Oct 12, 2022 - News

Philly's "eds and meds" economy

Illustration of an open briefcase full of pencils and health pluses.

Illustration: Aïda Amer/Axios

Higher education institutions and hospitals power nearly 13% of all jobs in our regional economy, according to a new report from the Federal Reserve Bank of Philadelphia.

Driving the news: The fed’s report, released last month, provides the first-ever nationwide economic assessment of the impact that “eds and meds,” also known as anchor institutions, have on their communities.

  • The report includes a “Reliance Index” that calculates how dependent local economies are on these establishments.

Zoom in: Philadelphia — home to the University of Pennsylvania and its health system, Children's Hospital of Philadelphia, and Temple University — is among the most heavily reliant on eds and meds compared to its peer cities.

  • We rank fifth among peer regions when it comes to the overall impact that anchor institutions have on employment, trailing New York City and Chicago.

Why it matters: Higher ed and hospitals have wide-ranging economic effects on their hometowns.

  • They help stabilize communities through their large employment pools, typically resist economic shocks, spark innovation and attract talent.
  • Plus: These institutions remain anchored to their regions, whereas corporate headquarters or manufacturing facilities can pick up and relocate.

Yes, but: These industries are experiencing disruptions as a result of the pandemic and remote work, demographic changes and rising costs.

  • The result, the report says: “Regions that have reliably depended on anchor institutions, especially as other industries have moved out, may be looking at uncertain futures.”

By the numbers: Eds and meds in the Philly region account for more than 495,000 employees and 8.4% of the region’s income — or $33.8 billion — per the report.

What they’re saying: Deborah Diamond, director of the Anchor Economy Initiative at the Philadelphia Federal Reserve, tells Axios that the city’s meds and eds have led to the creation of companies in different industries, such as Spark Therapeutics, a gene therapy company.

  • Those spin-offs, she believes, have helped reduce the city’s overall reliance on eds and meds.
  • They have “diversified our regional economy even further,” she said.

Go deeper: Read the full report and use the online dashboard.

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