Susan Windham-Bannister and Gov. Deval Patrick in 2012.

Credit: AP Photo

$57M in Tax Credits Helped Create 2,500 Life Sciences Jobs ... Maybe

March 26, 2013

One of the cornerstones of Gov. Deval Patrick's "innovation economy" is a 10-year, $1 billion commitment to life sciences. But is this initiative working? Is it creating the jobs it promised?

“Life sciences” is an umbrella term for the industries the Patrick administration wants to grow the most: biotechnology, pharmaceuticals, medical devices, diagnostic testing, bioinformatics. The Massachusetts Life Sciences Center is the agency created to oversee that growth.

“It’s one thing for the government to make tools available, the question is whether you’re going to make the most of them,” Patrick said. “And you have. You see the results. You see them in your laboratories, in your workforce, in the economic impact here to the commonwealth.”

Patrick joined researchers from Northeastern University who presented a report showing that the state has given out $56.6 million in tax credits, and life sciences companies have created 2,537 new jobs in Massachusetts. The news was, in part, a pitch to the private sector for help -- encouraging investors to put money into clusters of firms over individual start-ups.

“Innovation is a process,” said Susan Windham-Bannister, president of the Life Sciences Center and founder of Abt Bio-Pharma Solutions. “The job creation results were critical and we really have to think both short-term and long-term. And that’s really the reason for our approaching this with a portfolio of investments.”

But it’s not clear whether tax credits are the direct cause of the life sciences sector growing at a faster pace than any other industry sector in the commonwealth.

“The life sciences credit is probably as well designed as a credit like this can be,” said Peter Enrich a law professor at Northeastern. “But it suffers from one basic flaw, which is that there’s no way to tell whether the jobs it is subsidizing would have been here in the absence of the credit.”

Enrich points out that companies can easily say they’re thinking about growing or moving to another state in order to attract tax credits and other incentives. But even if the Life Sciences Center isn’t on track to create the 250,000 jobs it had originally hoped for by 2018, it isn’t spending as much either. Thanks to state budget cuts, less than a third of the $1 billion pledged has been spent on tax credits, grants and loans.

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