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Mayo's expansion may create jobs, but how many?

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Downtown Rochester skyway
Pedestrians walk through the skyway in downtown Rochester, Thursday Feb. 14, 2013. The Mayo Clinic, Minnesota's largest private employer, pressed state lawmakers last month to commit more than $500 million toward an ambitious development project tied to the renowned medical center in Rochester, Minn. Mayo says the expansion will add between 35,000 to 40,000 jobs over the next two decades.
Alex Kolyer for MPR News

At noon, the Mayo Clinic is a bustling place. Throngs of patients mill about in the Landow Atrium, where some enjoy musical performances by fellow patients.

Many of the patients tapping their feet to the music are white-haired, the kind of patients expected to flock to the clinic in growing numbers in coming decades. But without more space, the Mayo Clinic won't have room for them, said Dr. Brad Narr, a spokesman for its $3.5 billion expansion project.

"We're chronically short of space at the Mayo Clinic, and there are pressures to add continually," Narr said. "Everyone wants more people. It's just kind of a part of our system. And we're trying to grow the parts of the practice where we have the biggest opportunities."

Adding facilities means adding employees. With about 34,000 workers, the Mayo Clinic already is the state's largest private employer. If it expands, it could add another up to 15,000 highly paid Mayo doctors, researchers and support staff in Minnesota over the next two decades.

"We're chronically short of space at the Mayo Clinic, and there are pressures to add continually," Narr said. "Everyone wants more people.

Some experts, however, are skeptical of the job projections, which Mayo Clinic officials have used to try to sell state officials on a public investment of $500 million to pay for roads, bridges, sewers, parking and other parts of the project. Minnesota lawmakers are asking for more details on how the proposed expansion would create jobs.

Mayo Clinic officials say the expansion would spur tens of thousands of jobs at businesses that cater to Mayo patients and staff -- among them hotels and restaurants, creating a total of 35,000 jobs in the region.

Economic analysts differ on how credible those projections are. 

Kyle Uphoff, a regional analyst for the Minnesota Department of Employment and Economic Development, said the job projections seem reasonable. He said they are on track with past trends in southeast Minnesota.

"There's a pretty strong precedent for the orders of magnitude growth that they are talking about," he said.

Based on that history, DEED has made its own employment forecasts for the region, one that forecasts about 35,000 additional jobs for southeastern Minnesota by the end of the decade, even without the Mayo expansion.

Still, it's not easy to predict how much of a difference the Mayo Clinic expansion would make. "The one problem we always have -- always -- is knowing how many jobs are being created because of this initiative," said Art Rolnick, a University of Minnesota economist.

Skyline of downtown Rochester, Minn.
The skyline of downtown Rochester, Minn., is seen Thursday, Feb. 14, 2013. The Mayo Clinic, Minnesota's largest private employer, pressed state lawmakers last month to commit more than $500 million toward an ambitious development project tied to the renowned medical center in Rochester. Mayo says the expansion will add between 35,000 to 40,000 jobs over the next two decades.
Alex Kolyer for MPR News

Rolnick said employment projections are seldom accurate. They are also hard to verify.

"Where do they get these numbers from?" Rolnick asked.  "I don't know. They've got projections of numbers of patients, profits, new building, new research coming in. I can see where they would come up with it. [The] Vikings did the same thing.  But you just don't know how that business is going to work -- especially 10 or 20 years down the road."

Rolnick is a vocal critic of public subsidies for private businesses that promise jobs in exchange for help. He calls the dynamic economic extortion, especially when companies threaten to leave and create jobs elsewhere.

Mayo Clinic officials have suggested they could do just that by beefing up its campuses in Florida and Arizona.

They also defend their projections. Spokesman Karl Oestreich said the Mayo Clinic has been the economic engine for southeast Minnesota, but historic growth rates won't continue without public support for the medical center's expansion.

Dayton, Noseworthy
Gov. Mark Dayton speaks at a State Captiol press conference announcing a planned Mayo Clinic expansion in Rochester on Wednesday, Jan. 30, 2013. At Dayton's left is Mayo Clinic President and CEO John Noseworthy, M.D. The clinic is asking for $585 million in public money to help fund the expansion.
MPR Photo/Tom Scheck

But economist Scott Anderson said government should not be in the business of favoring any particular industry with subsidies, even if it's one like the Mayo Clinic, where jobs are high paying, said Anderson, chief economist at Bank of the West.

"Which one should win out and which industry is more important to develop? Those sorts of questions come into play," Anderson said. "And those questions tend to be more political than economic."

Meanwhile, the politicians are trying to parse the economics. A Minnesota House Committee has asked Mayo Clinic officials to provide specific salary information about the jobs they're promising.