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The Creative Class and the Crisis Cambridge Journal of Regions, Economy and Society 2012, 00, 00–00 doi:10.1093/cjres/rss012 Advance Access publication The Creative Class and the crisis 1.50 1.5 Todd Gabea, Richard Floridab and Charlotta Mellanderc 1.55 Downloaded from 1.10 aUniversity of Maine, 5782 Winslow Hall, Orono, Maine 04469, USA, [email protected] bMartin Prosperity Institute, 101 College Street, Suite 420, Toronto, Ontario, Canada, M5G 1L7, [email protected] cJönköping International Business School, Box 1026, 551 11 Jönköping, Sweden, 1.60 [email protected] http://cjres.oxfordjournals.org/ 1.15 Received on 24 September 2011; accepted on 16 July 2012 The economic crisis contributed to sharp increases in US unemployment rates for all three 1.65 1.20 of the major socio-economic classes. Results from regression models using individual-level data from the 2006–2011 US Current Population Surveys indicate that members of the Creative Class had a lower probability of being unemployed over this period than individu- als in the Service and Working Classes and that the impact of having a creative occupation at Hogskolan i Jonkoping on September 18, 2012 became more beneficial in the 2 years following the recession. These patterns, if they con- tinue, are suggestive of a structural change occurring in the US economy—one that favours 1.70 1.25 knowledge-based creative activities. Keywords: economic crisis, Great Recession, Creative Class, Service Class, Working Class, unemployment. JEL Classifications: J6, J24, R0 1.75 1.30 Introduction Many observers of the US and global The economic crisis of 2008 was deep and far economies have commented on the severity, reaching. Over a relatively short time period, defining characteristics and long-reaching 1.80 1.35 the US economy saw a reduction in the ranks implications of the recent economic downturn. of the employed of about 8.4 million indi- Reinhart and Rogoff (2009) refer to it as the viduals between January 2008 and December ‘Second Great Contraction’, with the Great 2009, and the US unemployment rate rose Depression being the first, and suggest that its from 5.0% at the start of the economic slow- impacts have been “extraordinarily severe”. 1.85 1.40 down in December 2007 to 9.5% at its official After initiating the less sombre description of a end in June 2009.1 But a broader measure of ‘Great Recession’, Krugman (2009) noted that it unemployment, the so-called U-6 unemploy- appeared that the USA was in a Second Great ment rate—which also accounts for ‘marginally Depression. Nelson (2008) suggests that in many attached’ workers and those who work part- respects the current economic crisis bears more 1.90 1.45 time for ‘economic reasons’—topped 17% in similarity to the even deeper Panic and Long 1.46 several months of 2009 and 2010. Depression of the 1870s. Cowen (2011) dubs it a 1.92 © The Author 2012. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved. For permissions, please email: [email protected] Gabe, Florida and Mellander Great Stagnation, noting the diminishing pace of hitting less skilled workers with lower levels of new discovery and the falling rate of productivity education (Autor, 2010; Kolesnikova and Liu, growth among advanced economies. 2011).2 Florida (2010) refers to the present eco- Although the receipt of a college degree is 2.50 2.5 nomic era as a ‘Great Reset’, similar in scope often used as a proxy for an individual’s skill and nature to the crises of the 1870s (the First level, a person’s occupation provides a strong Reset) and 1930s (the Second Reset), remark- indication of the types of skills that are actu- ing that recovery will result in not only an ally used on the job. Florida’s (2002) Creative accelerated rate of innovation and enhanced Class—defined along occupational lines and 2.55 Downloaded from 2.10 productivity but also new sources of con- including jobs such as engineers, artists, sci- sumer demand that stem from significant shifts entists and educators—grew rapidly from in lifestyles and a new geography or spatial the smallest of the socio-economic classes fix (Harvey, 1981, 1982, 2003). Furthermore, (behind the Working and Service Classes) to Florida (2010) notes that the current crisis the second largest major occupational group 2.60 http://cjres.oxfordjournals.org/ 2.15 is more than a financial or economic crisis. (behind only the Service Class) over the lat- He suggests that it is an even deeper struc- ter-half of the 20th century. With the impacts tural divide as the productive and innovative of the 2008 recession on individuals with and capacities of the emergent knowledge-based without a college degree already known, the creative economies came smack up against the primary research question addressed in this 2.65 2.20 outmoded institutions, economic and social paper is how members of the Creative Class structures and geographic forms of the old fared during the Great Recession, as com- industrial age. This is indicative of broader pared to those in the Service and Working structural change in the economy—a shift in Classes. at Hogskolan i Jonkoping on September 18, 2012 the nature and make-up of employment. Numerous studies have examined the 2.70 2.25 Economists have noted that individuals with- determinants of unemployment, although very out a college degree were hit particularly hard little attention has been paid to differences across by the recession (Elsby et al., 2010; Katz, 2010). occupations or major occupational groups.3 Past The rate of unemployment for the college edu- studies, both those that report economy-wide cated peaked at 5.0% in September 2009 while unemployment statistics and others that involve 2.75 2.30 individuals 25 years and older without a col- regression analysis of state or metropolitan area lege degree saw a high of 9.1% unemployment unemployment rates, find that age, educational in September 2010. Autor (2010) suggests attainment, gender and race are key factors that the economic crisis ‘reinforced’ the trend affecting unemployment (Azmat et al., 2006; towards ‘skill-biased technical change’ in the Daly et al., 2007; Fairlie and Sundstrom, 1997; 2.80 2.35 labour market—the combination of enhanced Mincer, 1989). A person’s location of residence technology use (for example, automation of also appears to influence the likelihood of being routine tasks) and the globalization of labour unemployed, with a region’s industrial structure markets, which has already contributed to (for example, diversification) explaining a ‘polarization’ of the labour market with differences in unemployment rates across 2.85 2.40 employment opportunities concentrated in the states and metropolitan areas (Blanchard and highest and lowest skilled occupations, and a Katz, 1992; Malizia and Ke, 1993; Partridge and reduction of ‘middle-skill jobs’. This perspec- Rickman, 1997a, 1997b; Simon, 1988). Recent tive also suggests that the economic downturn studies examining employment prospects during has reinforced broader structural change in the the Great Recession indicate that males, young 2.90 2.45 economy, with the most substantial impacts workers, those without a college degree and ethnic 2.46 2.92 Page 2 of 17 The Creative Class and the crisis minorities were hardest hit by the 2008 economic and be better equipped to both reinvent them- downturn (Elsby et al., 2010; Katz, 2010). Our selves and come up with new ideas and inno- research not only accounts for the factors found vations to sustain the economy. Thus, creative in other studies to impact unemployment but regions with the ability to adjust to the economic 3.50 3.5 also investigates the impact of having a Creative crisis may also provide across-the-board benefits Class occupation—a measure of human capital to workers in Service and Working Class jobs, that is different from educational attainment—on mitigating the effects of the recession on these an individual’s probability of being unemployed two groups of workers as well. in the years before, during and immediately Several other factors explain why we might 3.55 Downloaded from 3.10 following the Great Recession. expect members of the Creative Class to have fared better during the recession than Working class individuals and, to a lesser extent, those in Why Creative Class members might Service Class occupations. One of the main causes have fared better of the economic slowdown was the mortgage 3.60 http://cjres.oxfordjournals.org/ 3.15 The Creative Class is comprised of the major crisis and steep downturn in housing activity occupational categories of computer and mathe- (Mian and Sufi, 2009a, 2009b, 2010). US Bureau matical; architecture and engineering; life, physical of Economic Analysis statistics from June 2011 and social science; education, training and library; indicate that “construction continued to be a arts, design, entertainment, sports and media; drag on real GDP growth” and that it “declined 3.65 3.20 management; business and financial operations; for the sixth consecutive year and detracted health care practitioners and technical; and high- from growth in most states”.5 This reduction end sales and sales management occupations.4 In in building activity during the housing bust contrast to the educational-based human capital and continuing beyond the recession’s official at Hogskolan i Jonkoping on September 18, 2012 measure, the Creative Class occupational typol- conclusion has adversely impacted employment 3.70 3.25 ogy takes into account what people actually do conditions in construction occupations, which (and related skill requirements) in their current figure prominently in the Working Class.6 jobs, rather than the amount of schooling they Another explanation as to why members have completed.
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