The creative economy rises in California

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There was a big bump in creative jobs in the Los Angeles region between 2011 and 2016, and creative employment across the state has now exceeded the pre-recession highs from more than a decade ago.

That’s one finding from the annual Otis Report on the Creative Economy, which was released Tuesday. During the five-year period, the report finds, direct employment in the Los Angeles region rose by 21,800 jobs to 457,400.

Otis College of Art and Design President Bruce Ferguson characterized the creative economy as “a designated set of industries that depend on individual creativity to generate employment and wealth.”

They break this down into 12 supersectors and then into 57 subsectors.

The largest creative industry sectors in the state are entertainment (192,200 jobs), publishing and printing (160,200 jobs in fields including newspaper writing, PR and screenwriting), and fashion (120,700 jobs).

Other sectors include architecture and interior design, art galleries, digital media, industrial design, and furniture and decorative arts.

The Otis Report on the Creative Economy has come out every year since 2007. Since 2007, Otis College of Art and Design has commissioned the Los Angeles County Economic Development Corporation (LAEDC) to generate the reports.

And these are meant to be tools to assess the economic impact and influence of the area's creative sector on the economy.

They survey employment, wages and output as the primary indicators of the economy. This year’s report includes numbers from 2016, which is the latest data available for most government industry and employment data sources.

Over the five-year period covered in this report (2011-2016), direct wage and salary employment in the region’s creative industries increased by 21,800 jobs to 457,400. This report makes the case that creative industries are significant contributors to employment and economic growth in the LA region. They also foster innovation and have spillover effects for other industries.

For example, the region’s creative industries also attract investment, tourism, consumer spending, and generate tax revenues for the region.

Many of these creative workers are self-employed, so you won’t find their activities in federal and state employment data. The report’s authors use IRS data on people who are classified as single-employee firms.

This means they also leave out cultural events like Coachella. Bruce Ferguson, president of Otis College of Art and Design, mentioned that the soft statistics of an event like this would be huge if they were counted.

In 2015 (latest data available), there were 179,200 self-employed persons working in the creative industries of the Los Angeles region earning revenues of $8.5 billion.

The report identifies several challenges for future growth in the creative economy. For example, there’s still strong global demand for “Hollywood” movies, but countries such as China and India have invested heavily in their domestic entertainment industries, creating competition for LA-produced content.

The report also mentions the continued “race to the bottom” for state film tax credits, which is syphoning off some film shooting and production work.

And it mentions increased automation, new technologies, and a reliance on cheaper labor outside the region are taking a hit on creative industries with a manufacturing component (fashion, toys, publishing).

However, there is also a set of costs that are left out of the report -- namely the costs that result from participating in the creative economy.

To get many of these creative industry jobs you need to go to design or art school. And yet this is very costly for students. They face very high college fees and long-term debt and then low-paying entry level jobs when they join the creative job market. They also face very high housing costs in the creative regions of California such as LA and San Francisco.

Bruce Ferguson, president of Otis College of Art and Design, said they believe it’s time for the report to factor in such costs.

“That isn't something that we've done because we were really trying to make this report visible to people that wouldn't have in the past understood that the creative industries are such a central part of the economy,” Ferguson said.

“But now... I do think that it would be responsible of us to start to look at some of the costs, whether they be psychological costs or economic costs and so on.”

Ferguson also mentioned gentrification, and noted that we’ve gone from a place where the creative industries were seen as peripheral to now being central, especially in this state, the fifth largest economy in the world.