Bacon's Rebellion

Democracy Thrives in Sunlight

Appalachia, Pharmacists and Economic Development

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by

James A. Bacon
in

As a follow-up to my pessimistic report on the economic future of Southside and Southwest Virginia, I thought it worthwhile to add a codicil on the University of Appalachia College of Pharmacy, located in Buchanan County, which appears to be a very productive deployment of the region’s scarce community development resources.

According to Frank Kilgore, an occasional contributor to the Bacon’s Rebellion e-zine, 67 students graduated with pharmacy degrees this May. Two months after graduation, 97 percent of them had found employment — 79 percent of whom had taken jobs in Appalachia serving rural populations in Virginia, West Virginia, Kentucky, Tennessee and West Virginia.

The pharmacy college contributes to regional economic development in two ways: (1) it provides a supply of pharmacists willing to practice their profession in central Appalachia, a region that is otherwise under-served by pharmacists, and (2) it keeps the economic activity of providing the educational services in the region. Were it not for the college, would-be pharmacists would have to earn their degrees in Richmond, Chapel Hill or wherever, exporting hefty sums on tuition, room and board to those communities.

This strikes me as a highly productive use of local resources, generating a high return on investment both socially and financially. The College of Pharmacy could well serve as a template for other professional schools that fill the void in professions which many poor and isolated communities find themselves unable to fill. (For the record, I am less sanguine about the law school in Grundy. Locals insist the region needs more lawyers. I’m dubious.)

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  1. Groveton Avatar
    Groveton

    The general theory on this site seems to be that well educated people will leave SW and South Side Virginia because these areas have too few places favored by the creative class. I don’t know whether that is true or not but that’s one of the things I believe commentators have been saying.

    Why are the pharmacists staying in Applachia? Why don’t they move to places like New York City where pharmacists must get paid more than in rural Virginia? Are they not part of the creative class?

  2. Anonymous Avatar
    Anonymous

    There is a similar deal in the Carribbean Called the Medical college of the Caribbean. Med students (frequently tose that could not get accepted stateside) go there to study. The school is broken up into specialties that the students rotate through, I think there are eight or ten specialties, each on a different island.

    The students say that because the school operates clinics, many island residents get services they could not afford otherwise, and the students see far more interesting cases than they might in the states.

    Some students stay in the islands after their experiences there, and others go back tot he states for additional training until they can take and pass the U.S. board certifications.

    RH

  3. Jim Bacon Avatar
    Jim Bacon

    Groveton, I don’t know if Richard Florida classifies pharmacists as members of the “creative class” that contributes disproportionately to artistic, scientific and entrepreneurial innovation and economic growth. I would like to know myself.

    Let’s assume for purposes of your comment that they are members of the creative class. It would be a misperception to say that all members of the creative class want to live in the red-hot metro areas. Florida makes the argument that economic forces are inducing many members of the creative class to migrate the “mega cities” but he doesn’t suggest that every member of the creative class will want to make that move.

    Every individual has different values and priorities. While many people are motivated by the opportunity to maximize their income, not everyone is. Some people simply want to make a decent living while residing in a community where they can sink deep roots and stay close to family and friends. I think it’s a fair bet that the College of Pharmacy in Buchanan County appeals to such people.

  4. Not your father's economic developer Avatar
    Not your father’s economic developer

    Creative class is a grab bag. Florida’s categories cover something like 1/3 of the US population.

    Pharmacists might be an example where other values are able to come into play in location choice. Not every occupation requires participation in a thick labor market for success.

  5. Larry Gross Avatar
    Larry Gross

    some jobs and some number of jobs are “local” … serving the basic needs of the local populace – postal, public safety, medical, education, welfare.

    Just about any place will have a basic set of these jobs and I really don’t see too many people from outside that area scrambling for those jobs – so to have local folks trained to do these local jobs makes perfect sense.

    But this is not a vibrant jobs-producing economy but more along of the lines of minimally self-sustaining.

    Once the local people fill these limited jobs.. where will the others work? Where will others get money to pay for prescriptions from that pharmacist?

    I end up with the same questions – which is – how much money should be spent on what specific economic development efforts – and do we have a way to measure success?

    The tobacco settlement .. for instance… could have been used to provide kids of these regions with health care and a top-notch education but I get the sense that some believe this would be tantamount to abandoning the region.

    What won’t work is this – trying to lure modern industry to those areas on the hopes that there are still some industries that need minimally-educated labor to build/assemble basic products.

    It’s not only the outsourcing aspect.. it’s that many…more and more industries are automating … replacing people with machines…not only in Virginia but in India.

    This kind of manufacturing is going away.

    Manufacturing processes that used to remain static for decades – those processes now can change in months… sometimes… as something as simple as a computer program update is done to a robot or computer-controlled process and they can and do move physically if it makes sense for their bottom line.

    There ARE many, many jobs in the US but they are virtually always – technology-based – both the products themselves .. and the processes for creating those products.

    Virginia is very fortunate. We have NoVa … which is golden IMHO not because of any smart economic development strategy in particular unless “smart” means staying out of the way of the Feds when they want to build another jobs center.

    If we actually had a specific economic development plan that was responsible for the success of NoVa …wouldn’t we just replicate it throughout RoVa?

  6. Darrell -- Chesapeake Avatar
    Darrell — Chesapeake

    Guess ya’ll forgot about the student loan forgiveness program. They agree to work in a distressed area for a period of time, then move on to the big money.

    Same kind of deal with foreign doctors who come here, get licensed and in return serve in the hinterlands, then move on to NYC.

  7. Larry Gross Avatar
    Larry Gross

    Not sure where this goes but it’s at least tangentially relevant and it’s also curl EMRs whiskers…

    “Houston, New York Has a Problem

    The Southern city welcomes the middle class; heavily regulated and expensive Gotham drives it away.

    New Yorkers are rightly proud of their city’s renaissance over the last two decades, but when it comes to growth, Gotham pales beside Houston. Between 2000 and 2007, the New York region grew by just 2.7%, while greater Houston — the country’s sixth-largest metropolitan area — grew by 19.4%, expanding to 5.6 million people from 4.7 million.

    To East Coast urbanites, Houston’s appeal must be mysterious: The city isn’t all that economically productive — earnings per employee in Manhattan are almost double those in Houston — and its climate is unpleasant, with stultifying humidity and more days with temperatures exceeding 90 degrees than any other large American city. Since these two major factors in urban growth don’t explain Houston’s success, what does?

    Houston’s great advantage, it turns out, is its ability to provide affordable living for middle-income Americans, something that is increasingly hard to achieve in the Big Apple. That Houston is a middle-class city is mirrored in the nature of its economy. Both greater Houston and Manhattan have about 2 million employees.

    In Manhattan, almost 600,000 of them work in the idea-intensive sectors of finance, insurance, and professional services; only 2% are in manufacturing, and fewer than that in construction. Finance increasingly drives New York City’s economy as a whole. By contrast, Houston is a manufacturing powerhouse that makes machinery, food products, and electronics, with a retail sector twice the size of Manhattan’s and lots of middle-class jobs.

    Housing prices are the most important part of Houston’s recipe for middle-class affordability. In Gotham, the extraordinarily high housing costs aren’t a problem for the hyper-rich. With enough money, you can live in a spacious aerie overlooking Central Park, shop at Barney’s, eat at Le Bernardin, and send your children to Brearley or Dalton.

    The abundance of poorer immigrant New Yorkers, in turn, tells us that for people simply seeking a lifestyle that beats rural Brazil, the city’s many entry level service-sector jobs, wide array of social services, and extensive public transportation can offset high apartment prices.

    But what if, like most Americans, you are neither a partner at Goldman Sachs nor a penniless immigrant? Consider an average American family with skills that put them in the middle of the U.S. income distribution — nurses, sales representatives, retail managers — and aspirations to a middle-class lifestyle. What kind of life will such people lead in Houston and New York City, respectively?

    For starters, they’ll probably earn less in Houston, though not as much less as you might think. In the 2000 U.S. Census, the typical registered nurse made $50,000 in New York and $40,000 in Houston. A retail manager earned $28,000 in New York and $27,800 in Houston. Let’s be generous to New York and assume that our middle-income family would earn $70,000 there but just $60,000 in Houston.

    If our Houston family’s income is lower, however, its housing costs are much lower. In 2006, residents of Harris County, the 4-million-person area that includes Houston, told the census that the average owner-occupied housing unit was worth $126,000. Residents valued about 80% of the homes in the county at less than $200,000. The National Association of Realtors gives $150,000 as the median price of recent Houston home sales; though NAR figures don’t always accurately reflect average home prices, they do capture the prices of newer, often higher-quality, housing.

    In Houston, you’ll find a lot of nice places listing for $175,000, and they’ll probably sell for about 10% less, or $160,000. These are relatively new houses, often with four or more bedrooms. Some have more than 3,000 square feet of living space, swimming pools, and plenty of mahogany and leaded glass. Almost all seem to be in pleasant neighborhoods — a few are even in gated communities. The lots tend to be modest, about one-fifth of an acre, but that still leaves plenty of room for the kids to play. For a family that has about $35,000 available for a down payment, basic housing costs — that is, mortgage payments — would be about $9,200 a year.

    The average home price in New York City is dramatically higher. In 2006, the census put it at $496,000, and $787,900 in Manhattan — way out of reach for a family earning $70,000 a year. There are cheaper options: a perfectly pleasant Staten Island home with three bedrooms and two baths for $340,000, for instance. These houses don’t have the amenities you would find in new Houston houses, but they offer 2,000 square feet of living space. Alternatively, the family might purchase a condominium, with two or three bedrooms, in Queens — say, in Howard Beach or Far Rockaway. Even for the Staten Island option, a family making the same $35,000 down payment would face basic housing costs of about $24,000 a year.

    You thus get much more house in Houston and pay a lot less for it. Small wonder Houston looks so good to middle-class Americans.

    It looks even better once you take taxes into account. Federal taxes are roughly equal for the two families: about $7,000 per year. But under the Texas constitution, to enact a state income tax requires approval by statewide referendum — and two-thirds of the revenues generated by such a tax, if passed, must go toward reducing other taxes. As a result, Texas doesn’t have any state income taxes. Nor, for that matter, does it have any city income taxes.

    Houston residents do have to pay property taxes, which come to about $4,800 for a $160,000 home. In New York City, not only would a middle-class family have to pay local property taxes, probably about $3,400; they would also have to pay state and city income taxes — adding another $4,000 or so to their tax burden, depending on deductions and other factors. State and local levies thus add about $2,600 to the cost of living in New York.

    Ah, but doesn’t it cost a lot more to get around sprawling Houston? The Houstonians must have two cars: the poor public-transit system leaves them no other choice. American families earning $60,000 typically spend about $8,500 a year on transportation — and sure enough, in Houston, that’s sufficient (barely) to cover gas, insurance, and payments on two relatively inexpensive cars.

    The New Yorkers could save a lot by giving up on cars altogether and relying solely on Gotham’s extensive network of buses and subways, but on Staten Island or in outer Queens, that would mean a significant lifestyle cost. Family members would have to walk to the grocery store and rely on taxis for other trips. A more reasonable approach would be to have one car for local trips and use public transit to get to work. With a public-transit bill of $80 per month, a fair guess is that the New York family will end up spending about $3,000 less per year than the Houstonians on getting around.

    Just as with housing, however, there’s a significant difference in the quality of transportation in Houston and New York. In Houston, the middle-class breadwinner likely will drive an air-conditioned car from an air-conditioned home to an air-conditioned workplace, and take 27.4 minutes to do it, on average. Commuting via New York public transit is more complicated. If you live in Queens, the average commute to midtown Manhattan (if that’s where you work) is 42 minutes, and longer if you’re coming from Far Rockaway.

    From Staten Island, the average commute is 44 minutes — and often something of a triathlon, with bus, ferry, and subway stages. Our middle-class New York commuter thus spends at least 120 more hours in transit per year than does his Houston counterpart. And except perhaps for the ones spent on the ferry, none of those hours is as agreeable as sitting in an air-conditioned car listening to the radio.

    Will rising oil prices eat away Houston’s cost advantages? While there’s no question that more expensive crude favors dense New York, the impact of paying more at the pump is likely to be modest. If the Houston residents buy 500 more gallons of gas per year than the New Yorkers, and if the price of gas jumps by $3 a gallon, then the price of Houston living will increase by $1,500. This is a real cost, but it doesn’t come close to evening the playing field.

    Further, the Houston family could always drive a 50-miles-to-the-gallon hybrid, which would let them buy only 400 gallons of gas to drive 20,000 miles. Big-city boosters may like to think that rising gas prices will end suburban sprawl, but a far more likely response to expensive oil is a large switch to more fuel-efficient cars.

    After housing, taxes, and transportation, the New Yorkers have $26,000 left. The Houston family has $30,500, and those dollars go a lot further than they would in New York. The American Chamber of Commerce produces local price indexes for various areas, including Houston and Queens (though not Staten Island). The overall price index for Queens is 150, which means that it costs 50% more to live there than it does in the average American locale. The price index for Houston is 88.

    If we exclude the areas that our two families have already paid for (housing and transportation) and average the remaining categories in the index (food, utilities, health, and miscellaneous), Queens is 24% more expensive than the average American area and Houston is 6% less expensive. Thus — again, after housing, taxes, and transportation — the Queens residents’ real remainder is a little less than $21,000; the Houston family’s is $32,200. The Houston family is effectively 53% richer and solidly in the middle class, with plenty of money for going out to dinner at Applebee’s or taking vacations to San Antonio. The family on Staten Island or in Queens is straining constantly to make ends meet.

    If the key factor making Houston a middle-class magnet is its plentiful and inexpensive housing, that raises the question: why is it so cheap? The low cost of homes reflects the low cost of supplying homes in Texas. Building an “economy” 2,000-square-foot house in Houston costs about $120,000, and a slightly larger “standard” one about $150,000.

    Why is it so much more expensive in New York? For one, supplying housing in New York City costs much, much more — for a 1,500-square-foot apartment, the construction cost alone is more than $500,000. Also, part of the reason is geographic: an old port on a narrow island can’t grow outward, as Houston has, and the costs of building up — New York’s fate, especially in Manhattan — will always be higher than those of building out. And the unavoidable fact is that New York makes it harder to build housing than Chicago does — and a lot harder than Houston does.

    The permitting process in Manhattan is an arduous, unpredictable, multiyear odyssey involving a dizzying array of regulations, environmental, and other hosts of agencies. A further obstacle: rent control. When other municipalities dropped rent control after World War II, New York clung to it, despite the fact that artificially reduced rents discourage people from building new housing.

    Houston, by contrast, has always been gung ho about development. Houston’s builders have managed — better than in any other American city — to make the case to the public that restrictions on development will make the city less affordable to the less successful.

    Of course, Houston’s development isn’t costless. Like most growing places, it must struggle with water issues, sanitation, and congestion. For environmentalists who worry about carbon dioxide emissions and global warming, Houston’s rapid growth is particularly worrisome, since Houstonians are among the biggest carbon emitters in the country — all those humid 90-degree days mean a lot of electricity to cool off, and all that driving gobbles plenty of gas.

    But Houston’s success shows that a relatively deregulated free-market city, with a powerful urban growth machine, can do a much better job of taking care of middle-income Americans than the more “progressive” big governments of the Northeast and the West Coast.

    The right response to Houston’s growth is not to stymie it through regulation that would make the city less affordable. It’s for other areas, New York included, to cut construction costs and start beating the Sunbelt at its own game.

    http://www.nysun.com/opinion/houston-new-york-has-a-problem/81989/?print=0687676121

  8. E M Risse Avatar
    E M Risse

    Darrell — is there a loan forgiveness program in effect?

    With or without check the top 50 percent of the class in 5 years and see where they are then.

    Larry:

    I have spent some professional time in the New York New Urban Region and a lot in the Houston New Urban Region.

    I tried to read your post carefully but found not one sentence re Houston that made sense or was worth responding to — if you know Houston.

    It would take even more bytes than you spilled to unwind the misconceptions.

    Sorry.

  9. Larry Gross Avatar
    Larry Gross

    yeah.. it was a bunch…

    how about some comparative metrics – you pick…

  10. E M Risse Avatar
    E M Risse

    Larry:

    Start with Regional Metrics:

    The area of the to New Urban Regions, the area of the urbanized area (10 pn per acre) and the size of the commute sheds.

    Compare with populations in each of these areas.

    Check out the lane miles of limited access roadways and TTIs congestion measures.

    Houston, Houston’s got the problem.

    Housing is cheap but mobilty and Access is very expensive and going up.

    EMR

  11. not your f's ed Avatar
    not your f’s ed

    LG,

    “Minimally educated labor to assemble basic products” doesn’t even characterize a lot of overseas manufacturing these days. You’re out of date. What’s left here does employ less every year but pays them higher rates, and involves more added value and technology. Not a 1:1 trade for what’s gone away certainly but it’s something.

  12. Larry Gross Avatar
    Larry Gross

    agree.

    the bigger point is … in this day and time… what kind of economic development should be promoted for RoVa?

    I don’t think handing out tobacco money to locals … is an effective strategy unless the idea is just pork barreling for those who profess to be victims.

  13. Anonymous Avatar
    Anonymous

    “I tried to read your post carefully but found not one sentence re Houston that made sense or was worth responding to — if you know Houston.”

    You do realize who wrote that don’t you?

    It was Ed Glaeser, Glimp Professor of Economics, Department of
    Economics, at Harvard University.

    That’s going some to claim that someone like that could write not one sentence that you could understand.

    It is also a lot different form disputing his conclusions mathematically: the average joe is better off and more comfortable in houston, even if it is a disperse mughole of heat and humidity.

    Sure the commute shed in Houston is huge, but hardly anyone uses all of it: and their commute time is SIGNIFICANTLY shorter. It may be going up and becoming more expensive, but so is New York’s. And the housing differnce is vast: New York will take a long time to catch up, even if you are right. We are talking a 53% difference in usable wealth,that’s not peanuts.

    ——————-

    Thanks to Larry for posting the whole piece, which I had only mentioned parts of.

    RH

  14. Jim Bacon Avatar
    Jim Bacon

    This comment is based upon an e-mail conversation sent to me by Frank Kilgore, an occasional Bacon’s Rebellion columnist. – Editor.

    I appreciate what you said about our pharmacy school (www.uacp.org). There were many comments posted that reflect an alarming degree of cultural bias and ignorance. Let me start by saying that our school is not a repository for students who could not get in elsewhere as one writer assumed. In fact, last year our student team won a statewide competition against the Medical College of Virginia, Hampton and Shenandoah (MVC was third, Hampton was actually second). We hadn’t even graduated our first class and beat the state school. This
    year we came in a very close second to MCV.

    We received 1400 applications for 65 slots this year and our average GPA and PCAT scores were above the national average for all new schools of pharmacy. We also have no loan forgiveness program, in fact, our students have to do their own financing until we are fully accredited which is a step or two away and on time. We have received national recognition for student community volunteer work, they also participate in the annual RAM project to help uninsured folks receive medical treatment and the national pharmacy association (PhRMA) has chosen us as one of two new pharmacy schools they are promoting as a model for integrated pharmacy practice with other medical professions. Not bad
    for a school that is only three and a half years old is it?

    The rest of the world seems at reat liberty to use stereotypes and bigotry toward mountain people when they would never say the same thing
    about other groups or races, except maybe illegal immigrants (which all
    of our ancestors were the minute they stepped ashore, unless Native
    American). My family was here in Southwest Virginia before the
    Revolutionary War and three of them fought in the Battle of King’s
    Mountain, the battle that was a turning point for the revolution, and most of our residents can trace their lineage here for at least two
    centuries.

    We are giving our brightest and best young people a chance to stay and make a difference and become the leaders of tomorrow. We don’t need anyone’s approval to succeed but it sure the hell would be nice not to have them spitting on us while we are making leaps and bounds toward our goals. By the way, there are a lot worse places to live than a cool mountain region that has plenty of open spaces, uncrowded roads, friendly neighbors and the ability to grow our own food when things get tough. Feel free to share my comments with the bigots that posted that junk. Being a hillbilly, I obviously wouldn’t have the good sense to post them myself I reckon.

  15. Liz- Houston- 25 Avatar
    Liz- Houston- 25

    I cant say much because i dont have the facts down like Larry does. Eventhough I have thought of moving to New York for a year just to experience the living there and just to say that I started my finance career there. But I do agree with Larry, I think you’re very smart Larry. Im from Houston. Its funny how all these other people are getting so offensive and you can still stay calm. I agree with everything you said. If I lived in NY, I would just defend myself by saying that everyone has different preference in their living style. It’s okay to live and work many hours or sell your soul just to make ends meet and pay for rent- as long as you love it. and some others like to work to make enough money to have a relaxed living (also spend time with their family) and also have a savings. theres no need for hostility. well yal can get mad at me and say whatever haha, but i wont know the link to get back to this page, and its not worth bookmarking to my favs. i was just googling “how much a pharmacist makes” and stumbled on this blog page. but im not to trying to get hostile…

    you know what maybe i will bookmark this page, maybe one of yall can help me find a job or an afforable place in Manhattan.. 🙂 but then again my friend told me that 30,000 ppl just got laid off in NY.. well whatevers going on, my inspirational teacher told me whatever goes up- will go down and so whatever goes down will go back up. i have faith in our country, even if a major recession occured, i would still have faith in our country.

    ok what did all this have to do with pharmacy? haha. bye!

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