Employment statistics, and their relationship to the strength of the U.S. economy, are frequently cited in political discourse. The subject of job creation is getting even more attention now, in the run up to the U.S. presidential election. The current trend is positive: Since 2010, the unemployment rate has fallen by half across the country. However, issues surrounding job creation are usually forward-looking: Where are stable jobs of the future?
One source of steady employment, which remains under the radar in public debate is the role of anchor institutions in local economies. Universities, colleges, hospitals and other enduring institutions provide various employment opportunities, while contributing to the health of local economies in other ways.
According to the Anchor Institutions Task Force, anchor institutions are enduring local organizations that play a vital role in their communities and economies. Anchor institutions have typically been situated in the same location for a long time. They are very unlikely to move location, even during adverse events like an economic downturn. They provide employment and stimulate the local economy. The stability of anchor institutions attracts local businesses, which position themselves to provide goods and services to the institution and its employees.
The anchor institutions of previous generations were often industrial companies which dominated the cities and towns in which they were located, such as the auto manufacturers of Detroit, or the steel mills of Pittsburgh. In other settings, department stores may have been the anchors. The companies once thought to be stable and enduring were also the most significant local employers beyond government. Today, in so many localities, the most significant local employers, after government, are universities and hospitals (see Table 1).
Despite the significance of these institutions to local economies, popular and political discourse does not always emphasize anchors, particularly those that are non-profit organizations like universities and hospitals. Employment growth is often treated as merely a feature of private sector expansion and incentives for corporations. While a great deal of attention is paid to bringing back lost jobs, there is less attention to forging strategies to build upon the most significant local employers in today’s economy. Indeed, it was the departure and downsizing of corporations that often led to universities and hospitals becoming the most significant local employers. When businesses left, universities, colleges, and hospitals endured, along with arts institutions, regulated industries and others. So, why the emphasis on the anchors of yesterday over the anchors of today?
The global economy is in transition, where manufacturing is declining and the knowledge economy is growing. In the U.S., the Bureau of Labor Statistics forecasts that between 2014 and 2024, the educational services sector will grow 10 percent and healthcare and social assistance sector will grow 20 percent. In the same time period, the manufacturing industry is set to shrink its workforce by 7 percent, while the number of agricultural jobs will be reduced by 6 percent. Stable jobs of prior generations have been eliminated. Some hope for their return. But, in many instances, these jobs are obsolete, as they have been replaced by automation. And the speed of these changes is fairly rapid, destabilizing many local communities. In an unstable context, the endurance of anchors is an opportunity.
Boston is an example of a major urban center with an economy that is fueled by anchors. Not only are hospitals and universities substantial local employers, these institutions contract with businesses that employ locally, and their continued knowledge development has influenced the growth of private industry. One of the great challenges with knowledge-oriented development that is driving the economy of the future is the scope and scale of opportunity. Growth in employment that requires substantial formal education and specialized expertise without greater access to quality education for a broad cross section of the population can exacerbate existing inequities. And this is what we have begun to see already, where lower-income populations can only access unstable, low-paying service jobs with limited or no benefits. If we are to expand opportunity widely, it will be crucial to connect anchor institutions with their communities.
In 2014, educational, healthcare and social assistance services accounted for over 14 percent of jobs in the U.S., as reported by the Bureau of Labor Statistics. However, the economic impact of anchor institutions in these sectors is not limited to employment. The direct and indirect spend through procurement activities is a vital part of their footprint. For example, the American Hospital Association estimated that the spend on goods and services purchased by hospitals in 2013 supported $2.6 trillion in economic activity across the U.S. In addition, the core activities of anchor institutions mean that they are well positioned to prepare young people for employment in growth sectors that will be vital to maintain a strong future economy. In order to make the most of their unique position, anchor institutions are increasingly working collaboratively in order to positively transform their local communities.
Table 1: Largest employers (excluding government) in 5 most populous cities in the U.S.
Examples of the impactful role of anchor institutions are found both across the U.S. and internationally. The case studies below provide an illustration of the transformative capacity of anchor institutions, particularly when they work collaboratively.
Healthy Neighborhoods Albuquerque, New Mexico
In Albuquerque, New Mexico, six anchor institutions from the healthcare and higher education sectors have formed a coalition to leverage their purchasing and hiring practices with the aim of creating “Main Street” jobs in the city.
The coalition is called Healthy Neighborhoods Albuquerque and is led by the University of New Mexico Health Services Center. As well as implementing a local purchasing and employment strategy, the coalition will train high school students in skills that will help them to secure entry-level jobs in the anchor institutions when their time comes to enter the job market.
In the United Kingdom, the Centre for Local Economic Strategies has worked with the city of Preston to engage six anchor institutions in understanding how they can maximize their impact on the locality through procurement.
An initial baseline analysis of procurement by the six institutions was undertaken and found that 39 percent ($423m) was spent with organizations based locally. Next, a strategy was developed with the vision of building community wealth through a long-term collaborative commitment. Strategic objectives include encouraging local businesses and social enterprises to bid for contracts with anchor institutions, simplifying the procurement process, and reducing the leakage of spend from the local economy.
Greater University Circle Initiative of Cleveland, Ohio
Since 2005, a group of anchor institutions in Cleveland, Ohio, have been working together in a bid to address the keenly-felt effects of economic downturn in the city. Known as the “Greater University Circle Initiative,” the approach aims to rebuild disinvested neighborhoods in the Greater University Circle area and improve the economic opportunities of the people who live there.
One of the initiative’s four strategic areas is economic inclusion. This involves encouraging the anchor institutions of the Greater University Circle area to buy local, hire local and deliver vocational training programs in order to stimulate the local economy and address joblessness in nearby neighborhoods.
Examples of the initiative’s economic inclusion strategy include the development of the Evergreen Cooperative Initiative, which aims to create worker-owned, green, for-profit businesses providing goods and services to the area’s anchor institutions. By 2013, Evergreen businesses employed 82 Greater University Circle residents. In terms of workforce development, 2010 saw the opening of the NewBridge Cleveland Center for Arts & Technology, which provides youth and adult training programs in job skills.
Central Corridor Anchor Partnership, Minneapolis – St. Paul, Minnesota / Wisconsin
The Central Corridor Anchor Partnership consists of 13 anchor institutions, including colleges, universities, healthcare organizations and hospitals. The partnership aims to secure regional prosperity for the Twin Cities region, with a focus on the central corridor neighborhoods.
The anchor institutions constituting the partnership have three strategic goals, two of which focus on developing local businesses and the skills of local residents. The partnership aims to spend more with central corridor businesses that employ and invest in the local community. By leveraging the purchasing power of the partnership in a mutually beneficial way, preferred procurement options have been initiated with local suppliers of appliances, window cleaning, snow removal and food.
The partnership also aims to develop the skills of and hire central corridor residents so that the anchor institutions’ workforce is more representative of local communities. For example, the partnership supports Scrubs Camp, which gives high school students a week-long, hands-on experience of what it would be like to pursue a health care career. In its sixth year in 2015, 75 students completed the camp.
Homewood Community Partners Initiative, Baltimore, Maryland
Established in 2011, the Homewood Community Partners Initiative was initiated by Johns Hopkins University. It grew out of the understanding that the health of the university’s Homewood campus was closely tied to the physical, economic and social well-being of its surrounding neighborhoods. The initiative focuses on what it considers to be six interrelated elements of a sustainable community, including local hiring and purchasing, and workforce development.
Anchor institutions and other enterprises in the area develop the local economy by hiring local residents and purchasing from local businesses. Workforce development initiatives focus on increasing the supply of capable workers through training and skills development programs for residents.
Modern day anchor institutions such as hospitals and universities are vital contributors to their local economies, not least in terms of job creation. As demonstrated in an increasing number of local initiatives, anchors have the potential to create a multiplier effect toward job creation inside of their institutions, through their vendors, and in their knowledge contributions to the development of the industries of the future. The technology industry, for example, would not be what it has become without the support for knowledge development of universities. Healthcare and related industries such as biotechnology are among the fastest job creators for the future, significantly due to universities and hospitals.
There is an opportunity for anchor institutions to turn their contributions into even greater positive and enduring change, through hiring, purchasing and expanded civic engagement. In order to achieve this level of impact, a multi-stakeholder approach is required in order to create a policy environment which encourages anchor institutions to transform their local communities.
This is indeed a cross-sector concern. Collaboration across government, anchor institutions, philanthropy, the private sector and others can help shape coordinated strategies to expand employment opportunities in localities. The Anchor Institutions Task Force has been bringing representatives of these fields together to help craft the kinds of approaches that can maximize the economic and social potential of anchor institutions.