For immediate release

Contact: Daneil Mazone, Media Relations

Washington, D.C. — Federal Reserve Bank of Philadelphia President and CEO Patrick T. Harker today urged an audience of college and university presidents and chancellors convened in Washington, D.C., to embrace their role as anchor institutions and economic engines to help overcome the current climate of uncertainty facing the U.S. higher education sector.

Harker was a headline presenter at the Presidents and Chancellors Summit, hosted by the American Council on Education, introducing research conducted by the Philadelphia Fed’s Anchor Economy Initiative in a talk titled, “The Anchor Economy Amid Shifting Sands.”

Harker posited to the audience of approximately 150 higher education leaders that, while this is an uncertain moment for American colleges and universities, the legitimacy of higher education is necessary for a skilled workforce and democratic citizenship. At the ground level, colleges and universities are anchor institutions with benefits — economic, social, and cultural — that extend beyond campus walls.

To further the discussion, Harker turned to research conducted by the Anchor Economy Initiative that, for the first time, compiled data measuring the economic impact of higher education and health-care institutions, so-called eds and meds. These data reflect the number of jobs created and supported by anchor institutions — whether directly, indirectly, or induced — along with those institutions’ combined impact on regional economies through both total household incomes and total economic activity. In 2019, the latest year in which full data are available, the U.S. anchor institutions accounted for more than 18 million jobs — 9 percent of total nationwide employment — providing more than $1.1 trillion in household incomes and supporting roughly $1.7 trillion in total economic activity, which is 8 percent of the nation’s gross value added.

The Anchor Economy Initiative’s dashboard further breaks down the employment, income, and economic activity data for each of 524 statistical areas across the nation, along with calculating a reliance index, which measures how reliant an area is on its anchor institutions for total economic activity. The index is set with a reliance level of 1 as a national benchmark. Regions rating above 1 have a greater level of economic impact from eds and meds than the average, while those below 1 see less economic impact from eds and meds than the average.

Areas with a higher reliance on eds and meds may ultimately be more vulnerable to downturns affecting anchor institutions, such as a marked decline in college enrollments, though a higher reliance index score may also denote greater regional anchor institution strength.

As an example, Harker pulled dashboard data for the Philadelphia Fed’s own metropolitan statistical area (MSA), which showed anchor eds and meds institutions impacting the employment of more than 495,000 residents, providing wages totaling nearly $34 billion, and adding more than $50 billion in overall economic value. The Philadelphia MSA’s Reliance Index rating of 1.39 means it leans more on anchor institutions than the average, though Harker noted that given the region’s density of higher education and health-care institutions, that rating is more than likely an indicator of the sector’s overall strength.

He said that, ultimately, the Anchor Economy Initiative and the dashboard are provided as tools for anchor institutions to not just measure their impact on their home regions, but to also help institutions — particularly in higher education — find future opportunities amid current challenges facing the nation’s colleges and universities. By seeing for the first time the true impact institutions have on the broader communities that reside outside a campus, leaders could use the dashboard as a tool for creating new economic development planning partnerships.

Harker said the Anchor Economy Initiative can help college and university presidents and chancellors answer a very basic question: “What are colleges and universities for?”

Harker responded that institutions of higher education are vital for growing talent, securing long-term economic and social stability, driving innovation, and creating equitable economic opportunity.