Monday, May 15, 2023

Philadelphia’s Eds and Meds Economy Leads Region’s Employment Growth

By Brenda Nguyen Costar

After losing nearly 520,000 nonfarm jobs peak-to-trough in 2020, the Philadelphia region continues to surpass pre-pandemic employment levels with two industries leading the way: education and health services, and professional and business services.

The metropolitan area's 5.2% job growth in 2022 exceeded the national growth rate of 4.3% and put the region back on course. Anchored by over 100 higher education institutions as well as leading health systems such as Penn Medicine and the Children's Hospital of Philadelphia, the Philadelphia region has long been touted as an "eds and meds" economy. Jobs in education and health services have consistently trended upward since 1990, except for 2020 when the coronavirus pandemic began.

In recent years, venture capitalists and record levels of public funding from the National Institutes of Health have fueled a wave of life science companies in the Philadelphia region, growing local employment opportunities in the process. By the end of the first quarter, 25,300 more health and education jobs existed than three years ago, rising by 3.7% during this period.

The professional and business services sector has similarly expanded since the Great Recession ended in 2009, adding 30,400 jobs alone since March 2020. This industry encompasses a range of skilled labor, including accounting, engineering, advertising and scientific research and design. Many of these new jobs have ridden the waves of life science companies, growing by 6.5% between March 2020 and March 2023.

Although severely affected by the pandemic, the leisure and hospitality industry has also rebounded. The industry recovered 97% of its pre-pandemic employment levels at the end of the first quarter.

The region's recovery is an encouraging sign for the local economy with steady growth across multiple industries. However, the remainder of 2023 is expected to see a slowdown in job creation given significant pressures by the federal government to control inflation. Nonetheless, strong educational and healthcare institutions have been a critical driver of employment growth in the region in recent decades, and that should continue to be the case in the long term.

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