So many cities today claim that they’re centers of health care and education. And as far as I can tell, they’re all right. In an economy defined by electronic communication, face-to-face communication has become the scarce resource that defines job growth, from retail to health care to teaching to construction to real estate agents to nail salons to mechanics to bartenders. And as industries, Health Care and Education sound the best of this bunch, so you don’t find economic development agencies bragging about regional strength in cosmetic services, but I’m pretty sure no one’s proposing a technology that will usher in an era of “virtual” bikini waxes.
Of the 211,000 net new jobs in the last employment report, about 80% were in categories, like those above, that require direct contact with the customer or end user. “Food Service and Drinking Places” job growth of 31k far outpaced the 28k in all “professional and technical services”, as did the 32k new jobs in “health care and social assistance”.
The top employers in many cities and states are no longer Fortune 500 companies, but universities and hospitals. Largest employers in LA? The County, the City, and the School District. Is that because they don’t have the San Francisco’s tech economy? Not quite. The Bay Area’s biggest employers are Kaiser Permanente, City and County of San Francisco, UC-Berkeley, and UCSF.
So while face-to-face communication is the scarce resource that defines most jobs today, those that don’t require direct contact with the customer are often the highest paying, and often the ones that set more expensive regions apart from less expensive ones. Moreover, the primary economic impact of adding more regional jobs in tech, biotech and non-consumer financial services is often greater wealth, as opposed to significantly more jobs in other service sectors. Outside of the Bay Area, Boston is a good example of this, where Akamai, HubSpot, Biogen, and other publicly traded companies add billions of equity value on top of an already large base of education and health care jobs.
Even where little wealth is added, such as with heavy Federal employment, regions are better off defining themselves by the non face-to-face sectors where they’re strong, even if those sectors account for a small percentage of overall jobs. Philly’s “eds and meds” is as distinguishable as the “Silicon Beach/Forest/Alley/Dominion/Prairie/Pick-Geographic-Term” that still gets overused to describe technology regions outside the Bay Area. And in terms of attracting residents from other areas, 2000-era Creative Class crap could be far less effective than standing out as a clear leader in one industry. Especially when that one industry will never employ more than 20% of your workforce.