Expert Commentary

The “creative class” and the financial crisis

2012 study from the University of Toronto and other institutions on structural changes in the U.S. job market, as demonstrated during the Great Recession.

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Urban studies theorist Richard Florida at the University of Toronto coined the concept of the “creative class” to describe occupations wherein work was not standardized and required the use of advanced knowledge. This emerging class is comprised of those in the sciences, medicine, education, management, finance, the arts, high-end sales and other such fields. According to this theory, the creative class can be distinguished from the working class, employed in construction, maintenance, repair, production and related fields; and the services class, made up of those working in retail, building and grounds cleaning, administrative support services, food services and other jobs. While the impact of the economic crisis has been frequently measured by demographics and education, limited research has been done on its impact on occupational classes.

A 2012 study published in the journal Cambridge Journal of Regions, Economy and Society, “The Creative Class and the Crisis,” seeks to measure the relationship that occupational class had on unemployment during the recent recession. The authors — Florida of the University of Toronto, Todd Gabe of the University of Maine and Charlotta Mellander of the Jonkoping International Business School — analyzed data from the United States Bureau of Labor Statistics on 600,000 members of the U.S. labor force from 2006 to 2011. The study sought to measure the relationship of occupational class, level of education, metropolitan area, and demographic factors (race, age, marital status and more) on the likelihood that an individual was unemployed during this period.

Key findings include:

  • Belonging to the creative class, as opposed to the services and working class, lowered an individual’s probability of being unemployed by 2.0 percentage points between 2006 and 2011.
  • Holding a Service Class occupation “increased an individual’s probability of being unemployed by 0.5 percentage points, during the 2006-2011 period.” This effect became increasingly negative later in the recession, and thus the probability that an individual in the services class would be unemployed became lower after the recession.
  • Belonging to a working class occupation increased the probability of an individual being unemployed by 2.9 percentage points during the 2006-2011 period.
  • The decreased probability of being unemployed associated with being in the creative class (-2.0 percentage points) was greater than the decrease associated with having an associate (-1.2 percentage points) or bachelor’s degree (-1.7 percentage points). Having a graduate degree was associated with only a slightly greater reduction in probability of being unemployed (-2.2 percentage points) than being part of the creative class.
  • The industry and metropolitan areas in which individuals lived were found to have a much more significant impact on their probability of being unemployed than demographic factors such as age, race or marital status.
  • The effect of being in a creative class occupation on the probability of being unemployed are similar for metropolitan areas regardless of size.
  • Furthermore, the study finds “that metropolitan areas with the lowest shares of creative workers tend to have higher average unemployment rates than places with a greater percentage of the workforce in the creative class.”
  • Being a member of the creative class has a more positive impact on an individual’s employment status in the metropolitan areas suffering from higher unemployment rates than those with much lower rates.

The authors conclude that these findings suggest that the U.S. economy is undergoing structural change: “This shift is characterized by high — and growing — unemployment in working class occupations, whereas the relative position of creative workers improved in the years following the recession.”

Florida argues in his 2010 book The Great Reset that the cause of the significant decrease in jobs in the working and services class was the result of a “great growth illusion,” in which an artificial economy based on residential and home construction caused expansion in retail and food services. Subsequently, Florida argued, the collapse of the housing market resulted in the loss of both construction and services jobs. However, the findings of this study can only suggest a shift in the economy, and more research needs to be done to substantiate Florida’s theory.

Tags: financial crisis, creative class, gentrification,