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King University News :: King Institute for Regional Economic Studies Release Report on the Role of Health Care in the Tri-Cities Economy

The King Institute for Regional Economic Studies has released its fifth report, “The Role of Health Care in the Tri-Cities Economy: Trends, Projections and Economic Impacts.”

“After significant growth, the College developed the King Institute for Regional Economic Studies (KIRES),” said Dr. Sam Evans, associate professor of Finance and Economics.  “The new Institute has a threefold mission: to build a knowledge base of the regional economy, to inform public and private decision-making, and to provide King students an opportunity to participate in research projects.”

“The King College School of Business and Economics is pleased to offer these economic insights to the people and businesses within central Appalachia,” said Dr. Todd Erickson, dean of King’s School of Business Economics.  “King College has intentionally transitioned its old Regional Economic Studies Team (KCRES) into the King Institute of Regional Economic Studies so that it can bring more resources into the job of studying the region's economy and its impact on the lives of its inhabitants.  We have a robust slate of reports planned for the next few years and look forward to serving this region in a way that will assist in both short and long term planning for organizations.”

The newly released paper, KIRES Paper No. 5, was prepared by Dr. Evans and Dr. Randall Blevins, professor of marketing.  It describes and quantifies the contribution of the health care sector to the Tri-Cities economy.  The first section of the paper presents the current state of the local health care sector in terms of employment and earnings, the 10-year trend in health care sector employment and employment projections for the intermediate term.  The second section of the paper presents an analysis of the economic impacts of the health care sector on total employment and earnings in the Tri-Cities economy.

“Employment trends by sector in the Tri-Cities mirror those exhibited nationwide over the past decade,” said Dr. Evans.  “The main feature of this trend is a loss of jobs in the goods-producing industries, primarily manufacturing, and a gain in jobs in the services sectors, including health care.  The recession of 2007-09 buttressed this trend as over half of jobs lost nationwide and in the Tri-Cities were in the manufacturing sector.  Over the past decade, 2002-2011, employment in the health care sector rose about 48 percent in the Tri-Cities while employment in all other sectors fell almost five percent.”

Health care sector employment as a percent of total employment in the Tri-Cities grew from less than nine percent in 2002 to 13.4 percent in 2011.  The sector’s share of total employment grew 0.5 percent annually over the 2002-2011 period.  If this growth rate were sustained, health care employment would account for almost 18 percent of total employment by 2020.  

During the same time period, health care sector employment rose by 978 jobs per year.  Should this growth rate be sustained, health care employment would top 34,000 by 2020.

The employment multiplier for the total health care sector is estimated at 1.63, meaning that for every 100 jobs created in the health care sector, 63 jobs are created in other sectors of the Tri-Cities economy. Thus, the health care sector accounts, directly and indirectly, for 21.8 percent of total employment in the Tri-Cities.  Multiplier analysis demonstrates that the additional 978 health care jobs created annually support 616 jobs in other sectors of the economy.  The result of this growth in the health care sector is a total gain of 1,594 jobs per year in the Tri-Cities.

The earnings multiplier for the total health care sector is 1.45.  This means that for each additional $100 of wages paid to households employed in the health care sector, an additional $45 is earned by households employed in other sectors of the Tri-Cities economy.  Whereas, the health care sector accounts directly for 18.3 percent of annual wages earned by households in the Tri-Cities, the earnings multiplier demonstrates that 26.5 percent of wages earned by all households in the Tri-Cities may be traced back to the health care sector.

KIRES Paper No. 5,”The Role of Health Care in the Tri-Cities Economy: Trends, Projections and Economic Impacts,” is available in electronic format at http://kires.king.edu.  The four previously published KCRES reports also are available in electronic format on the KIRES website.

“KIRES Paper No. 6 is scheduled for release in January 2013 and will present student research on the banking practices and needs of the underserved population of Southwest Virginia,” said Dr. Evans.  “We anticipate publishing Paper No. 7, which will profile and present an economic analysis of the economy of the First Congressional District of Tennessee, in May 2013.”

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