Creative Class

That’s the title of an important new study by my Martin Prosperity Institute colleague Kevin Stolarick. Economists have long used the firm as their basic unit of analysis. But Marx long ago said it was the kind of work people do that not only defined their class position but is what really propelled the economy. The study makes the case for the emerging field of “occupational organization” as a complement and counterpoint to the more established field of industrial organization. Here’s the abstract.

Industrial Organization studies the behavior of firms, markets and economies through the lens of industry.  With the transition to a knowledge or creative economy, occupation has become an equally important consideration for understanding regional economies and markets. Industry alone is no longer a sufficient discriminator to understand regional markets and structures.  This paper discusses the rising importance of occupation as a unit of analysis for understanding regional economies and economic structures. However, occupation does not supplant industry as occupation alone is also not sufficient.  Rather, an understanding of the organization of occupations and industries across regions and occupations within industries is required. The study of Occupational Organization is needed.

The full study is here.

Everyone interested in urban and regional economic development must check out this new MPI study, ”Knowledge in Cities.” Using data from the U.S. Department of Labor’s Occupational Information Network database – O*NET – it identifies 11 key types of regions by the knowledge, skill, and work they do. Here are some examples of the regional types it defines.

• Enterprising Regions like Chicago, L.A., Miami, and Toronto have high knowledge about sales and marketing, economics and accounting, customer and personal service, and information technology and telecommunications.
• Engineering Regions like San Jose (Silicon Valley) and Calgary are high in engineering and IT; low knowledge about physical and mental health.
• Thinking Regions like New York, Philadelphia, San Diego, and Portland, Maine, have high knowledge about arts, humanities, IT, and commerce, and low knowledge about manufacturing.
• Making Regions like Detroit have high knowledge about manufacturing, but very low knowledge about commerce and the humanities.
• Building Regions have very high knowledge about construction and transportation.
• Understanding Regions – mainly college towns like Charlottesville, VA, and Iowa City, IA – have very high knowledge about arts, science, humanities, and IT but very low knowledge about manufacturing.

The study also finds that three types of regions – Engineering, Enterprising, and Building Regions – have higher levels of productivity and earnings per capita, while Teaching, Understanding, Working, and Comforting Regions have lower levels of economic development.

Density is a key factor in innovation and regional economic growth. Over the past couple of weeks, I’ve looked at density of human capital, the creative class, and high-tech innovation. Instead of measuring these factors on a per capita basis, we looked at them in terms of land area, or per square kilometer.

The first map below plots the top 10 metros on each of the basic density measures, charting human capital, creative class workers, artistic and cultural creatives, patented innovations, and high-tech workers per square kilometer.

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My past several posts have looked at the density of key economic and demographic factors across America’s metropolitan regions. Today, I turn to the density of high-tech industry and of innovation. Long ago, the great economist Joseph Schumpeter highlighted the role of innovation in powering the rise of new industries, the creative destruction of existing ones, and the growth in prosperity of economies. Robert Solow won the Nobel prize for identifying the role of technology in economic growth and development. Paul Romer has shown how the accumulation of scientific and technical knowledge is the central force in endogenous economic growth. Michael Porter and AnnaLee Saxenian, among others, have shown how clusters of high-tech companies and other economic assets have propelled the rise of new firms like Intel in semiconductors, Apple in computing, Genetech in biotech, Google in search, and countless others that have introduced not just new innovations but whole new industries and epochs of regional growth.

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Have a gander at this mind-boggling chart put together by Mike Mandel.

It shows the share of real growth of private fixed assets – stuff like machinery, factories, technological equipment, and, yep, housing. Or, as Mandel puts it: “All the privately owned productive assets of the country – for the decade spanning 1999 to 2009.”

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From the Bureau of Labor Statistics (via The New York Times Economix)

My past several posts have looked at the density of key variables across America’s metropolitan regions. Today, I turn to the density of a subset of the creative class – the density of artists and cultural creatives. My own earlier research, which landed me on “The Colbert Report” of all places, showed that metros with higher proportions of employed artistic and cultural workers also have higher incomes, higher rates of innovation, and higher housing prices. The reason is not that artistic and cultural creatives are more likely to launch new businesses or invent new products, but that their location in an area signals that a community is open to diverse groups of people who are open to new ideas and self-expression. The concentration of artistic and cultural creatives in a place is a sign of a local ecosystem that is more conducive to generating new ideas and mobilizing resources around them.

Our measure for the density of artistic and cultural creatives is the number of artistic and cultural creative workers per square kilometer. The map below shows the density of artistic and cultural creatives across U.S. metro regions. The median density of artistic and cultural creatives across all U.S. metros is only .08 per square kilometer. The densest metros have more than four artistic and cultural creatives per square kilometer, while the average metro has less than a tenth of a cultural worker. (more…)

Video of Richard Florida’s talk at yesterday’s The Economist Ideas Economy event in NYC.

In this, the third in my series of posts on density, I look at the density of the creative class. More than 35 million Americans are members of the creative class, making up roughly a third of the workforce. The creative class is a measure of human capital that looks at what occupations people work at rather than whether they earned a college degree. The creative class includes workers in science and technology, business and management, health care and law, and arts, culture, design, media, and entertainment.

The map below shows the density of the creative class across U.S. metros. The median density across all U.S. metros is roughly 8.4 creative class workers per square kilometer. The densest metros have more than 140 creative class workers per square kilometer, while the least dense have less than one. (more…)

My research team at the Martin Prosperity Institute just released a new report on Toronto in the Creative Age. Several things really stand out.

First, Toronto is still coming into its own as a major North American metro. U.S. metros in the Northeast and Midwest had significant expansion a whole lot earlier, but Toronto has seen substantial growth since the 1950s, sort of like a Sunbelt metro. Since then, it has transformed from a sleepy metro into a large and rapidly growing one, fueled by massive immigration and growing across almost every knowledge and creative  industry.

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