The Lexington-Fayette Metropolitan Statistical Area (MSA) is home to one of the most diverse economies in the U.S. In 2018, Business Facilities ranked the MSA 9th in the nation for the diversity of its industries. This comes as a huge advantage for those that call the metro home. A theory commonly reinforced in academic literature states that regions with diversified industries are less impacted by economic downturns and recover more quickly than specialized areas, as measured by the unemployment rate. This is demonstrated clearly by Lexington’s ranking as the 12th Best Post-Recession Recovery (WalletHub, 2014), 2nd Rapid Recovery Leader (Business Facilities, 2014), and 13th Best Cities for Riding Out A Recession (BusinessWeek, 2008).
Understanding a region’s industrial makeup and its largest drivers is crucially important for businesses seeking to expand or relocate. In economic development, a cluster is an area’s relative concentration of competitive and collaborative industries that provides those within a greater access to specialized talent, academic institutions, service providers, suppliers, and innovation. Through a cluster analysis, a company can evaluate a community’s expertise in an industry and benchmark it against other possible destinations, resulting in the best decision for the businesses’ future growth.
In the Bluegrass Region and Kentucky, Lexington has created cluster in the life sciences industry by leveraging its culture of innovation and entrepreneurship, superior business climate, top-ranked research programs at the University of Kentucky (UK), and expansive network of medical centers. Supported by five major, medical centers, including Baptist Health Lexington, CHI Saint Joseph Health, Shriner’s Hospitals for Children, the Lexington Clinic, and the UK Medical Center, the life sciences have long been a strength of Lexington’s economy. According to new data from the U.S. Census Bureau, it continues to be the metro’s largest industry and contributor to job growth.
Highlighting Health Care Growth
The life sciences industry includes two components: direct patient care and biotechnology. Our last blog post focused on recent achievements in Lexington’s biotechnology sector as the metro received 315 National Institute of Health awards and $138,024,223 in support, ranking it as a top-10 mid-sized metro for NIH awards and total funding per capita. In this entry we hope to underscore Lexington’s continued growth in the direct patient care portion of life sciences.
In 2002, the health care and social assistance sector accounted for 14.2% of Lexington’s metro area employment with 21,982 employees. In 2017, the sector has risen to 18.3% of primary job employment with 34,299 employees. Health care and social assistance has been the largest source of job growth since 2002 with 12,317 jobs created and the most resilient as it was one of the few industries to add jobs during the Great Recession from 2008 to 2009. During this period, the Health Care and Social Assistance sector added 1,583 jobs and grew from 14.8% of employment in 2008 to 16.5% in 2009, clearly demonstrating its durability and reliability as a key economic driver. The industry’s massive growth hasn’t showed any signs of slowing with 1,231 primary jobs added from 2016 to 2017. For more information on health care and other industries’ share of employment, click the chart below.
The substantial growth in the healthcare and social assistance industry can be explained by many factors, with some as simple as an area’s population growth. Another explanation that’s gained national attention and has been validated by demographers is the issue of an aging population. People are living longer than ever due to medical advancements preventing mortality in older ages. The average life expectancy in 1950 was 68 years old. In 2017, the average person is expected to live to be 78.6 years old. According to the U.S. Census Bureau, “By 2030, all baby boomers will be older than age 65. This will expand the size of the older population so that 1 in every 5 residents will be retirement age…The aging of baby boomers means that within just a couple decades, older people are projected to outnumber children for the first time in U.S. history.” In 2035, the 78.0 million people 65 years and older will surpass the 76.7 million under the age of 18.
Population aging means there will be more demand for the medical advancements that are helping keep people alive longer. Lexington’s largely reflects this growing demand. In 2018, there were 76 nursing and residential care establishments employing 4,293 people, an increase of 1,147 employees from 2010. Additionally, the ambulatory health care services sector, which includes offices of physicians, offices of dentists, outpatient care centers, home health care services and more, employed 12,950 people in 2018 compared to 10,519 in 2010. The nation’s aging population combined with Lexington’s rankings as a Top 25 Best Place to Retire (Forbes, 2019), a 100 Best Place to Retire (WhereToRetire, 2018), and 1st Most Affordable City for an Early Retirement (SmartAsset, 2018) ensure that health care providers will continue to experience increased demand for their services and Lexington’s life sciences industry will continue to grow.
For more information of Lexington’s life sciences and biotech industry, see our industry white paper.