderate compared with previous recessions. Lay-offs have been concentrated in manufacturing, retail and construction.
While the national unemployment rate actually dipped a fraction to 5 per cent in April, in Philadelphia unemployment remains much higher and is increasing at a faster rate.
The city’s seasonally adjusted unemployment rate, which counts only people who have looked for work in the previous four weeks, increased from 6 per cent in November to 6.7 per cent in March.
“The rise in unemployment we are seeing is probably being seen in low-paid service sector jobs,” Mr Price said.
A broader definition of unemployment that includes the long-term jobless population and those discouraged from looking for work because of the economy, increased by 0.1 per cent to 9.2 per cent nationwide last month. That measure has historically trended higher in Philadelphia.
“If they haven’t shown up on the records as having applied for a job, they don’t show up as unemployed. They are in an abyss out there,” said Patrick Eiding, president of the Philadelphia council of the AFL-CIO, a federation of unions.
Philadelphia’s gleaming blue skyscrapers are only a 20-minute walk from the Career Link jobs centre that serves the city’s deprived northern districts, but the financial district feels like a world away.
A notice on a gun registration unit next door to the centre warns the office will be closed for the funeral of a Philadelphia police sergeant shot dead the previous weekend when responding to a suspected robbery.
Only a couple of days later, a local news crew filmed a dozen police officers beating three black men accused of links to a separate triple-shooting.
“There are jobs out there but they require higher skill and education levels,” said Nicki Woods, site administrator at Career Link. “If the economy continues to go in the direction it’s in, it will lead to more lay-offs.”
But overall payrolls are still increasing – albeit at a weaker rate. The business community remains upbeat, particularly about the hundreds of new jobs tied to the expansion of the city’s convention centre and the prospect of two new casinos.
However, some of the pain may be yet to come and those Philadelphians who manage to find a job could suffer in other ways.
Some economists argue the US labour market never really recovered from the last recession. With fewer jobs to cut in this cycle, there are concerns businesses may try to limit working hours instead.
Average weekly hours for US production workers fell by 0.1 hours to 33.7 hours in April.
Meanwhile, the number of Americans working part-time because they cannot find a full-time position or their employer cut their working hours increased by 306,000 to 5.2m in April. Tom Birney, 48, was forced to quit his job in Silicon Valley and to move back to Philadelphia when his father fell ill.
He chose to accept better-paid part-time work as a waiter rather than subsist on a low-wage pharmacy job, but the decision meant giving up healthcare coverage.
“I’ve doubled my salary but I’ve got no benefits: it’s a classic trade-off,” Mr Birney said.
In terms of wage growth the labour market may even have fallen back since the last recession; a trend some economists fear could increase in-work poverty for low-paid workers as food and energy costs continue to rise. Inflation-adjusted median hourly earnings in Philadelphia fell by 4 per cent between 2001-2002 and 2006-2007 from $17.25 to $16.59, according to the Keystone Research Center.
Lawrence Holman, 36, said he was pleased to find a job at a Philadelphia deli, paying little more than $7 an hour, after almost seven months on unemployment benefits. “It’s a job. It beats a blank, as they say.”
FT series: Feeling the pinch
