On July 21, eight Seattle City Council members sat down with lobbyists from an industry that seems to have far more access and sway with the city these days than, say, strip clubs. Indeed, at the invitation of council budget chair Jan Drago, folks from the Washington Biotechnology & Biomedical Association (along with David Schubert, CEO of a local biotech outfit called CellExSys) gave the council a presentation on the virtues of the pharmaceutical industry--the industry with the highest profit margins of any business, according to the Fortune 500. (Pharma margins are 17 percent.) The explicit goal of the presentation was to convince the city to invest a half billion dollars to subsidize the sector--mainly in South Lake Union, where Paul Allen has convinced the city to back a biotech office park on his 50-acre property.

But industry reps make a weird case to woo public investment. Biotech is a chancy industry, they say, and biotech is a successful industry. Here's how that seemingly contradictory line of reasoning works: After outlining how cutthroat biotech is--i.e., if the local biotech industry is going to prosper it needs city government to help--the bio boosters proceeded to map out a record of enormous local payback to date: an average biotech employment growth rate of 9.5 percent per year, tax revenues increasing 6 percent per year, and an average annual industry salary of $68,000.

Furthermore, the city's Office of Economic Development (OED), which led the rah-rah session in concert with the industry folks, points out that an earlier city investment in biotech company Immunex (the city put up $10.1 million to build a bridge in Interbay for the company in 1999) has brought benefits. The OED's Ben Wolters says, "The bottom line is, we are guaranteeing that Seattle is being used as the anchor for what some consider the largest biotech firm in the U.S." Amgen, which bought out Immunex last year, is moving its oncology research program to the Immunex site. And Wolters says studies estimate that Amgen will generate $28.7 million in taxes over the next 20 years. Amgen, which is actually the 10th largest bio firm in the country, employs about 750 people in Seattle (the former Immunex crew) and has built a 750,000-square-foot complex of about six buildings at its Interbay site. (That development is, however, scaled back from the 1.1 million-square-foot space originally planned by Immunex. The site is also supposed to house 15 buildings.)

Unfortunately, levelheaded critics of the bio boom--like Phil Bereano, a professor of technology and public policy at the UW who has researched corporate subsidies and the biotech sector--were not invited to the briefing. After the session, I forwarded a copy of the 30-page July 21 presentation Bereano's way. He definitely had some concerns. "This implies that [biotech] will experience near 10 percent job growth in the future, and that's just bullshit," Bereano said. Biotech started out with a tiny base, he argued, so any growth would be represented by impressive percentages. He also pointed out that the 9.5 percent employment growth took place during the Clinton-era boom. It's no secret that irrational investment poured into the bio industry during the '90s, just like overzealous investment flowed to dot-coms.

Luckily, a few council members--Nick Licata and Richard McIver, mainly--brought a healthy dose of vocal skepticism to the meeting. "I thought it was weak," McIver said after the presentation. "Once you get through with the PhDs, what are the other jobs?" Indeed, McIver asked at the hearing, "Why would I invest more in biotech than in existing manufacturing jobs?" Meanwhile, Licata pointed out that Seattle's 7,300 bio jobs (which make Seattle the sixth-ranked bio spot in the nation) aren't actually a whole lot of jobs. If just 7,300 jobs put Seattle in the top 10, Licata reasoned, the biotech sector doesn't sound like a massive job machine. The nation's leading biotech region (the Bay Area around San Francisco) has 38,000 bio jobs--which means the biotech industry isn't even one of the Bay Area's top 25 employers. (For some perspective, Boeing employed 107,000 local folks at its height in 1989.)

In fact, a June 2002 Brookings Institution report on biotech investment questioned whether biotechnology yields as many jobs and other economic benefits as boosters expect. Only 44 biotech companies have more than 1,000 employees, the report pointed out.

Mayor Nickels has been saying that a South Lake Union biotech park will create 20,000 new jobs. At a half-billion-dollar public investment, that pencils out to a public subsidy of $25,000 for each job. A count smaller than that optimistic prediction, of course, would push the already high investment per job even higher. "It's not rational," Bereano concludes. "It's sexy to subsidize biotech, but biotech is not labor-intensive."

In short, dumping a half billion dollars into a given industry or neighborhood is bound to kick up some results, but you have to wonder if investing in other industries and neighborhoods might make more sense. After all, a cornerstone of the bio boosters' case is that their industry is so successful. That prompts the question: Why do they need public investment?

josh@thestranger.com