01 May 2013 // Thoughts

The Business of Culture: Museums, Employment and the Creative Class

And we’re back with “The Business of Culture: Museums as Economic Development.” But before we move forward with our next segment, let’s review what we’ve covered so far:

  • • We’ve introduced the topic by posing a number of questions: can museums and other cultural assets positively affect property values? How do they affect other economic indicators such as employment and tourism? Can they be a catalyst for successful urban planning?
  • • We’ve explored how the introduction of MASS MoCA into North Adams, Massachusetts created positive gains in residential property values, and how rental properties are increasingly using their surrounding cultural assets as marketing tools.
  • • We’ve discovered how, by using museums as their core differentiator, 21c Museum Hotelshas become the cream of the boutique accommodation crop, earning accolades from guests and major travel publications alike, all while bolstering economic activity in its hometown communities.
  • • And we’ve learned the concept of creative placemaking, its role in incorporating cultural assets into urban planning, and how The High Line in Brooklyn, New York and The Mind Museum in Taguig, Philippines have transformed their surrounding urban areas.

But in an economy still reeling from the worst recession in decades, perhaps the greatest indicator of true economic impact is job creation, retention and overall growth. How are museums and other cultural assets affecting the job market? According to the American Alliance of Museums, American museums employ 400,000 people and directly contribute $21 billion to the economy each year. Returning to our MASS MoCA example from a few weeks ago, when Dr. Stephen Sheppard and his team compared the average of number of businesses and jobs the four years before the opening of MASS MoCA to the three years following, North Adams welcomed an increase of 44 new businesses within the city, adding 255 jobs. During those three years, annual payroll increased $17,898,000, and the average salary per employee grew $2,000 (and these figures were not attributed to a confluence of low-wage jobs). So, it would appear at first glance that the museums spur both direct and indirect employment in their communities.

Image: Americans for the Arts

When widening the study pool to include all arts and cultural institutions, the numbers become even more compelling. Recently, Americans for the Arts released a report entitled “Economic Prosperity IV: Economic Impact of the Nonprofit Arts & Culture Industry.” This most recent of their four surveys, completed in 2010, includes expenditure data collected from 9,721 arts and culture organizations and 151,802 attendees in 182 study regions. Americans for the Arts used input-output analysis to determine how many times a dollar was re-spent throughout the local economy before it left the community. Because the previous study was completed in 2005, the contrast between the two surveys provides an interesting look at pre- and post-Recession effects. Between 2005 and 2010, unemployment rose from 5.1% to 9.7%, consumer confidence dropped precipitously from 101 to 54, and home foreclosures tripled to 2.9 million, meaning Americans had little money to spare for arts and cultural events.

According to the 2010 results, the arts and culture industry generated $135 billion in economic activity. This figure breaks down to $61.1 billion by the organizations themselves and $74.1 billion in event-related expenditures by audiences. Arts and cultural institutions created 4.13 million full-time equivalent jobs, 2.14 million of which were the result of direct expenditure by the surveyed nonprofit arts organizations, representing .87% of the US workforce (a higher percentage than accountants, auditors, public safety officers, and lawyers). As a result of this income generation, nonprofit arts institutions contributed $22.3 billion in revenue to local, state and federal governments annually. While all of these numbers are impressive, they represent significant decreases from the 2005 survey, indicating that the nonprofit arts and culture industry was hit as hard as everyone else in the Great Recession. Nonetheless, the scale of these figures and the impact of cultural institutions on employment cannot be ignored. But how are creative nonprofits generating this kind of job momentum and what does it mean for entities trying to attract companies and talent?

Image: www.creativeclass.com

In his seminal 2002 work The Rise of the Creative Class, Richard Florida asserted that creative professionals were the driving force for economic development in post-industrial cities. Florida, professor and head of the Martin Property Institute at the University of Toronto, divides the creative class into two sub-groups: the Super-Creative Core (scientists, engineers, artists and designers), and creative professionals (classic knowledge-based workers such as educators, lawyers and healthcare professionals). Overall, Florida surmised that the Creative Class comprised 40 million workers in the United States alone, and that these workers drive the economy, and will continue to do so, because of their ability to think creatively and innovate.

In 2012, Florida revisited his theories to see if they held up in a post-recession economy. The book, aptly named The Rise of the Creative Class Revisited, largely supported his assertions of ten years prior. One of Florida’s key concepts from both books was what he called Quality of Place. He asserts that members of the Creative Class are attracted to vibrant cities and places that offer a wide range of amenities and experiences, and that job opportunities have become less of a location attractant. He quotes his colleague Edward Glaeser, Harvard University Professor of Economics, who writes: “The future of most cities depends on their being desirable places for consumers to live. As consumers become richer and firms become mobile, location choices are based as much on their advantages for workers as on their advantages for firms.” Adds Jason Renfrow in his book, The Open City: “It is not just that people sort themselves into places where they can find work… they seek out environments where they can pursue their personal as well as their professional interests.” So what constitutes Quality of Place?

Richard Florida defines Quality of Place in terms of its “territorial assets” – the unique set of characteristics that defines a place and makes it attractive. A city with strong territorial assets easily answers the questions “what’s there,” “who’s there,” and “what’s going on.” Many members of the Creative Class actually want to take part in shaping their community’s quality of place (sounds a little like creative placemaking, doesn’t it?). According to Florida, cultural amenities are a contributing factor to quality of place: “the availability of a wide mix of cultural attractions is the signal that a place ‘gets it’ – that it embraces the culture of the Creative Age.” The arts can also contribute to a place’s authenticity or uniqueness, another attractor for creative professionals.

This shift to place-based versus occupation-based migration would explain why, as Gabe et al. found in their paper, “The Effects of Workforce Creativity on US Counties,” a negative correlation exists between earnings and the number of museums (and entertainment and recreational facilities) per capita, “suggesting that, all things being equal, individuals will accept lower earnings to be in areas with a relative abundance of museums and other creative assets.” On the flip side, the National Conference on Citizenship found in their study, “Civic Health and Unemployment III: The Case Builds,” the presence of nonprofit organizations in a community has a calming effect on the unemployment rate, in that communities with more non-profits (including arts and culture), had significantly smaller decreases in employment during the great recession. Non-profit cultural institutions are creating employment stability and are making communities attractive to such an extent that creative class workers will accept lower salaries to live there.

As Florida writes, “today where we choose to live as opposed to what we do has become our main element of identity.” Whereas the members of the previous generation might ask you “where do you work,” the Creative Class of the present generation would be more likely to ask, “where do you live?” In his book Stumbling Upon Happiness, economist Daniel Gilbert sums up Florida’s theory thus: “Place is the first leg in the triangle of a happy and fulfilled life.”

So we’ve looked at numbers and discussed theories, but how do these figures and philosophies hold up in practice? Do cultural amenities really attract businesses and talent? Tomorrow, we’ll interview two Cincinnati businesswomen to put Cincinnati’s “territorial assets” to the employment and job creation test.