By: Marian Kansas, Consultant
Alan Mallach’s book The Divided City: Poverty and Prosperity in Urban America explores the rise and fall of America’s industrial cities. For us, it was an illuminating read on economic development, especially as Avalanche is advising communities across the Rust Belt.
We were especially interested in the chapter “From Factories to Eds and Meds.” Cities with rich histories like Baltimore, Cleveland and Pittsburgh have been able to weather the difficult transition in part because of their strong higher education and healthcare sectors (“eds and meds”).
The story of the shrinking manufacturing sector is not a new one. Advanced technologies have made it easier to manufacture products more quickly and at a lower cost with fewer workers. One plant discussed in The Divided City is still open and operating “but with 5,000 workers rather than the 30,000 that once worked there.” Manufacturers also expanded outside of the Rust Belt in states without unions or to overseas locations with lower labor costs, compounding the issue.
But, while manufacturing was cutting jobs and moving out of the Rust Belt, the higher education and medical sectors started booming across the nation. The US went from spending $12 billion on healthcare in the 1950s to more than $3 trillion this decade (“more than twenty-five times what we spent in 1950” when adjusted for inflation). While not quite as explosive, the higher education industry also grew rapidly. In the 1940s, “only 5% of US adults had graduated from a four-year college . . . Today it is 32%”.
For industrial cities with a university or medical center, the economic losses of a declining manufacturing industry were cushioned by increased spending on healthcare and higher education. These institutions were often long-standing members of the community (such as Yale University in New Haven or Carnegie Mellon University in Pittsburgh) and had a special relationship with their home city that couldn’t be replicated elsewhere. Industrial cities that had anchor universities or medical centers fared much better than others. For example, “in 1958, nearly 100,00 people worked in [Pittsburgh’s] 1,000 factories. Today, there are only 7,300 manufacturing jobs left in Pittsburgh, but 90,000 in the city’s new leading industries – education and healthcare.”
Eds and meds sectors are an important economic catalyst for several reasons. Research facilities, startups, cultural amenities, and university or medical center expansions cluster together and “generate billions more indirectly, through spin-offs and through the spending of their employees and -increasingly- their student bodies.” Eds and meds sectors also draw talent to their doorsteps. Finally, these sectors caused a reinvention of some cities into centers of consumption, or “scenes” as Mallach calls them. As their workers grow in number, they demand better quality of life amenities like high-quality shopping, dining, and entertainment. The Divided City found that industrial cities that invested in scenes fared better economically than those that didn’t.
These sectors have been vital to the Rust Belt’s economy recovery. However, the shift from a manufacturing-based economy to an eds and meds-driven economy does come at a cost to low-income residents and low-skilled workers. The manufacturing industry provided opportunities for workers to land a living-wage job with a high school degree. When those jobs left, former manufacturing workers often didn’t have the skillsets needed to transition into healthcare or higher education fields. Mallach sums it up by saying “while [eds and meds] businesses and jobs are important for their cities’ vitality, they leave most of the people who live in these cities behind.” This shift to eds and meds, while well intentioned, can exacerbate issues like generational poverty, income inequality, and gentrification.
There’s no doubt that a strong higher education and/or healthcare sector is good for a community, not just for the services they provide but also for the community and culture created around them. However, it’s important to recognize the tradeoffs made when investing in these industries and finding opportunities for all residents and workers to be successful and thrive.
Mallach, Alan. The Divided City: Poverty and Prosperity in Urban America. Washington, D.C, Island Press, 2018.