Creative Sectors Made Up Nearly a Quarter of California’s Economy in 2020

The “creative economy” represented 23% of California’s gross regional product, or $687.6 billion, in 2020, according to a report by Los Angeles’s Otis College of Art and Design released this week. Defined by its authors as comprising five distinct sectors — architecture, “creative goods and products,” entertainment, fashion, and fine and performing arts — the industry is essential to the California economy, employing 3.9 million people. If the state were a country, it would have the fifth largest economy in the world, and the creative sector is an important reason why.

In addition to confirming the significance of creative workers during the pandemic, the report surveys the economic health of the industry two years after the onset of the virus. The fine and performing arts sectors — which had been expanding most rapidly pre-pandemic — suffered the greatest blow, with its labor force contracting 4% in the aftermath of the economic downturn.

Canceled seasons in music and the performing arts, along with the closure of galleries, museums, and cultural centers, led to a 20% drop in employment from 2019 to 2020. Direct employment in the entertainment and digital media segment, the largest of the five by far, also dropped by 3.3% in 2020, attributable to delays and cancellations in production and the closure of cinemas.

The authors of the report project that supply chain issues, inflation, and geopolitical crises will continue to negatively impact the creative economy.

Nevertheless, the industry is beginning to bounce back. New businesses grew by 8% from 2019 to April 2021. And in 2021, the architecture sector — the one least affected by the pandemic — added 670,000 jobs, the largest annual increase logged since the financial crisis in 2008. The performance of the architectural industry is often considered a reliable indicator of economic recovery as a whole.

Many of the report’s results verified previous studies and intuitions economists had: The creative industries were disproportionately affected by the pandemic yet remain vital.

Its authors do highlight several policy recommendations for ensuring the robustness of the creative economy going into the future. Compared with other democracies, the funding landscape for individuals and projects in the US is anemic. A graph enclosed in the report shows the United States trailing 31 countries, including Norway, Korea, Columbia, and the United Kingdom, in public expenditure on the cultural sector as a percentage of national GDP.

To bolster the creative economy, the report’s authors also encourage increased investment in community college and public education, support for nonprofits with digital literacy, and better affordable housing policy that might house workers employed in the creative domains.

“The creative economy mirrored the broader economy when it came to disproportionate impacts felt by COVID-19,” the report says. “By December 2021, socially disadvantaged populations continued to experience an elevated unemployment rate — 8.6% for Black workers and 6.8% for Hispanics or Latinx workers, compared to 5.3% of all workers economy-wide.”