In Your Own Backyard:
How NIH Funding Helps Your State's Economy

A Report from Families USA, June 2008

KEY FINDINGS

We analyzed NIH grants and contracts awarded to each state in fiscal year 2007 and the economic impact of these awards in each state.5 We also provided a framework for predicting the economic impact of potential increases in NIH funding in fiscal year 2008.

NIH Spending Has a Significant Impact on State Economies

• Grants to States: In fiscal year 2007, NIH awarded approximately $22.846 billion in grants and contracts to universities and other research institutions in the 50 states.
  • The value of NIH state awards ranged widely, from $3.493 billion (California) to $7 million (Wyoming).
  • Seven states received more than $1 billion in funding from NIH: California ($3.493 billion), Massachusetts ($2.339 billion), New York ($2.005 billion), Maryland ($1.566 billion), Pennsylvania ($1.436 billion), Texas ($1.128 billion), and North Carolina ($1.088 billion).

• Business Activity: On average, in fiscal year 2007, each dollar of NIH funding generated more than twice as much in state economic output. That is, an overall investment of $22.846 billion from NIH generated a total of $50.537 billion in new state business activity in the form of increased output of goods and services.
  • Business activity generated per dollar of NIH funding ranged from $2.49 (Texas) to $1.66 (South Dakota).
  • The 10 states that generated the most economic activity per dollar of NIH funding were Texas ($2.49), Illinois ($2.43), California ($2.40), Georgia ($2.36), Colorado ($2.34), Pennsylvania ($2.32), Tennessee ($2.32), Utah ($2.30) Ohio ($2.29), and New Jersey ($2.26).
  • In fiscal year 2007, every $1 million that NIH invested generated $2.21 million in new state business activity.

• Jobs and Wages: In fiscal year 2007, NIH grants and contracts created and supported more than 350,000 jobs that generated wages in excess of $18 billion in the 50 states. The average wage associated with the jobs created was $52,000.
  • Jobs: The number of new jobs created ranged from 55,286 (California) to 127 (Wyoming).
  • Jobs: In six states, more than 20,000 new jobs were created: California (55,286 jobs), Massachusetts (30,864), New York (27,877), Maryland (21,299), Pennsylvania (21,262), and Texas (20,148).
  • Wages: The increase in total wages from jobs created and supported by NIH funding ranged from $3.111 billion (California) to $5 million (Wyoming).
  • Wages: In six states, total wages from jobs created exceeded $1 billion: California ($3.111 billion), Massachusetts ($1.815 billion), New York ($1.423 billion), Pennsylvania ($1.164 billion), Maryland ($1.150 billion), and Texas ($1.013 billion).
  • Wages: The average wage per new job created by NIH funding ranged from $60,285 (Connecticut) to $38,746 (Louisiana).
  • Wages: In seven states, the average wage per new job created exceeded $55,000: Connecticut ($60,285), Massachusetts ($58,801), Delaware ($57,960), New Jersey ($57,720), Nevada ($56,664), California ($56,268) and Illinois ($55,566).
  • Wages: The average wage of all the jobs created by NIH funding nationwide is $52,112. The latest estimate of the average U.S. wage is $42,000.7 This means that, on average, wages associated with jobs created by NIH funding are nearly 25 percent higher than the average U.S. wage.

• Impact of Changes in NIH funding: The amount of money that NIH awards to states increases or decreases as the agency’s federal funding is increased or cut every year. The impact of these increases or decreases is somewhat predictable and can be estimated at the state level. Taking 2007 as the base year, we estimated the impact of a 6.6 percent increase in funding on states’ economies. (A 6.6 percent increase in NIH funding is the amount needed to offset past flat funding and to adjust for current inflation.8 This increase in funding will get NIH on the path to restoring the purchasing power it has lost over the years.)

If the sum of all NIH awards to the states were to increase by 6.6 percent, the national economic benefit would add up to $3.1 billion worth of new business activity, 9,185 additional jobs, and $1.1 billion in new wages (Tables 3, 4, and 5).

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