May 24, 2009 -- Brigham Young University hasn't felt much of an economic squeeze over the past year. Small businesses on the fringes of campus are making money off students, and construction continues on university buildings and dorms.
While the U.S. as a whole continues to pray for a stronger Dow Jones industrial average, a boost in the S&P 500 and a clear-cut recessionary bottom, Provo, Utah, where the university is located, has added jobs to its economy. Over the last year, there's been a 2.97 percent rise in jobs in Provo; the national unemployment rate has now hit 8.9 percent. Last year, the Milken Institute, a Santa Monica, Calif.-based think tank, credited Provo's rise as a regional financial center, expansion of information technology services and university spending and expansions. These factors were enough to land it first on our list of best college towns for jobs.
There are also business booms in college towns like College Station, Texas (home to Texas A&M and up 2.06 percent); Baton Rouge, La. (up 2.16 percent), which Louisiana State calls home; and Durham, N.C. (up 2.49 percent), where Duke University have been major drivers of economic activity.
Research universities tend to be great environments for business, as they're flush with cheap, highly talented labor (recent grads), and the massive research and development budgets universities have. Plenty of the world's top companies, including Dell, Cisco Systems and Google, began in university settings.
"Universities provide the future educated labor force and are centers of innovation, which creates an ideal ecosystem for start-ups," says Antonio Ubalde, chief executive of ZoomProspector.com, a San Francisco-based corporate relocation and start-up consulting firm. He notes that new technologies developed in many schools wind up growing into businesses of their own: "Research universities spin off academic innovations into commercial enterprises."
Behind the Numbers
We defined "college towns" as U.S. metropolitan statistical area and metropolitan divisions--geographic entities defined by the U.S. Office of Management and Budget used by federal agencies in collecting, tabulating and publishing federal statistics--where employment from universities, four-year colleges, two-year community colleges and university medical teaching hospitals supplied 2 percent or more of area jobs. Jobs created at for-profit universities and strictly Internet-based universities were not counted. Using Data from Moody's Economy.com., we looked at year-over-year job growth in each college town. While jobs in the U.S. as a whole shrunk by 3.5 percent from March 2008 to March 2009, there were 62 college towns that experienced job growth.
Our list includes plenty of idyllic college communities, such as Charlottesville, Va., home to the University of Virginia and its grand Jeffersonian architecture, where 12.7 percent of metropolitan residents are employed by the university, and jobs are up 2.47 percent; as well as Athens, Ga., where you'll find the University of Georgia and more than enough bars and music venues to entertain its 35,000 students. Employment in Athens is also up 2.47 percent for a year ago. Also on the list, however, were bigger metros like Seattle (2.19 percent) and Oklahoma City (1.51 percent), where clusters of large universities have continued to create jobs through the downturn.
Why? "Across business cycles, college towns are steady and predictable," says John Stapleford, senior economist at Moody's Economy.com, who notes that for every job created by a university or college, between one-half and one full job are created in the surrounding economy. "That money comes from the spending patterns of the university, the spending of employees, spending of the students as well as the flow of visitors."
The question for the coming year, especially for smaller college towns, where employment is highly dependent on the universities, will be how the huge recent losses of university endowments will affect job creation and university spending. Harvard has lost 30 percent of its $37 billion endowment in the last year, and according to university president Drew Gilpin Faust, the university will delay construction on its $1 billion Allston, Mass., science complex. That means fewer jobs and far less residual spending around Harvard's campus.
Of course, Harvard's endowment still tops $20 billion, so save your empathy. The effects on the economies of less wealthy schools, such as North Dakota State or the University of Alabama, will likely be greater.