Philadelphia Economy: Eds, Meds, and Logistics

The Philadelphia metro area — formally Philadelphia-Camden-Wilmington, which stretches across parts of Pennsylvania, New Jersey, Delaware, and Maryland — is the seventh-largest metro economy in the United States. It is anchored by what people in the region call "eds and meds": a dense cluster of universities, hospitals, and biotech firms that together employ a huge share of the workforce. Add a major Atlantic port, a busy logistics corridor, and a historic financial sector, and you have a metro that quietly punches above its weight.

This is a plain-English tour of how the Philadelphia metro economy works. For the state-level picture, see Pennsylvania Economy. For the country-level view, see The State of the U.S. Economy and the broader Economy hub and city cluster.

How big is the Philadelphia metro economy?

For example, recent metro GDP for Philadelphia-Camden-Wilmington has run around $530 billion, according to the Bureau of Economic Analysis. Metro population is roughly 6.2 million, per the U.S. Census Bureau. That makes the Philadelphia metro larger by population than 32 of the 50 U.S. states.

The biggest industries

A handful of sectors do most of the work in the Philadelphia metro economy:

• Healthcare and hospitals — the University of Pennsylvania Health System, Jefferson Health, Children's Hospital of Philadelphia, and Temple Health together employ huge numbers of workers across the metro.
• Education — Penn, Drexel, Temple, Villanova, and dozens of smaller colleges and universities anchor a large student and faculty workforce.
• Pharmaceuticals and biotech — the I-95 corridor between Philadelphia and Princeton hosts major drug-company labs and headquarters, and the metro is one of the leading centers for cell and gene therapy in the country.
• Finance and insurance — Philadelphia is one of the older financial centers in the country and still hosts asset managers, insurers, and the Federal Reserve Bank of Philadelphia.
• Trade and logistics — the Port of Philadelphia handles a growing share of refrigerated cargo entering the East Coast, and the metro sits on a major rail and trucking corridor between New York and Washington.
• Tourism and conventions — historic sites, sports, and the Pennsylvania Convention Center draw visitors year-round.
• Manufacturing — chemicals, food, and specialty industrial production are still meaningful employers.

Jobs and wages

Metro labor data is published by the Bureau of Labor Statistics Mid-Atlantic region. For example, the Philadelphia metro unemployment rate has typically run close to the national average, sometimes a tick above when manufacturing softens and a tick below when healthcare hiring is strong.

The City of Philadelphia uses Pennsylvania's statewide minimum wage, which still matches the federal floor of $7.25 per hour, though New Jersey and Delaware portions of the metro use higher state minimums. Many large Philadelphia employers — especially hospitals and universities — pay well above that floor on their own.

Cost of living

Philadelphia's cost of living tends to run a little below the national average and well below New York and Washington, the two metros that bracket it on Amtrak. For example, recent HUD Fair Market Rent for a two-bedroom in the metro has run around $1,700 a month, with Center City and the Main Line higher and parts of North Philadelphia and the suburbs lower. Current county-level numbers are at HUD User.

The federal government tracks region-specific inflation data through the BLS Mid-Atlantic region. Philadelphia's CPI tends to track close to the national average.

Taxes in Philadelphia

Philadelphia residents pay Pennsylvania's flat state income tax plus a separate city wage tax — one of only a few major U.S. cities that levies its own income tax. Combined sales tax in the City of Philadelphia is 8%, made up of the state's 6% base plus a 2% local addition. Property taxes in the city are moderate by U.S. standards. State rules live at the Pennsylvania Department of Revenue, and you can read more about how sales tax works in our glossary.

How the Philadelphia metro fits into the national picture

Philadelphia sits in the middle of the Northeast Corridor, the densest stretch of population and economic activity in the country. That position — a short train ride from both New York and Washington — has shaped the metro for decades. Workers commute in both directions, companies open satellite offices to be near both capitals, and the metro itself benefits from being a more affordable alternative for headquarters and back-office work than either bookend. The metro's healthcare and biotech specialization gives it a steadier base than metros that depend more on cyclical industries.

Eds and meds, in detail

When people say Philadelphia's economy runs on eds and meds, they are not exaggerating. Education and healthcare together account for one of the largest shares of metro employment of any U.S. metro. That mix gives Philadelphia an unusual feature: even when the broader economy slows, hospitals and universities tend to keep hiring, which softens downturns relative to metros that lean on finance or manufacturing.

A note on the numbers

Numbers in this article change every quarter — always check the latest from BEA, BLS, and HUD User for the most current data on the Philadelphia metro.