Useful Stats: Employment in “Eds and Meds” by state

For decades, state and local economies have leaned heavily on their anchor institutions during times of economic uncertainty and transition. An analysis finds that total employment in “Eds and Meds” industries increased in every state from 2005 to 2015. This article breaks down the growth and geography of Eds and Meds employment at the state level, while next week’s issue of the Digest will explore this data by metropolitan area.

Authors Tim Bartik and George Erickcek make the case for hospitals and universities as economic development levers in “The Local Economic Impact of Eds & Meds: How Policies to Expand Universities and Hospitals Affect Metropolitan Economies.” They suggest that increasing employment at Eds and Meds institutions could enable them to serve more students or patients who would not otherwise spend money in a particular area, which in turn encourages economic development. These effects mainly manifest themselves at the metropolitan level, and are more pronounced for colleges and universities than hospitals. The presence of Eds and Meds institutions can also help residents improve their skills, spur entrepreneurship, and encourage employers to pay higher wages in the area, they find.

On the other hand, an overreliance on Eds and Meds employment can have downsides, especially in cities burdened with high legacy costs, according to a report by Stephen Eide of the Manhattan Institute published last October. For example, because most Eds and Meds institutions have nonprofit status, this means that a growing share of a state or city’s tax base is exempt from property taxes. Furthermore, colleges and hospitals face considerable pressure from outside forces to keep their costs down. This could limit their ability to continue to sustain growth over time.  

Nonetheless, the strategy is likely to remain common at both the state and local levels. This analysis will look at Eds and Meds through a state lens, while a subsequent analysis will address metropolitan areas.

Defining “Eds and Meds”

Eds and Meds industries are defined by five NAICS codes, according to Bartik and Erickcek’s research, which focuses on “service industries whose original primary goal is to enhance human capital, either through education or health care.” Three of these NAICS codes represent health care industries – ambulatory health care services (NAICS: 621), hospitals (622), and nursing and residential care facilities (623). Two represent educational industries: junior colleges (6112) and colleges, universities, and professional schools (6113). To impute suppressed data, the midpoint method is used in select instances.

Total employment

In general, there is a close relationship between a state’s total Eds and Meds employment and its total employment across all industries. The states with the most Eds and Meds jobs in 2015 are California (1.8 million employees), Texas (1.5 million), and New York (1.3 million); while Vermont (50,395), Alaska (38,728) and Wyoming (26,122) have the fewest jobs in Eds and Meds industries.  

Change in employment

Employment in Eds and Meds industries increased by 18.6 percent in the United States from 2005 to 2015, with the  fastest growth in the western part of the U.S. and slower in the Midwest and the South.

The states where Eds and Meds employment grew the most during that period were Wyoming (34.2 percent), Arizona (32.6 percent), and Idaho (32.4 percent). From 2005 to 2015, Eds and Meds employment grew the slowest in Louisiana (5.5 percent), Vermont (4.9 percent), and Arkansas (5.5 percent).

Per capita employment

Across the country, Eds and Meds industries represented 14.6 percent of all jobs, up from 13.2 percent in 2005 and down from 15.1 percent in 2010. States in the Northeast tended to have the highest share of employment in Eds and Meds industries, while geographically large, Western states had the lowest shares.

The states where Eds and Meds industries make up the largest share of total employment are Rhode Island (22.3 percent), Maine (20.2 percent), West Virginia (19.3 percent), Massachusetts (20.4 percent), and Pennsylvania (19.1 percent). California (12.3 percent), Hawaii (12.0 percent), Wyoming (11.9 percent), Colorado (11.8 percent), and Nevada (8.7 percent) had the smallest shares of Eds and Meds employment.  

Change in per capita employment

From 2005 to 2015, the share of the nation’s employment in Eds and Meds industries grew by 1.4 percentage points. The share of employment in Eds and Meds increased at the slowest rates in heartland states west of the Mississippi River. This share increased at a faster rate in some Western states, and many states in the Northeast and Midwest.

The states where share of employment in Eds and Meds increased the most from 2005 to 2015 are led by Maine (3.4 percentage points), Rhode Island (3.2 percentage points), and Delaware (3.2 percentage points). The states where share of employment in Eds and Meds industries decreased by the most were Alaska (0.6 percentage points), the District of Columbia (1.1 percentage points), and North Dakota (2.3 percentage points).