Can Legacy Cities Survive the "Meds And Eds" Downturn?

In cities like Philadelphia and Syracuse, a third of the economy is "meds and eds". But with Trump targeting NSF, NIH, and Medicaid, can they survive?

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The era of “Meds and Eds” may be coming to and end – and that could be bad news big central cities big and small across the country.

For a couple of generations – ever since the decline of large urban manufacturing, especially across the Rust Belt in the 1970s – hospitals, universities, and similar “anchor institutions” have been the mainstay of the American urban economy. Unlike manufacturing companies and corporate offices, they weren’t “footloose”. Rather, they had huge place-based investments in urban locations – many of them otherwise distressed – and weren’t about to move. Think, for example, of Columbia University in the Morningside Heights section of Manhattan, close to Harlem, or the University of Pennsylvania in West Philadelphia.

The University of Pennsylvania and the surrounding West Philly neighborhood.

And as the ‘90s and ‘00s unfolded, these anchor institutions became even more important to cities than ever before. In periods of urban unrest, they doubled down on their location and began to do a better of job of connecting with the surrounding communities. A good example is the University of Southern California in South L.A., where I used to teach, which learned these lessons after the 1992 L.A. riots touched its neighborhood. Also, as these institutions got bigger, their footprint in these neighborhoods grew dramatically. Often they became the biggest employer in the city.

In 2010, my mentor Neal Peirce and Joe Cortright underscored this dominance in a report highlighting the importance of urban universities to their host cities, writing: “Urban universities are anchors in all of the 100 most populous metropolitan regions in the United States. They possess a scale and breadth of resources available to few other urban-based entities. Their unique assets put them in unparalleled positions to partner in the development of cities.”

But here’s the problem: Central cities became too dependent on “meds and eds”. And now that the Trump Administration has targeted these two sectors, it’s likely that cities will struggle to maintain and replace these important centers of employment, research, and innovation.

Legacy Cities Are Extremely Dependent on Meds and Eds

Indeed, the economy of large legacy cities has become astonishingly dependent on meds and eds – and on the federal funding that has supported these two sectors.

The best tracking of meds and eds in cities comes, appropriately enough, from the Philadelphia Fed and its anchor institutions dashboard. The dashboard shows that there are a lot of smaller cities that are highly dependent on meds and eds – for example, college towns such as Charlottesville and hospital towns such as Rochester, Minnesota, home of the Mayo Clinic. Among larger cities, however, there’s a definite “legacy” patterns. Here, according to the dashboard, are the nine largeish cities (after Rochester) most dependent on meds and eds:

2. Pittsburgh

3. Philadelphia

4. Cleveland

5. Syracuse

6. Baltimore

7. New Haven

8. St. Louis

9. Providence

10. Buffalo

All legacy cities in the Northeast and Midwest, most of which have experienced near-catastrophic population declines in recent decades. Some of these cities have come back strong in the post-industrial era – Pittsburgh and St. Louis most prominently – on the backs of meds and eds.

But the Trump-era cutbacks in federal funding for meds and eds could be catastrophic as well for these cities. Perhaps the most interesting example is Philadelphia, which is by far the largest city on the list.

A Third of Philly’s Economy Is Meds and Eds

According to the Philadelphia Fed’s data, more than a third of Philadelphia’s economy is dependent on meds and eds. The leading anchor institutions include Penn, Children’s Hospital, Thomas Jefferson University (and Jefferson Health), Temple, and Drexel. Together these institutions bring in around $1.25 billion a year from the National Institutes of Health alone (more than half of which goes to Penn). Meds and eds account for a half-million jobs in Philadelphia.

Between cuts to NIH, the National Science Foundation, and Medicaid, the anchor sector in Philadelphia could be dramatically reduced.

A smaller-scale example is Syracuse – the smallest city on the list above except for New Haven (and only slightly above that city) and the city where I began my career as a journalist. When I was a kid and even a young reporter, Syracuse had a robust manufacturing economy revolving around Genera Electric, which was located on “Electronics Parkway” along I-90. Today almost all the manufacturing is gone and “meds and eds” are pretty much all that’s left: Syracuse University, SUNY Upstate Medical Center, and Crouse Hinds Hospital, all of which are located on “University Hill” up the hill from Downtown Syracuse. Like Philadelphia, more than a third of Syracuse’s economy is dependent on meds and eds.

The I-81 viaduct in Syracuse separates University Hill from Downtown and a poor Black neighborhood.

Ironically, there’s a turf battle going on in Syracuse right now between the meds and eds up on the hill and a very poor, mostly black neighborhood in the flats below. The I-81 viaduct will soon be removed, creating new available parcels adjacent to the black neighborhood. Local residents are worried that the meds and eds will come down the hill and scoop up the land, expanding their footprint. But with less NIH and Medicaid funding, will that really happen?

To be fair, these cities recognize that they have to pivot. Syracuse is banking on a revival of manufacturing due to the arrival of Micron, which is building the largest semiconductor plant in the world north of the city (with help from the CHIPS act, another federal source of funding). Philadelphia still has considerable manufacturing, plus it’s probably the biggest oil refining center in the Northeast (which could benefit from Trump’s policies), and the meds and eds sector is aggressively seeking to spin off research into commercialization in the region.

In the end, that’s probably the answer for most of the meds-and-eds cities: The future isn’t the meds and eds themselves, but rather the commercial spinoff that comes from them.

And which cities are at the other end of the spectrum – the ones that are least dependent on meds and eds? Well, here’s the list from the Philadelphia Fed:

1. Boise

2. Orlando

3. Reno

4. Houston

5. Cape Coral

6. San Jose

7. Lakeland/Winter Haven

8. Las Vegas

9. Bakersfield

10. Midland/Odessa

An interesting list because it reveals the sections of the economic that appear to be least dependent on federal spending (or, at least, direct federal spending): technology, tourism, and energy. Houston has a huge meds-and-eds sector focused around the Texas Medical Center and Rice University, but it’s dwarfed by the energy sector. Orlando and Las Vegas are tourist meccas. Bakersfield and Midland/Odessa are oil-and-gas towns. And there may be some eds-and-meds spending hidden here: cape Coral and Lakeland/Winter Haven are probably highly dependent on Social Security and Medicare, but those funds don’t necessarily go directly to the institutions.

The only city not in the Sunbelt on this list is Boise. Why? Because Boise is the headquarters of Micron – the semiconductor company building a huge plant in Syracuse. So maybe cities like Syracuse will survive the meds-and-eds downturn after all, if they are well connected to economic sectors (and cities) that are still thriving outside the meds-and-eds sector.