What does the health economy mean for Gateway Cities?

First in a series of three blogs on the state’s changing regional economies

Looking at the economic recovery of Gateway Cities through the lens of job growth, it appears that the state’s regional cities have regained lost ground. But growth in total employment obscures more fundamental change in the base of Gateway City economies.

Gateway Cities ended 2013 with just as many jobs as they had in 2004, but as depicted in Figure 1, without 26,000 new jobs in health care and social assistance services, Gateway City employment would have stood 7 percent lower in 2013. For many cities, these health care gains were critical. Instead of remaining even, Springfield would have lost 10 percent of its jobs over the last decade without health care growth; Fall River’s 10 percent loss would nearly double to an 18 percent hit between 2004 and 2013.

The Gateway City trend contrasts sharply with Boston, a global leader in health. The number of jobs in Boston grew 9 percent. Take out gains in health care and the city still saw a 7 percent rise in employment.

Thousands of lost Gateway City manufacturing jobs have been replaced by health services jobs. Manufacturers made products sold outside their cities and regions, bringing new dollars into local economies. In contrast, many of the health care jobs created during the last decade were enabled by state and federal transfer payments for poverty alleviation services. These industries still largely drew dollars from outside the local economies, but the sustainability of this path is questionable.

The challenge is even clearer when you look within the large health care industry to reveal the fastest growing subsectors. More than 60 percent of the growth in health care came in individual and family services, a division that represents companies providing non-residential social assistance services for children and the elderly. A quick glance at Figure 2 shows that the largest gains in this sector tended to occur in cities with high concentrations of poverty.

Between 2004 and 2013, the 16,000 jobs created in individual and family services outnumbered the 14,000 manufacturing jobs Gateway Cities lost. Stats like these should be top of mind for state policymakers. The economic base of our regional cities still shows real signs of linkage. We’re plugging the hole with transfer payments, which is problematic for the long term.

– Ben Forman

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