Creative Economy of the Los Angeles Region

What is the creative economy of the Los Angeles region? As defined the Otis Report, it is the market impact of businesses and individuals involved in producing cultural, artistic and design goods and services. It consists of creative professionals and enterprises that take powerful, original ideas and transform them into practical and often beautiful goods, or inspire us with their artistry. For example, in product design, staying one step ahead of the competition depends upon capturing the public’s imagination and that requires innovative design.

The creative economy also includes presenting enterprises that bring creative products to the marketplace such as museums, art galleries and performing arts venues. A third component of the creative economy in Southern California revolves around activities one does not instinctively associate with “creativity” such as the apparel, toy and furniture manufacturing industries. The final piece of the creative economy consists of the support system that sustains creative activity: arts programs in the schools, post_secondary arts institutions to develop talent, and community foundations along with other nonprofits to provide financial resources and incentives to the creative arts.

When one thinks of Los Angeles, the signature industries that most frequently come to mind are tourism and entertainment. But what draws nearly 25 million visitors to Southern California every year? How did Los Angeles become the “entertainment capital of the world”? Tourism and entertainment derive their competitive advantage from the “L.A.” brand, which in turn owes its distinctiveness to the creative economy. People often get confused with the difference between culture and creativity. Culture is defined as a set of values, conventions, or practices shared by a society. Creativity, on the other hand, is defined as having the ability and the power to bring something into being; it is imaginative. The Los Angeles region has a creative culture.

The region’s creative culture, the creative talent base of the region spills over into a number of other sectors and is a major driver of economic growth. For example, there is a linkage between the creative economy and another one of Southern California’s signature industries: international trade. The import containers handled at the ports of Long Beach and Los Angeles are often filled with goods designed in the region and produced in Asia (e.g. toys, clothing and furniture). The sorting and further processing of these goods takes place in local warehouses and distribution centers, giving the creative economy a real estate impact. In Los Angeles County, this activity has resulted in the tightest industrial real estate market in the U.S., with an average vacancy rate of just 3.3% at the end of 2009. This need for space has spilled over into adjacent counties, especially the Riverside_San Bernardino area.

The creative economy is undeniably important to the region’s economic growth. About 835,000 employees work directly or indirectly in the creative economy of Los Angeles and Orange Counties. Los Angeles County based firms in the creative economy earned an estimated $113 billion in revenues during 2009.

California and local governments received an estimated $4.6 billion in taxes tied to these activities.

The creative economy links with most other industry clusters in the region. With 304,400 employees in Los Angeles County, the creative industries would rank second, behind tourism and hospitality (458,000 jobs in 2008), and ahead of business and professional services (268,000 jobs, including architecture and engineering), and wholesale distribution (172,000 jobs).

The creative economy is among the top employers in the Los Angeles region. Importantly, the talent that drives the creative economy is also a resource for competitive advantage that reaches across almost every industry in the Los Angeles_Orange County region. In addition, the creative talent pool in the region is not as vulnerable to going “offshore.” Typically, the development of advanced technologies to increase productivity is seen as the road to better jobs. In fact, advanced technologies can be replicated across the world using cheaper labor. To the contrary, original artistic creation, innovative design thinking and other higher_level creative work cannot be outsourced easily. Creativity also serves to build brand awareness and an attractive environment to entice talented people to the region.

Los Angeles is unique because of its combination of place, resources and open attitudes towards new ideas. Here, ideas are constantly given form and brought to life by creative people. Otis College of Art and Design, a critical component of the creative economy, commissioned the analyses in this report to put real numbers to the business of creativity. Otis and the LAEDC carried out this research because in the Los Angeles region, creativity is serious business.

Prepared for Otis College of Art and Design by the Los Angeles County Economic Development Corporation For additional information contact: LAEDC (213) 622-4300. Toll free (888) 452-3321 or visit: www.laedc.com.