Tim Crouch is in the business of selling New Jersey. As the chief strategy officer at Choose New Jersey, he focuses on attracting global investment and helping companies bring their operations to the state.

His pitch, in part, is that New Jersey has strong anchor institutions that are also great partners.

“Clearly for a state like New Jersey, the eds and meds sectors are a critical part of the mix that makes the state compelling,” Crouch said.

Higher education institutions and hospitals, so called “eds and meds,” are two types of anchor institutions. Anchors are generally described as large, public-facing, public-serving institutions whose jobs and services support local economic activity. They are often among their area’s biggest employers and major purchasers of goods and services, but they also serve as critical partners in economic and community development.

In New Jersey, for example, in 2019 (the latest year of available data), higher education institutions and hospitals supported 569,500 jobs in New Jersey, generated nearly $44 billion in employment income, and contributed more than $65 billion to the state’s gross domestic product (GDP). Previously, such data were hard to pinpoint because of the lack of a consolidated dataset.

Crouch suggests there’s even more to the value these anchor institutions add to New Jersey’s economy. He points to innovation the state’s hospitals, colleges, and universities drive, the talented workers they attract, and the future-forward training they provide to the local workforce.

Welders for the state’s growing offshore wind industry is one example Crouch cites. This emerging, green industry has lots of economic potential, but relies on a steady flow of skilled and specialized labor.

Crouch isn’t alone in pointing to the importance of anchor institutions. Researchers at the Philadelphia Fed launched the Anchor Economy Initiative in 2022 to study the economic impacts of the eds and meds sectors in the national economy, but also, how these anchors relate to their regional economies.

Engines for jobs 

Beyond the crucial services they provide, hospitals and institutions of higher education create jobs.

Millions of jobs.

In 2019, 18 million US jobs were tied to anchor institutions. These include the direct hires made by these organizations, indirect employment like contractors and tradespeople working in their buildings, as well as the “induced jobs” that are supported by their economic activity. An example is the local restaurant worker who relies on the foot traffic of visitors and employees of nearby anchor institutions for their business.

In total, in 2019, jobs attributed to US anchor institutions accounted for 9 percent of total nationwide employment, provided $1.1 trillion in household incomes, and produced roughly $1.7 trillion in total economic activity, which is 8 percent of the nation’s gross value added.

A more nuanced breakdown of the economic impact of anchor institutions can be found on the Anchor Economy Dashboard, which details the economic impacts for 394 metropolitan regions and 130 nonmetropolitan areas across the US. The dashboard also provides a unique measure of each region’s economic dependence on their anchor institutions, dubbed a reliance index.

Researchers at the Philadelphia Fed who developed the dashboard also wanted to explore how anchor institutions relate more broadly to their state economies, since initiatives such as Choose New Jersey and other state policies depend on state, not regional, data. In 2023, the Anchor Economy Initiative released state-level measures of anchor institution impacts for the years 2019 and 2004 in all 50 US states and the District of Columbia.

Big business for small shops 

In states and regions, anchor institutions can help local economies survive and thrive by purchasing from and investing in communities.

Mark Little oversees NCGrowth, an economic development center based at the University of North Carolina (UNC) at Chapel Hill. The center works nationally to help create good jobs and new wealth in economically distressed communities. He sees anchor institutions as vital partners in the effort of revitalizing local and regional economies, particularly after the pandemic. 

In 2021, NCGrowth launched a new program to help anchor institutions invest in distressed communities through increased procurement, purchasing, and construction contracts.

Little sees the economic data of anchor institutions as a valuable tool to start conversations, specifically around institutions’ collective and individual efforts towards supplier diversity.

Many organizations have introduced programs and initiatives to promote an inclusive approach to sourcing goods and services. Some states have adopted policies for their state-funded entities. In North Carolina, for example, the university system, which includes 17 campuses, has a 10 percent procurement goal for historically underutilized businesses.

“The vast majority [of state-funded entities in North Carolina] do not hit the mark,” he said, creating a significant missed opportunity for businesses, communities, and anchor institutions. But having the state-level data can help, he says. Little sees an opportunity for policymakers, stakeholders, and anchor leaders to use the data to identify areas for improvement, make comparisons across states, and to motivate others to prioritize supplier diversity.

A partner in creating change  

At the University of Nebraska, Josie Schafer leads a research institute that produces and shares insights from economic and demographic data on a wide range of topics that impact the lives of Nebraskans. Much of the institute’s work explores community and workforce development, economic opportunity, and equity—topics that Schafer says, “are truly about making change in communities.”

In focusing on place-based research and policy, Schafer notes, you may need data beyond the community you’re focusing on. The national, state, and regional levels of data available through the Anchor Economy Dashboard allow her and her team to make comparisons and provide data that are revealing and powerful for Nebraska stakeholders.

You can learn more about the Anchor Economy Initiative and view the state profiles.