What percentage of Healthcare, Education, Government employment is good?

Frank always says that we should look for markets that have strong employment in the healthcare, eduction, and government (“HEG”) sectors. I’ve posed some questions below to provide more clarification on that. If Frank has time, maybe he’ll share his opinion here too! :slight_smile:

  1. When you look at the employment makeup of a market, how much HEG employment is enough?

For example, if you’re looking at an MSA and you see that the HEG sectors provide 20% of the jobs in that area, is that enough? Or do we want more like 50%?

  1. And similarly, how much manufacturing employment is too much? If a town is 25% manufacturing, is that too much?

  2. Does a military base qualify as government employment for these purposes? Technically it is gov employment of course, but is it less stable than more run of the mill administrative government offices?

  3. Lastly, a point that might not matter. Should we be looking at what percentage of the local economy (output, spending, sales) is attributed to each sector? Or at the actual number of jobs in that sector compared to other sectors? Or is either one a good indicator? (I’m assuming there would be a very strong correlation between number of jobs and the economic value of the sector).

Looking forward to hearing your thoughts and comments. Thank you!

I don’t analyze sectors so much as look at the top three to see how many of them are cyclical (e.g. Manufacturing, Oil & Gas, etc), which means increased risk you need to account for and calculate what a downturn would mean for your profitability based on historical data. The HEG data is just a standardized barometer to answer this, but does not necessarily indicate whether a market is good or not.

Good point. Thanks @jhutson