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Policymakers Are Short Shrifting A Key Contributor To U.S. And California GDP… The Creative Economy

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COVID-19 Health Mandates Disproportionally Affecting Arts and Culture Businesses

May 20, 2020— RIVERSIDE, Calif. — Despite making up a considerable share of both U.S. and California GDP, in the wake of the COVID-19 pandemic, businesses and organizations in the creative economy are being left out of much of the support other industries are receiving. A new analysis, released today by the UC Riverside School of Business Center for Economic Forecasting and Development, finds that the creative economy has experienced particularly alarming job and revenue losses as a result of shelter-in-place mandates, but the level of public sector relief directed at these businesses falls far short of other sectors.

Arts, entertainment, and cultural activity – which includes performing arts, spectator sports, art galleries, museums, historical sites, and other creative businesses – make up 4.5% of U.S. GDP and 8.2% of California GDP. Yet, in California, a mere 1% of the loans approved under the Small Business Administration’s Paycheck Protection Program have gone to businesses and organizations in the state’s Arts and Entertainment subsector. This is even more concerning given April’s shocking 54% year-over-year loss of jobs in the nation’s Arts and Entertainment subsector. California’s data was not available as of this release, but the authors note that it will very likely reflect the nation’s experience.

“The minimal level of financial support stands in direct contrast to the value-added contributions these businesses and organizations make to the broader national and state economy,” said Adam Fowler, Director of Research at the Center for Economic Forecasting and one of the report authors. “We need to shift away from the attitude that the creative sectors are discretionary and not necessary – they play a critical but underappreciated role in our overall economic health and prosperity and will be essential in driving economic recovery at the local, regional, and national level.”

That the creative economy is not on equal footing with other sectors in the minds of policymakers is evident in ways beyond financial assistance. The analysis points to California and New York, which have both established economic recovery teams that have drawn members from industry, labor, academia, and government, but have failed to include advisors from either state’s world-class arts or cultural institutions. “The old playbook needs to be tossed out, and we have to recognize these sectors and their workers as foundational elements of the economy, both in terms of immediate interventions and longer-term planning,” said Fowler.

The report authors make a number of recommendations for increasing support of the creative sectors, including reinvigorating federal legislation such as the CREATE Act, which would steer economic development tools and resources towards creative businesses and organizations. In California, they argue that the housing and land use crisis must be resolved as rising costs are driving creative workers, like many others, out of the state’s urban employment centers. Locally, cities across the state can modernize their business licensing procedures and fee structures to ensure local codes don’t hamper or disincentivize opportunities for creative workers and businesses.

According to the analysis, the prospects for rapid recovery within the creative economy are low given that most of its organizations and workers were among the first impacted and will be among the last to resume normal operations under most state reopening plans.

The complete analysis, COVID-19 and the Creative Economy: Necessary Not Discretionary, is available here.

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Inland Empire Business Journal
The Inland Empire Business Journal (IEBJ) is the official business news publication of Southern California’s Inland Empire region - covering San Bernardino & Riverside Counties.