A group of professors from colleges like Penn, La Salle and Temple were working in the early 90s to explain how universities and hospitals could drive a city’s economy and improve the communities around them. At this time, hospitals and colleges were known pretty much only for their service functions. Hospitals treated patients. Colleges educated students. That was about it.
To gain traction, their movement needed to convince city and university leaders of these institutions’ power, but it also needed a catchy name. As Penn professor Ira Harkavy recalls, one day at lunch his late colleague Lee Benson thought of one, and the buzzword that’s come to define the economy of Philadelphia and numerous other cities was born right here: “Eds and Meds.”
Since its inception, you’ve probably heard the phrase ‘Eds and Meds’ numerous times to describe Philadelphia’s economy. It’s basically what we’re known for. Our city features more than 15 hospitals and massive research universities like Drexel, Penn and Temple. But do you really know how big this industry is?
The last few decades, this sector has been one of the few growing parts of Philadelphia’s economy, and the number of people they employ is probably greater than you’d imagine.
Their size and growth
In 1998, about 29 percent of Philadelphia’s workforce consisted of Eds and Meds workers. These days the number is even higher, according to figures from the Census’ County Business Patterns. Thirty-eight percent of employed people in Philadelphia work in the Eds and Meds sector, a total of about 144,000 employees in healthcare and 81,000 in education.
Another way to see their dominance of Philadelphia’s economy is through the city’s biggest employers. Nine of Philadelphia’s top 10 largest private employers and 12 of its 15 largest are eds and meds. In 2000, only five of Philadelphia’s biggest private employers were Eds and Meds.
While the share of Philly’s workers who are employed in this sector is massive, it’s not unheard of. Most every major city has at least one university or health system among its top 10 private employers. Baltimore has an even greater percentage of employees in the sector, at 41 percent.
But for the most part Philadelphia is unusual. Even well-known Eds and Meds cities like Houston and Boston don’t compare.
Philly’s economic savior
Most everyone knows the story of Philadelphia’s past. We were the workshop of the world. Manufacturing jobs could be found throughout the city and especially along the rivers. It all began unraveling in the 1950s. In 1953, about 359,000 people worked in manufacturing in Philadelphia, representing 45 percent of the workforce. The most recent count from 2013 put the number of manufacturing employees at 21,117, not even 4 percent of the workforce. Put another way, since 1970, Philadelphia lost 94 percent of its jobs in that sector.
It hasn’t succeeded in adding employment elsewhere, either. Compared to 1970, Philadelphia has about 25 percent fewer jobs. That number hasn’t changed substantially in the last 20 years, meaning that the recent growth seen toward the end of the Nutter administration still won’t bring Philadelphia anywhere close to where it used to be.
Manufacturing jobs weren’t the only ones lost during that period. Government jobs decreased. So did other private sector jobs.
Eds and Meds have been the main outlier. Even during the peak of the recent recession from 2008 to 2011, employment increased in eds and meds each year (healthcare employment did dip slightly from 2011 to 2013). The reason why Philadelphia has such a high percentage of these jobs likely has as much to do with their success as it does with the failure of numerous other industries.
“Had we not been fortunate to be so strong in those two areas we’d be struggling,” said James Cuorato, the director of commerce under Mayor John Street and currently the president/CEO of the Independence Visitor Center.
Some of Philadelphia’s economic success with Eds and Meds boils down to luck, or at least piggybacking off the ambitions of the universities. Philadelphia couldn’t just start thriving universities and hospitals from investment. Penn had been a top university since Ben Franklin founded it, and Drexel and Temple have risen in terms of enrollment and academic prestige in the last 25 years. All of them have received grants and donations for research and foundations that have allowed them to grow.
The city has not been directly involved in most of their growth and success. But sometimes it has stepped in with good results. Cuorato gave an example of the old Civic Center, located on 34th Street near Franklin Field. The building became unnecessary after the completion of the Pennsylvania Convention Center, and the city worked out a deal so nearby CHOP and Penn could use it. Among the buildings now located on that site is the Perelman Center for Advanced Medicine. Joe Biden stopped there at the beginning of his “Moonshot” mission to cure cancer.
A term now used for hospitals and universities is anchor institution. They create jobs for workers of varying skills and education levels — from doctors to custodians — and often attempt to serve the neighborhoods they inhabit. The latter is a relatively new phenomenon.
Until the late 1980s and even early 90s, Penn mostly acted as an invasive species in West Philadelphia. It tore up neighborhoods with little thought for residents. While gentrification in neighborhoods by colleges has been a divisive issue, Penn and other Philadelphia universities have attempted to give back and develop their surrounding areas. Over the years, the Netter Center for Community Partnerships, for which Harkavy works, has for more than two decades served the West Philadelphia community, creating relationships so students and faculty can interact in the neighborhood in fields like education, environment, health and beyond.
“It isn’t just being an Ed or Med,” Harkavy said. “It’s how you act.”
Is it bad for Philadelphia to be so dependent on this category of commerce?
The good news is employment in this sector has shown few signs of slowing down. As mentioned above, Eds and Meds were recession-proof in Philadelphia.
But just like manufacturing, no field is impervious to change. Some economists are already saying its growth period is coming to an end because of rapidly expanding costs for healthcare and education. Harrisburg could also cause problems. Education funding has gone down in recent years, and politicians blocked money from going to schools like Temple in the partial budget that passed earlier this month.
Philadelphia might not deal as acutely with these challenges because of the size and strength of its universities and hospitals. Some of them are among the best in the world. The downturn is more likely to affect small or midsize cities who might see their students or employees leave for the bigger institutions of the biggest cities.
The other problem is one the city has been dealing with for a long time. Universities and medical centers in Philly produce some of the best talent in the country. In areas like Boston and San Francisco, these graduates have gone on to start businesses that have helped improve other sectors of their cities’ economies. But graduates don’t often stay here.
In the early 2000s, about 29 percent of graduates who weren’t from the Philadelphia-area stayed around after college. A study from 2014 showed that number had increased to 42 percent (the rate for all students, including natives is 64 percent, which is about 20 points higher than the national average, according to Campus Philly). Philadelphia is getting better at retaining its talent but still needs plenty of help.
Update: This article has been updated to contextualize Philadelphia’s retention rate of students compared to the rest of the nation.