Bio-Pharmas Impact On Californias State and Local Economy

Peter Philips and Kevin Duncan

Working Paper Series, Department of Economics, University of Utah from University of Utah, Department of Economics

Abstract: In California, a leading state in biotech research & development, and bio-pharmaceutical manufacturing, more than 100 establishments in these two related industries employ about 65,000 workers whose average wage exceeds $100,000 per year. On average, about 2000 construction workers build and refurbish the infrastructure of this industry in California annually putting in place about $1 billion of new and renovated buildings. The economic impact of this construction activity adds a total of more than $2 billion annually to the California economy. The annual economic contribution of the biopharmaceutical manufacturing industry to the California economy exceeds $65 billion, creates almost 200,000 jobs directly and indirectly and generates more than $2.5 billion in state and local tax revenues. The annual economic contribution of the biotech R&D sector to the California economy exceeds $9 billion, creating more than 50,000 jobs and more than $450 million in state and local tax revenues. An analysis of a project labor agreement (PLA) in Solano County shows that the local hire provisions of this agreement generated more than 3 times as much local employment and local tax revenues compared to had the project not been done under a PLA. An analysis of a bio-pharmaceutical manufacturing plant belonging to a California biotech firm that was built in Ohio instead of California shows that not building this facility in California meant the state lost almost 4,000 construction and other jobs, lost more than $900 million in economic activity associated with the construction of this plant and lost more than $9 million in local and state tax revenues associated with the building of the plant. California further lost annually 2400 jobs that would have been created directly or indirectly through the operation of this plant, almost $850 million in statewide economic activity and $31 million in state and local taxes.

Keywords: biotechnology; project labor agreements; construction. JEL Classification: O14; O33 (search for similar items in EconPapers)
Pages: 129 pages
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:uta:papers:2013_03

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