Creative Class

The U.S. unemployment rate is 9.7 percent, the highest in some time, but the burden of unemployment is  spread unevenly across the economy. Production workers face a 15.1 percent unemployment rate, while unemployment among construction and extraction workers stands at 17 percent. But unemployment among management and professional workers is only 5.4 percent. Researchers at the Martin Prosperity Institute (MPI) previously identified long-run differences in the unemployment rates faced by industrial workers and knowledge, professional, and creative workers.

New analysis by the MPI team tracks unemployment among management and professional – or creative class – workers from 1983 to the present. While unemployment among creative class workers as a whole is far below the rate faced by production and construction workers, there is considerable variation in unemployment among the various occupations, professions, and job types that make up the creative class.

Creative workers in arts, design, and entertainment occupations consistently face higher unemployment rates and significant spikes during recessions. In contrast to other creative fields, the unemployment rate for arts, design, and entertainment workers sometimes runs higher than the overall unemployment rate.

Computer, sciences, and engineering professionals experience lower rates of unemployment than arts, design, and entertainment workers. But the lowest rates of unemployment and the most stable employment are found in meds and eds occupations – health and education – where unemployment stays consistently low, even during downturns.

The full analysis is here.

Yesterday, we looked at the relationship between drug use and economic patterns. We saw that drug use was associated with both higher levels of state economic output as well as higher levels of unemployment.

Today, I turn to the relationships between drug use and economic class. My colleague Charlotta Mellander charted the relationships between drug use and the percentage of a state’s economy that is made up of two classes: the creative class – that is, people who work in knowledge-based, artistic, and professional occupations; and the working class – those who work in production, transportation, and construction jobs.

While the associations between drug use overall are weak, the patterns for marijuana and cocaine are significant. Take the creative class: Both marijuana and cocaine use are positively and significantly related to states with higher concentrations of the creative class.

Correlation coefficient: 39**

Correlation coefficient: 36**

Now look at the results for the working class, where the pattern is reversed. Both marijuana and cocaine are negatively and significantly related to the concentration of working class jobs in state.

Correlation coefficient: -.35**

Correlation coefficient: -.36**

Note: * indicates statistical significance at the .05 level; ** indicates significance at the .01 level.

The U.S. economy has shed 7.2 million jobs since the onset of the recession. But the economic pain of unemployment has not been spread equally, according to a new analysis by my colleagues at the Martin Prosperity Institute.

The graph below, compiled by Ulrich Atz, tracks the unemployment rate for three broad groups or classes of employment – the working class, the service class, and the creative class from 1971 to May 2009.

The report finds that:

Unemployment for all three groups has spiked since the onset of the recession.  But the downturn has hit hardest on working class. . . The working class has been hard hit by every downturn since 1971. Working class unemployment spiked from 6.2 percent in 1973 to 14.5 percent in the 1975 downturn.  It spiked again from 7.7 percent in 1979 to 16.8 percent in 1983.  It reached 12.0 percent in 1992.

In contrast, the unemployment rate for the creative class has hardly ever reached the 4 percent mark.  Unemployment rates among the working and service class are typically about 3-4 and 2-3 times respectively the rate of those in the creative class.

A closer look at monthly data (available starting in 2000) reveals that unemployment rates among the working and service classes typically move together while creative class unemployment lags the other two by several months.

The full analysis is here.

The unemployment rate surged to 9.4 percent today. But unemployment continues to fall heavily on certain demographic and class groups and in certain cities and regions of the country, according to the latest figures from the Bureau of Labor Statistics.

Greater Detroit still posts the highest rate for large regions (those with a million or more people), 13.6 percent, down from 14 percent in March. Los Angeles, Tampa Bay, Las Vegas, and San Jose also have rates above 10 percent. Greater Portland, Oregon saw the largest jump in its unemployment rate (+6.9 percentage points), followed by Detroit (+6.6 points) and greater Charlotte (+6.4 points). Iowa City (3.2 percent), Des Moines (4.6 percent), and Salt Lake City (five percent) post the lowest unemployment rates.

Ryan Avent notes the resilience of Washington, D.C. and of the Bos-Wash mega-region across the board as well as college towns. He also points to the surprising strength of the “eastern Rust Belt” especially Buffalo, Scranton, Syracuse, and Pittsburgh. These places all  experienced the kind of hit Detroit is taking today roughly a generation ago. They have had time to stabilize the economic trauma and to begin to rebuild around universities, heath care, technology, and creative industries.

Large increases in regional unemployment remain heavily concentrated in regions with large fractions of blue-collar working class jobs. The change in unemployment from April ‘08 to April ‘09 is closely correlated (0.39) with the regional concentration of working class jobs – that is, jobs in industrial production, transportation, and construction, according to an analysis by my colleague Charlotta Mellander.

Regions with higher levels of the creative class and higher levels of human capital have fared much better. (Year-over-year, change in unemployment is negatively correlated with both the creative class, -0.29, and human capital levels, -0.35, the percentage of adults with at least a bachelor’s degree).

Unemployment does not appear to be related to regional income levels (the correlation between the two is insignificant). And it tends to fall more heavily on regions with higher housing prices (with a significant positive correlation between the two of 0.18) – perhaps an artifact of the bubble.

Interestingly, regions with large concentrations of lower-end service jobs (like food prep, building maintenance, and personal care services, which are typically seen as the worst and least secure kinds of jobs) are holding up much better than those with large working class concentrations. (Change in unemployment is negatively correlated, -0.29,  with large concentrations of these standardized service jobs).

Seems to me, we’d be much better off developing new strategies to improve wages and working conditions in this sector – by say speeding the dissemination of better management models and improving innovation and productivity – instead of bemoaning the loss of blue-collar jobs or, worse yet, bailing out failed manufacturing firms.

A blogger says the issue is more class than gender:

Men have worked as essentially shop keepers and store clerks for a lot longer than they have worked on assembly lines. There have been waiters forever. Lawyers are the world’s second oldest profession. Teaching was a male-only profession for centuries.  The idea that men are and ought to be unreflective, grunting, two-fisted louts is a class thing not a gender thing and it is imposed upon working class men by a system that needs them to be beasts of burden.

Men who reject certain values and behaviors as “sissy” or “girlie” are rejecting success, and don’t think their bosses aren’t grateful.

His point hit home with me.

When I was a young boy, my father would often take me with him to Newark on Saturdays to buy “Italian Bread.” We would inevitably pass by a neighborhood “beauty parlor” where my father would stop for just a minute. “Richard,” he would say, “I was so dumb. When your aunt (his older sister) moved to California, she wanted to give me this place. I could have made it work. I enjoy cutting your hair and coloring your mother’s. But when I was young, beauticians were considered ’sissies.’ So I let my pride take over. Instead of having my own place, being my own boss, and doing something enjoy, I stayed in the damned factory.”

The economic crisis is hitting hardest at working class jobs, and rates of male unemployment have skyrocketed. A commonly asked question is, how do we retrain them for emerging job opportunities in other sectors? The Globe and Mail’s Margaret Wente suggests the problem runs a whole lot deeper than we think.

The new economy (over the long term) is creating tons of service jobs in retail, customer support, and personal care. The trouble is that these jobs require temperamental attributes that are stereotypically feminine – things like patience, a pleasant demeanour, deference to the customer and the ability to empathize and connect. Another way to put it is that these jobs require emotional labour, not manual labour. And women, even unskilled women, are much better at emotional labour than men are …

This identification of masculinity with hard physical work (no empathy required) is deeply embedded in the history of the human race … But no matter how much education and retraining we offer, we are not going to transform factory workers and high-school dropouts into customer-care representatives or nurses’ aides any time soon. It’s their wives and daughters who will get those jobs …

In the new world of work, the old values of working-class men are an anachronism. And what we are really asking of them is not to retrain or upgrade. We are asking them to abandon their very idea of masculinity itself.

She’s right. I grew up in that culture. My father worked his entire life in a factory. I spent my high-school summers doing factory work. Sexism and racism ran rampant. Fights were almost everyday occurrences; working class disagreements almost always end in them. When a Garden State scholarship enabled me to attend Rutgers, I was floored by the relative safety, meritocratic orientation, and personal freedom afforded by middle-class culture. Sure, modern middle-class culture has plenty of faults. And certainly not all working-class men share these retrograde attitudes. Many workers in more modern, high-performance factories (a good deal of whom are women) would fit nicely into service or professional work. Still, that old blue-collar male culture remains too much a fixture in too many places.

The demise of high-paying blue-collar jobs and the economic devestation it means for families and and communities is tragic. But the demise of that old-school working-class male mind-set is not something to be sad about.

Yesterday, we looked at the effects of class on economic growth. Today, we turn to the relationship between class and innovation.

It’s a well-established truism that innovation drives economic growth and development. Nations and regions around the world go to great measures to stimulate innovation in their attempts to create the “next Silicon Valley” which will generate new technologies, improve economic growth, and lift their living standards.

To examine the relationship between class and innovation, Charlotta Mellander used data on patents by country available from the World Intellectual Property Organization. Despite some limitations, patents are the best-available measure of innovation.

The relationships between class and innovation are, if anything, even stronger than between class and economic activity.

The working class and innovation – not so much. Countries with a large working class have much lower levels of innovation.

Source of all graphics: Martin Prosperity Institute

Last week, we looked at what makes for happy states. One thing that stood out was that states with larger concentrations of the working class had lower levels of well-being.

So, we decided to take a closer look at the relationship between the working class and several key indicators of state wealth and well-being.

What we found is striking  – and frankly troubling. States with large concentrations of working class jobs had lower levels of income, GDP per capita, and well-being – pretty much everything across the board.

There were significant negative correlations between states with a large share of working class jobs and three of the five component indices in the Gallup well-being index: healthy behavior ( -.65), physical health (-.42), and life evaluation (-.31), as well as for the well-being index overall (-.51).

The pattern was similar, even worse, when we looked at the relationships between the working class and GDP per capita (-.51), income (-.69), human capital levels (-.71), and housing prices (-.62).

So maybe it’s time to think twice when we hear how important it is to save “good” working class jobs.  Individually, that may well be the case. Some of these jobs pay very well, and lots of people who lose them may find it difficult, perhaps impossible, to find similar work at their pay levels

But from the point of view of society and economic development broadly, it’s important to recognize that states with large concentrations of working class jobs do very poorly in terms of wealth and well-being.

These findings distress me personally. Looking them over and over, I found myself thinking back to advice  my father – who spent more then 50 years as a worker in a Newark eyeglass factory – gave my brother and I long ago. “Boys,” he said, ”I do this so you won’t have to. That’s why you have to stay in school, study hard, and go to college.” I understand much better now what he was driving at.

For a class to exist – the working class, the capitalist class – it has to inherit something to continue from one generation to the next. Money, or the lack of, was usually the thing that helped define a class. Titles and status also worked pretty well. If a class is defined by intangibles – like drive, character, education, creativity – can it be inherited and, if it cannot, can it be a class?

Think of entrepreneurship. If one cannot inherit the “claw with the prey,” how does the class continue? What holds it together from one generation to the next? This has interesting public policy implications. What should public policy support? Are we still in the Schumpeterian world where the capitalist class invites in the gifted few to revitalize the system from time to time? We seem to invite immigrants and they seem to perform rather well.