More college grads are needed to spur an “eds and meds” economy

Nov. 2, 2007
Chris Satullo
Inquirer columnist

'Philly is a great place to get sick in."

Asked to name some positives about living in Philadelphia, a participant in a Great Expectations forum blurted that answer.

The fellow was right, even if he stated the truth in a perversely Philadelphian way.

The Philadelphia region boasts one of the finest health-care clusters not only in the nation, but also in the world.

Consider: Five medical schools plus a raft of teaching hospitals. The nation's top-ranked children's hospital. A top cancer center. More than 30,000 pharmaceutical jobs. An agile group of biotech companies. A 2005 Milken Institute study ranked Philadelphia's life-sciences cluster as the third most potent in the nation, behind Boston and San Francisco Bay.

"Greater Philadelphia has assets other regions can only aspire to develop," the study said.

Philadelphia also is a great town to be smart in. The region has 88 colleges and universities, with 360,000 students, including a hot Ivy (Penn) and three of the top 25 liberal arts colleges in the U.S. News rankings (Swarthmore, Haverford, Bryn Mawr).

The region's colleges and hospitals (or "eds and meds" in economic lingo) form the backbone of its economy. Higher education and health care account for seven of the top 10 private employers in Philadelphia and its Pennsylvania suburbs (see chart).

That reliance has benefits: Eds and meds aren't flash-in-the-pan businesses. People always get sick, always seek education. What's more, universities and hospitals attract smart, talented people to the region. They offer local residents a rich menu of well-paying jobs other than doctor and professor. And, as institutions with huge sunken investments in urban neighborhoods, many universities and hospitals make big, strategic bets to boost their communities. Penn is a national innovator in this area.

But there are downsides: Eds and meds rely heavily on government funding, which is fickle. Each sector is for the most part nonprofit, meaning it doesn't breed entrepreneurship or create much new wealth.

At least around here it doesn't. That is the worrisome puzzlement about Philadelphia's eds and meds. In places such as Cambridge, Mass., California's Silicon Valley and North Carolina's Research Triangle, academic and medical research produces innovations, patents, spinout businesses and jobs at a far brisker pace than in Philadelphia.

Professor Richard Florida, the oft-quoted guru of "the creative economy" (which runs on brains, not brawn), last year ranked hundreds of U.S. regions on how much their research universities did to fuel their economies. (Find the study at http://www.creativeclass.com.) Philadelphia didn't rank in the top 10 for a single one of Florida's measures - not research dollars per capita, not patent applications, not research-driven business start-ups.

Philadelphia wasn't the only city struggling to convert academic heft into marketable innovation and economic pop. Florida speculated that universities must be "embedded in a broader regional ecosystem that can absorb their research and inventions and turn them into . . . long-run growth." He used the image of a transmitter and receiver: Some universities might transmit signals that their regions are not set up to receive.

Why does Philadelphia hear its eds and meds only dimly? The question points to a deep problem with Philadelphia's present and a huge challenge for its future. It is this:

Not enough Philadelphians go to college. And not enough bright kids from elsewhere stay after getting diplomas.

The familiar term brain drain doesn't quite capture the situation. A healthy segment (86 percent in a 2004 study) of local grads of local colleges do stay in the area. What's low is the share (29 percent) of kids from elsewhere who stick around after getting diplomas from Drexel, Villanova, etc.

The biggest problem, by far, is how few city residents attend college at all. The city ranks 92d out of the 100 largest cities in educational attainment. Suburbanites gobble up college credits at a good clip, raising the region's educational attainment to middle-of-the-pack.

This weakly educated workforce is a grievous blemish on the city's business appeal. The city's bizarre tax structure, seemingly designed to punish start-ups and entrepreneurs, helps not one bit. The city and state have been energetic in whipping up tax breaks and incentives for biotech and high-tech firms, and the city's biotech incubator, BioAdvance, does good work with the tobacco-settlement funds it gets.

But those efforts just level a playing field that has been tilted the wrong way. Meanwhile, other regions with fewer marquee institutions throw around huge bucks to nurture biotech sectors.

Cultural issues also may hurt. In a city where so few went to college, "ivory tower" gibes are common and town-gown tensions run deep. La Salle University got beat up for years for wanting to curb traffic on a street bisecting its campus. Temple University announces a plan to help its workers buy homes nearby and North Philadelphians grumble that they don't want "Temple people" on their blocks.

The academic institutions aren't blameless. Operating in bubbles, they can make ham-handed decisions that offend the community, such as Thomas Jefferson University's surprise sale of Thomas Eakins' painting The Gross Clinic.

Local campus cultures also may inhibit the transfer of ideas and innovations to the local economy. After all, the digital computer was invented at Penn, but the computer industry had to go elsewhere to take root.

It's not that Philly does nothing well in this area. Civic worrying about the "brain drain" led to creation of the Campus Philly operation (http://www.campusphilly.org), which coaxes kids to apply to local colleges, helps them sample cool things to do while here, and hooks them up with employment networks so they'll stay.

Campus Philly's efforts are nationally regarded as state of the art; in fact, a study funded by the Boston Foundation urged that city to look at Campus Philly for inspiration. Boston! Imagine that.

But Jon Herrmann, the able head of Campus Philly, says there is much yet to be done. As much as a lively club and arts scene helps, career goals still drive grads' decisions on where to live. To them, the idea of staying with one employer for a lifetime is as foreign a concept as staying in touch with friends by typing letters on a Smith Corona.

"It's about a pool of jobs in their field, a critical mass of opportunities they can work through," said David Thornburgh, a senior adviser with Econsult Corporation and a founder of the region's "brain gain" strategy.

That's where Philly falls short in the image race among the young and the able. To be seen as having that critical career mass, the region needs to capture more jobs generated by its research triumphs. That means, for starters, having political leaders who see the need. It also means doing more to connect grads to job bases that may be better than they suspect (e.g., in information technology).

It means, above all, becoming a region that views a college degree as a crucial thing to have - and a college grad as a vital person to keep.