The Dean Dad, spinning off an article in the Chronicle, has some interesting thoughts on the economic benefits of colleges and universities:
Apropos of my minor obsession with the economic conditions in Northern Town, the Chronicle of Higher Ed has a story noting that the University of Rochester is now the largest employer in Rochester. A quick check on the always-reliable Wikipedia (I know, I know…) reveals that SUNY-Buffalo is the largest employer in Buffalo, and Syracuse University the largest employer in Syracuse. Binghamton University (a.k.a. SUNY-Binghamton) is the largest employer in the Greater Binghamton region, which is almost an oxymoron. I’m starting to see a pattern here…
Higher ed makes an awfully dicey economic engine for a city, especially when it’s just a single institution and a fair-sized city. (Boston succeeds with gazillions of colleges and universities, and Ann Arbor does quite well by being not much bigger than the University of Michigan, but those are exceptional cases.) Colleges and universities (other than proprietaries) are tax-exempt, so unlike other employers, they don’t pay property taxes. (In the Northeast especially, that’s a big deal.) They generally don’t grow very fast, when they grow at all. With the increased reliance on adjunct faculty, they don’t pay as many middle-class salaries as they once did, even as total employee headcount increases. Students come and go, generally supporting a few local pizza places, bars, and slumlords, and not much else.
As noted in his comments, he’s a little unfair to academia, as a college or university necessarily employs a very large number of people, mostly in support roles, so it’s not too surprising to find them among the largest single employers, but the basic point is only changed a little.
(More thoughts below the fold.)
This is particularly interesting to me, as a lot of the issues he mentions have direct local applicability. Schenectady is one of those run-down single-industry towns– GE used to dominate the local landscape, but most of their operations have been shut down or moved away, and the state of the town is a constant concern for the college. It’s one of the major hurdles to be cleared in getting students and faculty to come here and stay here.
Of course, Union is in an odd sort of position, because it’s a very small college– only 2,100 students, give or take. It’s the only school I’ve been at that doesn’t completely dominate the local scene– Williams was the largest employer in the county, the University of Maryland has 40,000 students or so, and Yale is Yale. Here, if you get more than a few blocks away from campus, you really don’t see much sign of the college– there are very few student-oriented businesses, and not even much of a bar scene.
Still, it’s an institution with a great deal of money plopped down in the middle of a small cash-starved city, and a lot of thought has been put into how to use that the benefit the community. The college has sunk a great deal of money into improving the local area– buying up most of a large neighborhood near campus, and offering incentives to get working families to move in, buying a slightly seedy hotel and turning it into a dorm. Beyond the real estate transactions, the college has made PILOT paymets (payments in lieu of taxes) to the city in the past, and probably will in the future. And I know of at least one partnership between the college and a local company that has brought in state grant money for high-tech development projects.
Still, it’s a tough problem, and can be frustrating for people on both sides of the town-gown split. And as the Dean Dad point out, it’s not clear how stable this arrangement will be, in the long run. The flight of industry from the North is a relatively recent development, and we haven’t really had time to see how these situations tend to play out. That’s the problem with economics, of course– it’s one gigantic uncontrolled experiment, running at an extremely slow pace, and with the life and death of whole communities riding on the outcome.
That’s, um, an unfortunate typo in the handle of your fellow blogger in the last paragraph, there.
That’s, um, an unfortunate typo in the handle of your fellow blogger in the last paragraph, there.
[“Dead” instead of “Dean”]
Fixed now.
Thanks.
Your situation is very similar to mine, here in Greencastle. We are a school of 2200 in a town of about 14,000. Our main industry is a Walmart distribution center, and a automotive parts plant. Much of the city is poor, and there is a big town/gown divide, even with help that DePauw gives much like Union’s contributions to Schenectady. (I wanted to see if I could spell it without checking, I rule!)
I think a situation like this are common throughout the world. Otago University, New Zealand, A university of 17,000 in a city of 100,000… Easily the biggest employer. I suppose the bonuses of having a University isn’t so much in the money the university gives the town; but the money the students spend in that town… beer makes the economy go round.
Employment is only part of the story, I fear. Do the guys who mow the grass on campus get paid the same amount as the President? Economies are functions of how many money nodes/agents/entities there are and what their money flow looks like. While Boston may have a lot of colleges and universities, the bulk of its employment and money flow is at best distantly and indirectly related to higher education.
But there are towns whose economies are dominated by a college or university. These towns have a fairly unique structure in that the majority of money flowing into the town comes from the students either directly or indirectly through college salaries, purchases, etc.
One unfortunate side-effect of having a college as your big industry is the constant temptation to throw money at “technology incubators” and similar bogus projects which are about as useful to small or medium-sized cities as convention centers. All the old industrial cities want to become tech meccas and the city governments think that by eminent-domaining an old mill building or two and putting up a sign that says “High-Tech Business Center” they’ll magically become Silicon Valley or Route 128. There was a rash of putting “Silicon” before the name of a characteristic local landscape back in the 1990s in the hope it would attract tech companies. It didn’t because of course the tech meccas are already there. Just as building a casino won’t let your town compete with Las Vegas because Las Vegas already occupies the Las Vegas niche, you can’t become Silicon Valley because Silicon Valley does that already.
One area where a college can help is to improve local education. Bully the college into letting local high-schoolers attend classes either free or at a discount. It isn’t expensive and it can have a tremendous effect. OF course, there are no building contracts involved so it isn’t widely done…
“Ann Arbor does quite well by being not much bigger than the University of Michigan, but those are exceptional cases.”
Ann Arbor also lives quite heavily on the auto industry (Ford, Visteon). There are five plants within a twenty-minute drive; Visteon HQ is less than 30 minutes; Dearborn is 30-45 (all depending on roadwork, of course). When Ford has its two-week summer shutdown every year, the highway leading east from Ann Arbor (I-94) is noticeably quieter.
In addition, the University of Michigan is huge – 35,000 students, faculty and staff to match, plus a *very* large hospital system (employment ~20,000, IIRC).