This shift underscores how important “eds and meds” institutions are to regional economies across the country.

Municipalities and eds and meds have a mutual vested interest in supporting their communities’ resilience and growth across many policy areas. Because their economies are deeply interrelated, collaboration can support the community in securing additional fiscal resources, expanding economic development, navigating housing and public safety needs, and the like.

But collaboration hinges on mutual understanding. New findings from the Federal Reserve Bank of Philadelphia’s Anchor Economy Dashboard, which measures the impact of higher education and hospital establishments in every region of the country, provide a good starting point for both local policymakers and eds and meds administrators to understand how these anchor institutions, and their revenue streams, influence their local economies. They can serve as the foundation for mutual solutions that advance local economic goals.

Calculating the effects of anchor economies

The Philadelphia Federal Reserve Bank’s Anchor Economy Dashboard uses employment, income, and gross domestic product (GDP) data to generate a “reliance index”—a measure of how dependent a regional economy is on these institutions for economic activity. Together, the Anchor Dashboard displays estimates for 520 regions, consisting of 386 metropolitan regions and 134 nonmetropolitan regions around the country. The index includes measures for employment, income, and GDP attributable to these anchor institutions.

Across the 524 regions, anchor institutions add, on average, about $4.3 billion to local GDP, $3.1 billion in personal income, and more than 37,500 jobs. Effects vary, of course, by the number of institutions, population, and population density in an area. In the 130 nonmetropolitan areas, anchor institutions add about $1.2 billion in GDP to local economies on average compared with $5.3 billion for metropolitan areas. In total, anchor institutions added more than $2.2 trillion to the US economy in 2024.

These overall effects are the sum of three factors: direct, indirect, and induced impacts on the economy. Direct impacts are goods and services purchases made directly by the institutions. Direct impacts make up 61 percent of the overall impact of these institutions on GDP and jobs and 70 percent of the impact on personal income.

Indirect impacts—such as how institutional purchases affect other businesses in the region—make up 13 to 15 percent of the overall impact. These facilities not only employ scholars and researchers but also support large numbers of workers in administrative, janitorial, food service, and other operational roles—creating broad, direct economic effects in the surrounding community. For example, The Ohio State University employs around 50,000 people, of whom about 7,800 are faculty. Nearly 23,000 of these employees work in hourly positions, making an average of about $32 an hour (roughly matching the average hourly wage for the Columbus area) and underscoring the institution’s critical role in regional employment. 

 Finally, induced impacts—those that result from the spending individuals earn from wages and salaries earned in the region—make up between 17 and 24 percent of the overall economic impact of these institutions on their communities. Take the Destination Medical Center Initiative in Rochester, Minnesota, for example. Working with the city, the Mayo Clinic is infusing more than $5 billion over the next 20 years to help build the public infrastructure and other projects to support the expansion of the Mayo Clinic. The project includes recruiting and financially supporting new businesses, including retail, dining and entertainment, and investment in a historic preservation district that will co-locate retail and dining establishments with cutting-edge educational and medical facilities.

How communities can include anchor institutions in their economic development strategies

The impact of eds and meds is especially important to understand now, at a time when these institutions increasingly face financial risks—from reductions in federal research funding and cuts to Medicaid that pose significant threats to both the institutions themselves and their surrounding communities.

As city leaders build their local economic development strategies, they will also need to consider how changes in federal policymaking—from cuts to research dollars to changes in health care spending—will affect anchor institutions. As these cuts threaten the fiscal stability of these anchor institutions, policymakers, business leaders, and other stakeholders need to prepare for spillover effects into local communities. 

Local leaders will need to think strategically about partnerships with anchor institutions that can help cultivate new economic opportunities in changing economic and federal funding landscapes. Community leaders can work with institutional leaders to ensure adequate housing and housing supports for students and the underemployed. Communities can also work with local employers to connect recently unemployed individuals or students to job opportunities. Likewise, job search supports provided by universities for their students could be expanded to enhance employment opportunities across the community.

All of this means bringing together anchor institution leaders, workforce agencies, and community stakeholders to assess both the short- and long-term risks to their communities and to develop plans for supporting workers and strengthening local economies.