Shaking the Pillars of the Local Economy
‘Eds and meds.’
That’s the phrase people use when talking about the backbone of this region’s economy. That’s short for education and medicine, and those two sectors really are the pillars when it comes to the economy in Western Mass.
There are others, to be sure — precision manufacturing, tourism and hospitality, financial services, and a huge population of nonprofit agencies. But eds and meds … those are the two areas that seemingly hold everything else up, from the service sector to the broad construction industry; from food and beverage to hospitality.
And now, these pillars of the economy are being seriously impacted by the COVID-19 pandemic. There will certainly be a trickle-down effect that will touch every sector of the economy, and it will be significant, but for these two sectors themselves, the pandemic brings them the sternest test they’ve ever faced.
Let’s start with healthcare. And the place to start there is there, with the hospitals that dominate that sector. Unable to perform elective surgeries and facing a host of new expenses because of the pandemic, these institutions, which employ tens of thousands of people between them, are facing serious cash-flow challenges.
Yes, these hospitals will receive some disaster relief from state and federal governments, and eventually, they will be able to return to something approaching normal — as in what was happening just six weeks ago — but hospitals are suffering fiscal wounds that will not heal quickly or easily.
As for the other many facets of the healthcare sector, many practices are closed or operating at far less than full capacity as the pandemic has many people reluctant to leave their homes for treatment that simply cannot be administered from six feet away.
Like businesses in other sectors, healthcare practices can apply for disaster relief, and some are receiving it, but almost every business in this sector is being negatively impacted, and some are simply in survival mode. The day will come when people will want to go back to the dentist, the optometrist, and the podiatrist, but one can only schedule so many appointments in a day.
Like other businesses, these practices are losing money they really can’t recover.
Overall, though, the ‘meds’ sector is strong, and it will eventually bounce back. And while the same is likely true for the ‘eds’ side of the equation, these are perilous times for this sector as well.
Indeed, the region’s colleges and universities are, for the most part, ghost towns at the moment. Campuses are essentially shut down, and learning is being carried out remotely. Schools that already seeing their endowments take big hits are facing huge losses as they reimburse students for room and board for this semester. And now serious question marks loom about the fall semester.
Behind closed doors, many college administrators are conceding that students may not be able to return in September, and they may not be able to come back until next spring. Meanwhile, many graduating high-school students, not to mention their parents, are wondering whether a crowded a college campus is the place to be — this fall, next spring, or in general.
This is the time of year when those seniors commit to colleges, with May 1 being a traditional deadline of sorts. Now, that deadline is being pushed back at most institutions in the hope that time will sharpen what it is, at the moment, a very fuzzy picture.
It is almost certain that, between the pandemic and the fiscal hardships it is causing to individuals and families, enrollment will be down, at a time when high-school graduating classes have been getting smaller and many colleges were already facing enrollment challenges.
Like the ‘meds’ sector, the ‘eds’ sector is strong and resilient. Many of the institutions have been around for 150 years or more, and they will survive this. But they likely won’t be the same.
And neither will the region, because these are the pillars of the Western Mass. economy, and they hold up everything else.