Where 'Eds and Meds' Industries Could Become a Liability
Health care and education—the so-called “eds and meds” industries—are often touted as a means for economic development, especially in recovering Rustbelt cities where the bottom fell out after U.S. manufacturing declined.
But recently a number of economists and urbanists have questioned the ongoing ability of eds and meds to sustain and power local economies. Last fall, Aaron Renn warned that “for cities hanging their hat on eds and meds growth, a more fundamental problem now looms: these industries are at the end of their growth cycle." I’ve similarly registered my skeptical view of eds and meds on Cities before.
And writing in The New York Times late last month, Duke University economist Aaron Chatterji made a powerful case for the argument that dependence on eds and meds may be “bad news” for many local economies.
The reasons many cities turn to eds and meds for economic development are easy to understand. Both industries have been defined by substantial growth over the past few decades, and that looks set to continue. America’s aging population needs medical care, and the knowledge economy demands an increasingly skilled and educated workforce. Both are personal service industries that require face-to-face interaction. This, many have argued, makes them locationally “sticky” and less likely to uproot from cities, increasing their appeal to economies that have been battered by the outsourcing of manufacturing jobs.
But both of these assumptions, Chatterji explains, are problematic. Over the past few years, new technology has exposed both industries to greater competition nationally and globally, trends that will only increase in the future. (In education, for example, the rise of MOOCs increases the reach of large institutions while devaluing local degrees. In health care, Chatterji points to policies that companies like Walmart have recently implemented to send employees to bigger, more cost-effective health centers like the Cleveland Clinic rather than local hospitals).
These developments, he argues, are bringing increased competition to these once-insulated fields. The consequence is likely to be greater concentration of the education and medicine sectors in fewer cities and regions. Eds and meds seem set to follow in the clustering pattern seen in other industries, from high-tech to music to finance, even as economic activity and jobs continue to grow on the whole. Sooner rather than later, he notes, the United States and the world could see “the same dynamic of winners and losers observed in other industrial sectors, as top universities and hospitals become larger and absorb most of the increase in students and patients from across the nation.”
These trends, he adds, will have vastly uneven geographic impacts, hitting hardest the smaller cities and metros where there is little left to make up the difference. “These jobs,” he writes, “are the only thing keeping many small and midsize American cities from sliding into deeper decline.”
• • • • •
But which metros specifically face the largest danger? Which metros—especially small and medium-sized ones—are most dependent on eds and meds jobs and have the largest concentrations of them?
To get at this, I asked my Martin Prosperity Institute (MPI) colleague Charlotta Mellander to crunch the numbers (from the Bureau of Labor Statistics) on the levels of employment in the education and health care sectors across the country’s 350-plus metropolitan statistical areas.
The map above, by MPI’s Zara Matheson, shows the geography of eds and meds jobs across the United States. Across the nation, eds and meds make up roughly 13 percent of total employment in U.S. metros. But the range is considerable. Eds and meds employment ranges from roughly 4 percent in the metro with the lowest share to nearly 30 percent in the metro with the highest share.
The table below shows the ten metros where eds and meds make up the highest percentage of employment.
|U.S. Metros with the Highest Concentrations of Eds and Meds Jobs|
|Rank||Metro||Meds and Eds Share (percent)|
|3||Athens-Clarke County, GA||21.14%|
|5||Ann Arbor, MI||20.95%|
|9||Johnson City, TN||18.05%|
Unsurprisingly, many of the metros with the largest emphasis on meds and eds employment are small metros. Looking a little deeper, it becomes evident that there are two kinds of places on this list. One group is home to first-tier research universities and medical centers that are likely to not only survive but also thrive in any looming eds and meds disruption and shakeout. These include all five at the top of the list: Ithaca, New York (Cornell University and Ithaca College); Gainesville, Florida (University of Florida); Athens, Georgia (University of Georgia); Rochester, Minnesota (the Mayo Clinic); and Ann Arbor, Michigan (University of Michigan). The second group includes cities with far more regional institutions, generally the largest university or medical center in the surrounding area, but often not the state’s flagship. These places—like Goldsboro and Greenville in North Carolina; Johnson City, Tennessee; and Rome, Georgia—are much more likely to face considerable risk as the education and medical fields reform and centralize.
The same split pattern continues as we look at the metros that fall a little further down the list, including several large metros with populations over one million. Eds and meds make up more than 13 percent of employment in New Haven, Connecticut (17.32 percent); Flint, Michigan (16.04 percent); Rochester, New York (16.01 percent); Worcester, Massachusetts (15.76 percent); Syracuse (15.12 percent) and Buffalo (14.03 percent), New York; Boston, Massachusetts (13.94 percent); Providence, Rhode Island (13.88 percent); Hartford, Connecticut (13.63 percent); and Baltimore, Maryland (13.58 percent). Some of these metros—like New Haven, Providence, and Boston—have world-class clusters of medical and higher-ed institutions and are therefore among the places most likely to benefit from greater competition and clustering of these industries. Others have solid but not spectacular institutions that may enable them to survive if in shrunken form. Still others could be hard hit by the coming shifts.
• • • • •
All of this raises a larger question. How in general does the level of eds and meds employment affect local economies? Do metros with more eds and meds jobs fare better or worse than ones with lower shares of employment in these sectors?
To get at this, Mellander ran a simple correlation analysis of the share of eds and meds employment and key indicators of regional economic performance, such as income, wages, innovation and the like. As usual I point out that correlation points only to associations between variables and does not in any way imply causation. Still, her findings are striking and in line with Chatterjee’s argument.
Eds and meds employment levels were uniformly negatively associated with nearly every single important measure of regional economic performance: income, economic output per capita, and high tech industry concentration. (The correlations were not huge—in the range of 0.2—but they were statistically significant). This stands in substantial contrast to other highly educated, highly skilled occupational sectors like science and technology, business and management, and even arts, culture, and entertainment, which are all more concentrated and clustered geographically and much more closely associated with regional economic performance.
As I noted last fall, “Eds and meds may constitute a large part of the urban workforce and provide a substantial job base for many cities and regions, but they are not by themselves a source of economic development.” Chaterjee is right. Governments at all levels need to wake up to the fact that meds and eds will not be, by themselves, the ticket to economic growth.
*Correction: An earlier version of the table in this post incorrectly stated that Greenville is in South Carolina. It is in North Carolina.
Top Image: View from Cornell campus in Ithaca, New York, which has the nation's highest levels of eds and meds employment. Image courtesy Flickr user Unexplained Bacon.