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Federal Reserve Bank of Philadelphia releases the Anchor Economy Report, dashboard

October 06, 2022
By: Conor Gowder

In an effort to help to determine the economic impact of higher education institutions and hospitals within their regions and how reliant these regions are on these “anchor institutions” to drive their economy, the Federal Reserve Bank of Philadelphia developed an Anchor Economy Initiative. It recently published an Anchor Economy Report and created the Anchor Economy Dashboard, a new data set and website that measures employment, income, and gross value added from the institutions and hospitals, along with a new reliance index tool, for all 524 multicounty U.S. regions (394 metropolitan and 130 nonmetropolitan).

An “Anchor Institution” is defined as an institution of higher education or hospital and the report found that across the 524 multicounty regions there are a total of 24,155 anchor institutions that contribute $1.7 trillion annually in goods and services to the U.S. economy, directly employ 10 million people, and indirectly create an additional 8 million jobs in other industries nationwide.

The Anchor Economy Report also outlines the level of research funding awarded to anchor institutions. More than half (58%) of regions reported receiving no research funding from NSF or NIH, while 20% received up to $10 million, 13% between $10 and $100 million, 6% between $100 and $500 million, and 3% reported greater than $500 million.

The reliance index is calculated by dividing each of a region’s anchor institution’s employment, income, and gross value added (GVA) by the region’s total employment, income, and GVA. These three proportions are then divided by their respective national values then averaged to generate a reliance index value. A reliance index of 1.0 indicates that a region’s anchor institutions contribute the same proportion of the above variables as the national proportion, while those above 1.0 indicate a higher reliance and those below 1.0 indicate a lower reliance (e.g., 1.5 shows a 50% greater reliance than the average region).

The Anchor Economy Report reveals that the Cleveland-Elyria, Ohio region is the most reliant on Anchor Institutions out of all regions with populations greater than two million, with a “reliance index” score of 1.72 (median for comparable regions is 0.96), while the San Francisco-Oakland-Hayward, California region is the least reliant (0.60).

For regions with populations between one and two million (median 1.16), Rochester, New York is the most reliant (1.88) while Raleigh, North Carolina is the least (.78) reliant.

For regions with populations between 500,000 and one million (median 0.95), Durham-Chapel Hill, North Carolina is the most (2.86) while West Texas Region of Texas nonmetropolitan area is the least (0.36) reliant.

Of those with populations between 250,000 and 500,000 (median 0.88), Ann Arbor, Michigan is the most (3.23) while the Nevada nonmetropolitan area is the least (.29) reliant.

Finally, of the regions with less than 250,000 people (median 0.90), Ithaca, New York is the most (3.71) while Midland, Texas is the least (0.18) reliant.

Looking at the median reliance index for each population strata, regions with populations between one and two million are the most reliant on their anchor institutions to drive economic activity (a median of 16% above the national average), while regions with populations between 250,000 and 500,000 are the least reliant (a median of 12% below the national average).

economy, report, economic impact report, higher ed, federal reserve