Do “the creative industries” really matter for city economies?

That bloody elephant in Nantes again. Image: Getty.

Creative industries have long held a special place in economic development. But recent discussions that I’ve been party to in relation to the industrial strategy have underlined to me how confused the thinking on the creative industries is. Here are three areas where this is particularly apparent.

The definition of the creative industries itself is a source of confusion. According to DCMS, it is a combination of nine different industries ranging from architecture to fashion design, and including crafts, libraries and museums in between. This creates confusion on two counts.

The first is the mixing of highly productive industries like computer programming with much less productive activities like artistic performance. One sells to international markets, while the other is much more likely to rely on public subsidy to make ends meet. For a policymaker concerned about increasing productivity, one is much more relevant than the other.

The second is the mixing of industries (e.g. architecture, computer programming) with employment in cultural amenities, such as museums. By grouping cultural amenities in with businesses, we very quickly get into boosterist language about the supposed economic impact of such institutions in order to justify their grouping with the industries.

This is positively encouraged by the government, which requests that bids for things like City of Culture status set out the economic impact they will have. So in order to get funding, bidding bodies need to play the game. The result? We get grand proclamations on the economic impact of a City of Culture programme, no doubt sourced from the pages of a report written by a handsomely-paid consultant (the same is true of lower productivity industries in the definition too).

But this sadly distorts objectives and unfairly expects cultural institutions or activities to do something that they just aren’t able to deliver. Investment in a library is not done for any direct economic benefit, while investment in a museum should not be expected to bring about culture-led regeneration. Yet all these things are all too regularly confused, with April’s House of Lords report on seaside towns being the latest example.


Crucially, playing on these terms means that this is an argument that advocates of culture, in particular, are likely to lose. There’s no way we should expect libraries, crafts or museums to be making a direct contribution to improving the UK’s productivity. The data shows that not only do these activities have below average productivity, it’s actually lower today than in 1990 (as we should expect). And yet strangely exactly these arguments are being made about activities that are simultaneously reliant on public sector subsidy to make ends meet.

Losing this argument is a shame because cultural investment is important – it is likely to have impacts on things like civic pride and it exposes people to new ideas and experiences, for example. These are worthy aims that all policymakers should be attempting to achieve. But we should be clear about the reasons that we are making such investment, and be reasonable regarding the impacts we expect it to achieve. In terms of the industrial strategy, increasing productivity is not one of them.

A final source of confusion is the conflation of creative industries and creativity.

In response to the critiques above, the conversation usually then segues into the importance of creativity in the economy. This is exactly right. Creativity and new ideas are what drive innovation, which in turn drives long-run productivity growth. And policy should look to support this.

But let’s be clear. Despite being similar in name, the creative industries have no exclusivity over creativity. And it is not clear that supporting these specific industries through a sector deal, for example, improves the creative capacity of a local or national economy. Instead, improving education across the country would seem like a much more direct way to do so.

I don’t say this to be unkind or because I have any particular issue with the creative industries; although I’m sure there are many that will take umbrage with the above. I instead say this in the hope that we can bring clarity to what it is that we’re trying to achieve with different policy interventions – be that productivity, cultural engagement or civic pride. Because if we don’t have this clarity of thought, we’re all just going to end up disappointed when our expectations don’t get met.

You can hear more on this topic on our latest podcast.

Paul Swinney is head of policy & research at the Centre for Cities, on whose blog this article first appeared.

 
 
 
 

A new wave of remote workers could bring lasting change to pricey rental markets

There’s a wide world of speculation about the long-lasting changes to real estate caused by the coronavirus. (Valery Hache/AFP via Getty Images)

When the coronavirus spread around the world this spring, government-issued stay-at-home orders essentially forced a global social experiment on remote work.

Perhaps not surprisingly, people who are able to work from home generally like doing so. A recent survey from iOmetrics and Global Workplace Analytics on the work-from-home experience found that 68% of the 2,865 responses said they were “very successful working from home”, 76% want to continue working from home at least one day a week, and 16% don’t want to return to the office at all.

It’s not just employees who’ve gained this appreciation for remote work – several companies are acknowledging benefits from it as well. On 11 June, the workplace chat company Slack joined the growing number of companies that will allow employees to work from home even after the pandemic. “Most employees will have the option to work remotely on a permanent basis if they choose,” Slack said in a public statement, “and we will begin to increasingly hire employees who are permanently remote.”

This type of declaration has been echoing through workspaces since Twitter made its announcement on 12 May, particularly in the tech sector. Since then, companies including Coinbase, Square, Shopify, and Upwork have taken the same steps.


Remote work is much more accessible to white and higher-wage workers in tech, finance, and business services sectors, according to the Economic Policy Institute, and the concentration of these jobs in some major cities has contributed to ballooning housing costs in those markets. Much of the workforce that can work remotely is also more able to afford moving than those on lower incomes working in the hospitality or retail sectors. If they choose not to report back to HQ in San Francisco or New York City, for example, that could potentially have an effect on the white-hot rental and real estate markets in those and other cities.

Data from Zumper, an online apartment rental platform, suggests that some of the priciest rental markets in the US have already started to soften. In June, rent prices for San Francisco’s one- and two-bedroom apartments dropped more than 9% compared to one year before, according to the company’s monthly rent report. The figures were similar in nearby Silicon Valley hotspots of San Jose, Mountain View, Palo Alto.

Six of the 10 highest-rent cities in the US posted year-over-year declines, including New York City, Los Angeles, and Seattle. At the same time, rents increased in some cheaper cities that aren’t far from expensive ones: “In our top markets, while Boston and San Francisco rents were on the decline, Providence and Sacramento prices were both up around 5% last month,” Zumper reports.

In San Francisco, some property owners have begun offering a month or more of free rent to attract new tenants, KQED reports, and an April survey from the San Francisco Apartment Association showed 16% of rental housing providers had residents break a lease or unexpectedly give a 30-day notice to vacate.

It’s still too early to say how much of this movement can be attributed to remote work, layoffs or pay cuts, but some who see this time as an opportunity to move are taking it.

Jay Streets, who owns a two-unit house in San Francisco, says he recently had tenants give notice and move to Kentucky this spring.

“He worked for Google, she worked for another tech company,” Streets says. “When Covid happened, they were on vacation in Palm Springs and they didn’t come back.”

The couple kept the lease on their $4,500 two-bedroom apartment until Google announced its employees would be working from home for the rest of the year, at which point they officially moved out. “They couldn’t justify paying rent on an apartment they didn’t need,” Streets says.

When he re-listed the apartment in May for the same price, the requests poured in. “Overwhelmingly, everyone that came to look at it were all in the situation where they were now working from home,” he says. “They were all in one-bedrooms and they all wanted an extra bedroom because they were all working from home.”

In early June, Yessika Patapoff and her husband moved from San Francisco’s Lower Haight neighbourhood to Tiburon, a charming town north of the city. Patapoff is an attorney who’s been unemployed since before Covid-19 hit, and her husband is working from home. She says her husband’s employer has been flexible about working from home, but it is not currently a permanent situation. While they’re paying a similar price for housing, they now have more space, and no plans to move back.

“My husband and I were already growing tired of the city before Covid,” Patapoff says.

Similar stories emerged in the UK, where real estate markets almost completely stopped for 50 days during lockdown, causing a rush of demand when it reopened. “Enquiry activity has been extraordinary,” Damian Gray, head of Knight Frank’s Oxford office told World Property Journal. “I've never been contacted by so many people that want to live outside London."

Several estate agencies in London have reported a rush for properties since the market opened back up, particularly for more spacious properties with outdoor space. However, Mansion Global noted this is likely due to pent up demand from 50 days of almost complete real estate shutdown, so it’s hard to tell whether that trend will continue.

There’s a wide world of speculation about the long-lasting changes to real estate caused by the coronavirus, but many industry experts say there will indeed be change.

In May, The New York Times reported that three of New York City’s largest commercial tenants — Barclays, JP Morgan Chase and Morgan Stanley — have hinted that many of their employees likely won’t be returning to the office at the level they were pre-Covid.

Until workers are able to safely return to offices, it’s impossible to tell exactly how much office space will stay vacant post-pandemic. On one hand, businesses could require more space to account for physical distancing; on the other hand, they could embrace remote working permanently, or find some middle ground that brings fewer people into the office on a daily basis.

“It’s tough to say anything to the office market because most people are not back working in their office yet,” says Robert Knakal, chairman of JLL Capital Markets. “There will be changes in the office market and there will likely be changes in the residential market as well in terms of how buildings are maintained, constructed, [and] designed.”

Those who do return to the office may find a reversal of recent design trends that favoured open, airy layouts with desks clustered tightly together. “The space per employee likely to go up would counterbalance the folks who are no longer coming into the office,” Knakal says.

There has been some discussion of using newly vacant office space for residential needs, and while that’s appealing to housing advocates in cities that sorely need more housing, Bill Rudin, CEO of Rudin Management Company, recently told Spectrum News that the conversion process may be too difficult to be practical.

"I don’t know the amount of buildings out there that could be adapted," he said. "It’s very complicated and expensive.

While there’s been tumult in San Francisco’s rental scene, housing developers appear to still be moving forward with their plans, says Dan Sider, director of executive programs at the SF Planning Department.

“Despite the doom and gloom that we all read about daily, our office continues to see interest from the development community – particularly larger, more established developers – in both moving ahead with existing applications and in submitting new applications for large projects,” he says.

How demand for those projects might change and what it might do to improve affordable housing is still unknown, though “demand will recover,” Sider predicts.

Johanna Flashman is a freelance writer based in Oakland, California.