A French, an American and an Israeli architect are bragging about the architectural accomplishments of their respective countries. To prove whose construction feats are the most impressive, they agree to give each other a tour of their most iconic works. The French architect takes them to the Eiffel Tower in Paris and says “We are very proud that in 1889 we built this world famous structure in a mere two years and 65 days.” They then travel to the United States where the American architect brings them to the Empire State Building in New York City. “When we built this building in 1931, it took us a mere one year and 45 days to complete and it was the tallest building in the world.” Finally, they accompany their Israeli friend to Tel Aviv. On the drive into the city, the French architect points to a cluster of gleaming new office buildings and asked his host “What are those new buildings over there?” “I don’t know” replied the Israeli architect, “they weren’t there when I went to pick you up at the airport this morning.”
It’s not far from the truth. New office buildings are popping up all over the City of Tel Aviv. What makes this remarkable is that Israel is a country where taxes, on an aggregate basis, are almost 70% of income when you include federal taxes, health care taxes, social security and VAT. Nevertheless, businesses from around the world are flocking to this city. Why is that relevant to Philadelphia? Well, while people claim that our City’s tax structure is what’s keeping businesses from coming here, the number of new office buildings in Tel Aviv is proof that high taxes don’t have to be an obstacle to meaningful job growth. Tel Aviv is proving that businesses will go where the talent is. While the Israeli government certainly provides tax incentives for companies to locate there, it’s still an expensive place for people to work. Closer to home, the taxes in New York City are much higher than they are here in Philadelphia. Nevertheless, companies are there because, once again, that’s where the talent is. Young workers want to be there even if the cost of living is higher and their tax bills are much higher.
What makes young people want to be in Tel Aviv? It doesn’t hurt that they have great weather, beautiful beaches and allegedly one bar or restaurant for every 230 people. Oh yeah, they also have great universities. With so many young, highly educated workers, it’s no wonder employers are flocking there. In addition, because many young people there have served two years in the military, the younger workforce is perceived by employers as disciplined, more mature and tech savvy. While we obviously lack beautiful beaches, the fact that we have more universities than any region of the country other than Boston, should make us much more successful in attracting new businesses than we have been to date. The key is getting more young people to want to stay here after they graduate from our colleges and universities and establishing ourselves as a destination city for young workers across the country who otherwise have no ties to the Delaware Valley. Of course this creates the classic chicken and egg problem. The young people will stay or come here if there are good jobs for them, and the employers will come if there are lots of young, talented workers living here.
The best way to solve a chicken and egg problem is to address both of them at the same time. We have come a long way in the past 10 years creating great lifestyle amenities that young people are looking for. We have scores of great, affordable new apartment and condominium projects, loads of new, exciting restaurants and dozens of new attractions including pop up parks, beer gardens, walking/biking trails and even a new boardwalk on the river. People are taking notice as the City continues to be recognized as a tourist destination and a great place to live. Even the Pope and the Democratic party think Philadelphia is a great place to visit and spend time. With perhaps the exception of Sam Bradford, most young people who are working here also seem to like living here. Now we just need to convince the rest of the country that Philadelphia is not just a great place to live, it’s also a great place to work.
Surely our tax system, school system and local government need reform and, thanks to some creative initiatives from some of our business leaders, help may be on the way. However, we can make a lot of progress even while these long term goals are in progress. A lot of our problem is actually tied to simple branding; specifically, what do we want to be known for and who do we want to be the face of our city? While we all think we know Philadelphia very well, what do people outside the City think?
The following exercise helps illustrate our problem. Ask an average person on the street anywhere in the United States what industry comes to mind when they hear certain cities. For those cities experiencing high job growth, the answers are almost uniform. Here’s what you’re likely to hear for some of these successful cities: Washington, D.C. (government or defense), New York City (finance/Wall Street), Los Angeles (Hollywood/entertainment), San Francisco/Silicon Valley (tech and venture capital), and Boston (tech/finance). In sum, these cities have effectively branded themselves as the center of the universe for these exciting industries. As a result, when a Millennial interested in any of these industries thinks of the ideal place to be, they see themselves in those cities. Further, even if a young person isn’t interested in these specific industries, they understand that because the local economy is thriving as a destination center, other interesting job prospects will be available to them.
We’re not getting the new jobs and it’s partly because we aren’t really known for anything. What industry comes to mind when you say “Philadelphia” to the average American? While some folks who have spent time here may say “Eds and Meds”, it will by no means be a universal answer and a lot of the other possible responses clearly lack the pizzazz of Wall Street, politics, Hollywood or high tech. When it comes to business, we don’t have a well-established brand or at least an exciting one. That makes it a lot harder to sell Philadelphia to workers and employers. Being “conveniently located between New York and Washington, D.C.” is hardly a compelling pitch. Likewise, the face of Philadelphia is not Bill Gates, Michael Dell, Steven Spielberg or Steven Jobs, it’s still Ben Franklin and he died over 225 years ago. We desperately need an updating.
The good news is that things may be changing and, not surprisingly, our hopes and aspirations lay squarely at the feet of Comcast. Our leading industry used to be law (15% of all office space was occupied by law firms) but now, as the changing skyline clearly attests, our future is communications and entertainment. We, as a city, need to sell that hard because, frankly, it’s cool, it pays well and it can become a magnet for other industries that support communications and entertainment or that require related skill sets (i.e., tech and innovation). What Millennial wouldn’t want to work for Dreamworks or NBC Universal? We could become the east coast version of Hollywood and Silicon Valley all wrapped up in one place and on everyone’s short list for those industries. Our face could become someone from the 21st century.
Many people don’t realize it but we are now well positioned for success despite our burdensome tax system. We have the colleges and universities, the amenities and housing, and, with the Navy Yard and Schuylkill Yards, we even have the cool, hip environments that today’s cutting edge businesses are looking for. Maybe all we really needed was a compelling face—our own Microsoft, Dell or Sony Pictures that we could build around and help define us to the young workforce and employers around the country. We clearly have that now. Let’s go sell it. Brand it and they will come.
This article appeared in the Philadelphia Business Journal May 18, 2016.
For more information contact Glenn Blumenfeld