The Arts Mean Business
If your city had a new construction company move to town, this would be good news – more jobs, more economic activity, and more tax revenues to be collected. How about if your city received funding from your state to widen a road? Again, you would probably welcome this news with open arms. Now, think about a new arts organization moving to town. Would you look at this group with the same economic lens that you used to look at the construction or transportation business?
If your answer was no, here’s why you should!
The U.S. Bureau of Economic Analysis (BEA) with the National Endowment for the Arts recently released their second annual report measuring the arts and culture sector’s contributions to U.S. gross domestic product (GDP). This year’s report found that the arts and culture sector represented 4.32 percent of the GDP – a higher percentage than tourism (2.6 percent), transportation (2.7 percent) and construction (3.4 percent) – at $698.7 billion!
In other words, the arts and culture sector have a larger impact on your economy (in terms of GDP) than these other industries. The unfortunate problem is that we don’t readily recognize the economic value and impact of the arts. Luckily, more research is being done on this topic by groups such as the BEA and by organizations like mine, Americans for the Arts.
For example, did you know that, according to our Arts and Economic Prosperity IV study, the nonprofit arts are a $135 billion industry that supports over 4 million full-time equivalent jobs? Further, the nonprofit arts contribute $22 billion dollars in tax revenue, of which $6.07 billion is collected at the local level. Given that most local governments (that Americans for the Arts has studied) appropriate less than they receive in tax revenue, the arts are a wonderful investment!
Our Creative Industries: Business & Employment in the Arts reports provide a research-based approach to understanding the scope and economic importance of the arts in America. Nationally, 702,771 businesses are involved in the creation or distribution of the arts, and they directly employ 2.9 million people. This represents 3.9 percent of all U.S. businesses and 1.9 percent of all U.S. employees – demonstrating statistically that the arts are a formidable business presence and are broadly distributed across our communities. Arts businesses and the creative people they employ stimulate innovation, strengthen America’s competitiveness in the global marketplace, and play an important role in building and sustaining economic vibrancy. In addition to our national numbers, there are downloadable maps on our website of every state, federal legislative district, state legislative district, counties and some larger cities.
Cities of all sizes that, even minimally, invest in their local arts organizations can see economic benefits. For example, over 300 cities have created cultural districts to foster the economic viability of their downtown. Cultural districts are a well-recognized, labeled, mixed-use area of a city in which a high concentration of cultural facilities serves as the anchor of attraction and robust economic activity.
According to a study by the Federal Reserve Bank of Cleveland, Ohio, the Cleveland Playhouse Square’s downtown economic impact has been impressive. For every one dollar spent in ticket sales, $2.20 is generated in additional expenditures to the local economy. In a five-year period, 79 new businesses moved downtown, and the cost of downtown office space nearly doubled.
In the late 1990s, Paducah, Ky. had a problem – an area of the city, LowerTown, was run down. Fifty percent of homes were dilapidated; 73 percent of homes were renter-occupied; and there was a 17 percent unemployment rate with 51 percent of people living in poverty. To tackle the problem, city leaders came up with a unique plan: the Artist Relocation Program. City leaders partnered with banks and other businesses and reached out nationally to artists to invite them to move to Paducah. The program would offer them a very low-interest loan if they bought a house, agreed to make improvements, worked as an artist out of their house, and lived there for at least five years. (Read more about cities with cultural districts that revived the local economy on the Cultural Districts Exchange section of our website!)
Ten years later, dilapidated homes have fallen to 3 percent; the renter-occupied rate is down to 15 percent; unemployment is down to 6 percent; and the number of people living in poverty has been reduced to 4 percent. This is all a direct result of the Artist Relocation Program.
These are just a few examples of how the arts and culture can help your city’s economy. The great thing about the arts is they are already in your city. The arts, unlike many industries, are not going to relocate overseas or to a different city. The arts are committed to serving your city’s residents and improving the quality of life. But what they do need are community leaders to recognize them as an industry worthy of both private and public sector support. So, please contact your local arts groups. Get to know them, understand their programming, and how they work to improve your city. And if you have any questions, feel free to contact me directly – I would love to help.
This blog post was originally published on CitiesSpeak, the official blog for the National League of Cities, 4/28/15.