Reporting

February 12, 2014 by Tracy Hudak

Creativity is Big Business in California


(photo credit: James Broad)

Earlier today, California State Assembly members heard testimony about the $155 billion impact of the Golden State’s "creative economy." The informational hearing was convened by Senator Ted Lieu (D-West Los Angeles County), who also introduced legislation today to restore funding to the California Arts Council.

Lieu, who chairs both the Senate Business, Professions and Economic Development Committee and the Joint Committee on the Arts, seems eager to get California thinking strategically about its creative sector, saying in a press release “artistic services and intellectual capital are essential to the 21st Century economy, which is dynamic, knowledge-based and increasingly global.”

Fueling this conversation is the 2013 Otis Report on the Creative Economy, which argues “creativity is one of California’s greatest economic assets.” Released just last week, the Otis report is California’s first-ever, statewide study that defines the creative sector and analyzes its impact on employment and economic activity. As would be expected from a state boasting several of the most important creative regions in the world, the report has the numbers to back that claim up.

Otis College of Art and Design, with the Los Angeles County Economic Development Corporation [LAEDC}, has been producing a seminal creative economy report on the Los Angeles region for six years. It was prompted and funded by the California Arts Council to expand this year’s report to include a statewide analysis. The Otis report finds that in 2012, creative industries contributed $155 billion to the state’s economy after purchases from other sectors. That net value is 7.8% of the gross state product.  As Robert Kleinhenz, Chief Economist for the LAEDC explains, “by itself, the creative economy in California is larger than the gross state product of 22 states.”

While at least thirty-three states have been gathering data on their creative economies, there is no standard definition of what industries to include, allowing each state to measure what is useful and unique about their creative sector. The Otis report considers these commercial and nonprofit activities as creative industries: Apparel, Toy and Furnishings design and manufacturing; Arts and Culture businesses and venues; Architecture and Interior Design; Entertainment and Media; Product and Industrial Design; Publishing and Printing; Communication Arts- including graphic and web design and photography; Arts and Design Education Programs and Institutions as well as Foundations and Funding Organizations.

These industries directly support more than 681,000 wage or salary jobs as well as more than 261,000 self-employed contractors, and include a total (direct, indirect, induced) contribution of 1.4 million jobs in California. The report finds that creative industries account for 9.7%, of California’s workforce– roughly one in ten jobs. These jobs generate $13 billion in state and local tax revenues. Los Angeles is home to 44% of California’s creative workforce, with one in seven jobs in the region being in the creative economy.

The Otis report also examines California’s creative economy through a workforce development lens. It reports on the number of workers in creative occupations as well as their earnings averages and education levels. While art, design, and entertainment engage the most workers statewide, the report also accounts for creative jobs in other sectors, illustrating how these skills and services ripple through the economy. It counts the software developers working in computer science firms, cabinetmakers working in construction, and advertising and public relations professionals working for all sectors. The report reminds us that workers with creative economy skills “provide a competitive edge that reaches across almost every industry in the state.”

While one would expect California to be a leader in developing its creative economy and leveraging it’s creative assets, it is actually far behind other regions. Europe has been studying its creative economies since the 1990s, the Northeastern US since the early 2000s, and the National Governors Association reported in 2012 that thirteen states had already integrated creative economy initiatives into their statewide economic development plans. That report, titled “New Engines For Growth,” discusses how “arts, culture and design touch the economy at crucial leverage points, including innovation, entrepreneurship, employment, and revitalization.”

In contrast to the importance of its creative economy, California ranks 48th in the nation in per capita spending on state art agencies, just above Kansas and Georgia. As Senator Lieu says, “this is an insufficient investment in the state's art programs, and it means art programs and art-related businesses are unable to thrive, or in some cases, to even exist.”

The Otis report authors hope their findings offer, “a critical first step in enabling greater statewide coordination of resources and services to support [creative] industries.” As the first-ever study on the scale and reach of California’s creative economy, the report should help us recognize the impact and potential that the creative sector will have on California’s success as a 21st-century economy.

Tracy Hudak is a writer, artist and business consultant. She is the founder of CreativityWorks, an initiative to help Ventura County harness its creativity to catalyze economic and community success.

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