Once dubbed "The Magic City," Farrell sprung up practically overnight when a steel mill was constructed in 1901 on a plain bordering the Shenango River in what was then part of Hickory Township (now Hermitage).
The community was incorporated as the Borough of South Sharon in 1916; its population peaked at over 15,000 in 1920 and its status was elevated to a third-class city in 1932. At that time the residents of the new city elected to take the name of Farrell, after industrialist James A. Farrell.
The mill, which eventually became known as the Roemer Works of Sharon Steel Corporation, would serve as the community's lifeblood until 1992, when it was liquidated after filing bankruptcy. Many of the assets were sold at auction to Britain-based Caparo Corp. and later to Swiss steelmaker Duferco, which operates the plant today. Farrell was designated a financially distressed municipality in 1987 by the state of Pennsylvania.
Despite years of population and industrial decline, Farrell has made progress in rebuilding itself due to new industrial investments on tax abated land and several new housing starts.
There were 2,752 housing units at an average density of 1,177.7/sq mi (454.1/km²). The racial composition of the city was 50.28% White, 46.71% African American, 0.12% Native American, 0.20% Asian, 0.02% Pacific Islander, 0.30% from other races, and 2.38% from two or more races. Hispanic or Latino of any race were 0.66% of the population.
There were 2,504 households out of which 27.0% had children under the age of 18 living with them, 36.0% were married couples living together, 24.4% had a female householder with no husband present, and 35.3% were non-families. 31.5% of all households were made up of individuals and 17.9% had someone living alone who was 65 years of age or older. The average household size was 2.37 and the average family size was 2.96.
In the city the population was spread out with 25.6% under the age of 18, 7.4% from 18 to 24, 23.6% from 25 to 44, 20.8% from 45 to 64, and 22.6% who were 65 years of age or older. The median age was 40 years. For every 100 females there were 80.2 males. For every 100 females age 18 and over, there were 74.2 males.
The median income for a household in the city was $22,659, and the median income for a family was $28,935. Males had a median income of $32,800 versus $20,729 for females. The per capita income for the city was $14,532. About 24.0% of families and 26.4% of the population were below the poverty line, including 47.5% of those under age 18 and 9.6% of those age 65 or over.
The city also provides numerous incentives to entice new businesses to locate within its borders. Today, some of the major contributors to Farrell's business base include: