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Southern California - Still Creative Capital of the World

LOS ANGELES

 

NEW GEOGRAPHY-Over the past decade, Southern California has lagged well behind its chief rivals – New York and the Bay Area, as well as the fast-growing cities of the Sun Belt – in everything from job creation to tech growth. Yet, in what the late economist Jack Kyser dubbed “the creative industries,” this region remains an impressive superpower. 

By creative industries, we mean not just Hollywood’s film and television complex, which remains foundational, but those serving a host of other lifestyle-oriented activities, from fashion (photo above) and product design to engineering theme parks, games and food. We may be lagging Silicon Valley in technology and New York in finance or news media, but when it comes to entertaining people, and defining lifestyle, the Southland remains a powerful, even primal, force. 

Overall, according to the Los Angeles County Economic Development Corp., creative industries employ more than 418,000 people in L.A. and Orange counties. This is larger than second-place New York, and more than five times larger than the San Francisco and Seattle regions. Orange County and Los Angeles account for 80 percent of statewide employment in entertainment and fashion. In toys, LA and OC account for over two-thirds of statewide jobs. 

As a whole, visual- and performing-arts providers have done best in percentage terms, growing by 23.8 percent, followed closely by fine arts and performing-arts schools, with 23.2 percent growth. The SoCal creative economy took a big hit during the recession, when overall employment decreased 14.5 percent, compared with 8 percent for all other industries. But recent trends speak to the resiliency of the region’s creative industries. From 2009-14, employment finally began to grow, even as the rest of LA’s economy was still shrinking. 

As other local industries fade, the creative ones become more important, making up a growing share of the regional economy. New research by Chapman University’s Marshall Toplansky and Nate Kaspi found Orange and Los Angeles counties boast among the highest per capita employment in these creative fields of any major region in the country. 

These jobs are also critical to supporting the region’s beleaguered middle class; 63 of the 80 creative occupations in California have annual wages higher than the statewide median of $38,920.

The Inland Empire does less well in these industries, but has a strong presence in such design fields as furniture and decorative arts. The Coachella music festival, taking place in Riverside County every year, is widely seen as the most successful concert venue in the world and a global incubator of lifestyle trends and fashion. 

Overall, in most creative industries, we simply crush the nerd culture of the Bay Area. Los Angeles easily leads the nation when it comes to independent artists, writers and performers, with a location quotient eight times the national average, twice the share of New York. If Arby’s has the meats, we have the artists.

Persistently vibrant --Southern California’s creative economy, as Cary McWilliams noted 60 years ago, came as a result of some very good fortune – largely the exodus of movie producers seeking respite from New York process servers and close proximity to the Mexican border. Once there, they discovered the possibilities of shooting films and living in an ideal climate. 

“Here was an industry,” noted McWilliams, “perhaps the only industry in America that required no raw materials, for which discriminatory freight rates were meaningless and, which at the same time, possessed an enormous payroll.” 

Hollywood’s geographic spread has grown inexorably over time, moving from its birthplace to what would have once been considered the distant reaches of the San Fernando Valley and the Westside. As entertainment and lifestyle have expanded as industries, the dispersal has been even greater, with fashion and lifestyle-related employment particularly strong in Orange County and with some artisanal production concentrated in the Inland Empire. 

The deep roots of the creative industries, and their synergy within the region, helps explain why they have remained intact. For decades, in fields like energy and aerospace, Southern California has been losing both company headquarters and production facilities at a rapid rate. The region’s once-vast manufacturing base, a key provider of middle-class and blue-collar jobs, has been evaporating, the victim of both foreign competition and an ever more strangling regulatory regime. 

In contrast, the major movie studios all remain based in Southern California, although their ownership’s home bases tend to fluctuate. Hollywood and other creative fields face regulatory challenges but are not nearly as vulnerable, for example, to high energy costs as industrial or logistics firms. They also benefit from close ties with those who run California’s one-party political system. Finally, they have been fortunate to draw on a workforce that trends young and childless, at a time when families, pressed by high housing prices, have been moving inland and, increasingly, out of state. 

The creative industries matter even more to the regional economy, given the losses of aerospace, which has largely decamped to other states that do not disdain a source of technology-oriented, high-wage employment. In contrast, the entertainment economy continues to compete with less-expensive U.S. locales, such as Louisiana or Michigan, as well as well-funded global centers such as New York or London. Much of the employment reflects what might be called the Hollywood mode of production, dominated by small artisanal firms that often sell their services to clients around the world. Working together, they offer levels of expertise not easily duplicated elsewhere. 

In creative sectors, notes a report prepared for Otis College of Art and Design by the LAEDC, self-employment is more common than wage and salary employment. In the visual and performing arts, there were over 2.7 self-employed persons in Los Angeles County for every salaried worker. In Orange County, the ratio was even more striking, nearly 4-1. 

However, the real appeal of Southern California lies in the area’s way of life. Entertainment professionals, designers and theme-park creators like each other’s company, or at least enjoy gossiping about their co-workers. What the creative industries share with the rest of us is an enjoyment of the dispersed, outdoors-oriented and increasingly culturally diverse lifestyle associated with Southern California. 

Impact on the future --This cross-fertilization and creative flair could prove critical in the emerging digital economy, notes a recent Neiman study, where industries, like media, cluster in places where content creators live, notably, Southern California, Washington, D.C., and New York. The LAEDC predicts continued growth in these industries to the end of the decade. 

California’s expanded film and television tax credit program also appears to be slowing some of the industry’s migration. But, while incentives will continue to play a role, there remain many challenges, notably the shift to digital production and the potential shift of decision-making from the increasingly antiquated networks and movie studios to digital disrupters such as Apple, Amazon and Netflix. 

There is also potential fallout if furniture and apparel manufacturers, closely aligned with the creative industries, are forced to shift more operations to less-regulated, less-expensive regions. Fashion, for example, has thrived largely due to the ability of LA’s flexible garment production sector to churn out “fast fashion” products. If production, partly because of the state’s new $15 minimum wage, continues to depart, this link could be weakened. 

As with other industries, the biggest challenge could prove the cost of living. High housing prices are slowing growth in the Bay Area and Silicon Valley; soaring residential costs could also limit the ability of artists and creators to settle permanently in the Southland. Ultimately, the region needs to expand or retrofit its stock of housing so artists can still live a Southern California – as opposed to a New York – lifestyle. The prospect of living in dark boxes in paradise is not what has driven creative people to this region. 

To thrive, the creative industries will need to expand regionally, as they have in parts of Orange County and in the old Los Angeles County beach cities. The new-urbanist dream of a densely packed mini-NY is not congruent with the sunlight-oriented lifestyle that, in the final analysis, is our most compelling product. 

Southern California’s creative edge ultimately draws inspiration from its climate, open beaches, mountains and its necklace of unique small neighborhoods and towns. We may have lost tech to Silicon Valley, banking to Wall Street, energy and manufacturing to places like Texas and Utah, but we remain paramount when it comes to creation, and that could pace our recovery in the decades ahead.

 

(Joel Kotkin is a R.C. Hobbs Presidential Fellow in Urban Futures at Chapman University and executive director of the Center for Opportunity Urbanism in Houston. His newest book is “The Human City: Urbanism for the Rest of Us.” Charlie Stephens is a researcher and MBA candidate at Chapman University’s Argyros School of Business and Economics; he is founder of substrand.com.) Prepped for CityWatch by Linda Abrams.

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