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purchases from their suppliers and vendors. Additional induced jobs are generatedwhen the direct and indirect employees spend their wages on consumer goods andservices. In that sense, every job within the creative sector supports or sustains otherjobs in the region.Direct, indirect and induced employment in the creative industries of the Los Angelesregion totaled 744,100 jobs in 2014, up from 695,100 in 2013. The labor incomeearned by these 744,100 million wage and salary workers was 53.4 billion. Activityin the creative sectors not only triggers jobs and spending, but it also results intax revenues for state and local government that help to fund local services likeeducation and public safety. Property taxes, state and local personal income andsales taxes generated directly and indirectly by the creative industries were 7.7billion across the region in 2014.The creative industries of Los Angeles and Orange County also generated 176.9billion in economic output. Of that, 109.1 billion was value-added (corporate profitsand labor income). This net economic contribution was the equivalent of 12.7% of theregion’s gross product ( 860.6 billion) in 2014, up from a share of 10.6% in 2013, anindication that the contribution of the creative industries to the region’s economyis growing.The Los Angeles region continues to make steady economic progress. Over theperiod 2014 to 2019, wage and salary employment in Los Angeles County is expectedto grow by 4.5% and in Orange County by 8.0%. However, the LAEDC projectscreative industry employment will grow faster over that period in both counties.Creative employment is expected to increase by 7.0% in Los Angeles County from360,300 wage and salary jobs in 2014 to 385,400 in 2019 1. In Orange County, creativeeconomy employment is expected to increase by 9.7% from 53,400 jobs to 58,100over the same period.1Employment forecasts donot include employmentat fine and performingarts schools.All of the creative industries in both counties will experience wage and salary jobgains. With a long-awaited lift off in the housing market anticipated in 2016, therewill be increased demand for architecture and interior design, as well as furnitureand the decorative arts. This will drive demand upstream to industrial design. Asthe national and state economies continue to expand, household expenditures onart, entertainment and toys should grow and lend support to the creative industries.Throughout this period, job gains will gradually narrow but not close the gap betweencurrent creative economy employment and the pre-recession peak level of 464,200jobs that prevailed in 2007.As demonstrated above, the creative industries of the Los Angeles region makea significant contribution to economic growth and employment. They also fosterinnovation and spillover effects that enhance other industries. The creativeindustries help drive the region’s economy by attracting investment, tourism,consumer spending and by generating tax revenues. In a post-industrial society,www.otis.edu/econreport2015 Otis Report on the Creative Economy of the Los Angeles RegionBack to Contents9

activities based on creativity and culture are an essential feature of a flourishingeconomy. Creativity and culture also have a non-monetary value in that theycontribute to inclusive social development, dialogue and understandingbetween people.Given the large economic contribution of the creative industries to the regionaleconomy, it is important to ask how stakeholders can nurture, support and growthe creative economy. Creativity is unique in that it relies on an unlimited resource:human ingenuity. Growth strategies in the creative economy should thereforefocus on harnessing the development potential of this unlimited resource.To strengthen the creative economy, a good place to start is at the beginning ofthe creative pipeline, preK-12 education. Education in the arts is a necessary partof preparing students to meet the demands of the twenty-first century workforcewhere workers now have to compete in a global labor market. Arts educationfosters creative, critical thinking, problem solving and collaboration. In this sense,creativity has become as important in modern education as mastering specificlanguage and computational skills.California has one of the strongest polices on arts education in the nation, butuneven implementation and funding issues have resulted in huge disparities inthe Los Angeles region between schools in affluent areas compared with those inlow income areas. Closing these gaps would go a long way toward creating an evenplaying field for all of the children in the region and ensuring a future workforcewith the skills necessary to gain entry into today’s economy. Additionally,companies’ decisions about where to locate their businesses are often influencedby factors such as the ready availability of a skilled and creative workforce.Support for the creative industries must also include policies and initiativesthat increase the competitiveness of the region’s creative firms and increaseawareness of the state’s creative and cultural products beyond its borders.Initiatives may come from state and/or local governments, but the creativeindustries themselves should play the dominant role in this process.www.otis.edu/econreport2015 Otis Report on the Creative Economy of the Los Angeles RegionBack to Contents10

While it is beyond the scope of this report to recommend specific developmentstrategies, the following is a sampling of strategies that are available: A regional branding initiativeMarketing and partnerships that promote cultural tourismCapacity building through programs that teach business skills to entrepreneurs,professional education, consulting and coaching for business startupsBuilding physical infrastructure (e.g. affordable housing/spaces for artists towork; improving mobility for people and freight)Creative business incubationTraining programs that meet the specific needs of targeted industriesAccess to financeMuch has been written about the need for employees in the new economy to workcollaboratively to facilitate the exchange of ideas that leads to innovation. The sameholds true for firms and businesses. This is one of the primary benefits of industryclustering. While the disparate set of industries that make up the creative economydo not naturally form a cluster, they are a source of significant spillover effects oninnovation and productivity, tourism and branding, education and social innovation.Strengthening ties among the creative industries, as well as those between thecreative industries and the broader economy, would encourage cross-innovation,lend vitality to existing industries, and contribute to the emergence of new industries.www.otis.edu/econreport2015 Otis Report on the Creative Economy of the Los Angeles RegionBack to Contents11

TABLE 1:2015 CREATIVE ECONOMY REPORT: NUMBERS AT A GLANCELos AngelesCountyOrange CountyLA/OC 00744,10018.0%7.0%15.0%Los AngelesCountyOrange CountyLA/OC RegionDirect labor income 32.6 billion 3.5 billion 36.1 billionTotal labor income: direct, indirect and induced 47.7 billion 5.7 billion 53.4 billionLos AngelesCountyOrange CountyLA/OC Region 6.9 billion 0.8 billion 7.7 billion 158.2 billion 18.7 billion 176.9 billionCreative industries value-added(Corporate profits and labor income) 99.4 billion 9.8 billion 109.1 billionTotal regional gross product 634 billion 226.5 billion 860.6 billion15.7%4.3%12.7%Los AngelesCountyOrange CountyLA/OC Region141,95424,450166,404 6.7 billion 1.0 billion 7.7 billion2014 EmploymentDirect JobsDirect creative industries workers as % of allprivate wage and salary workersTotal jobs: direct, indirect and inducedTotal creative industries workers as % of allprivate wage and salary workers2014 Labor Income2014 Taxes and OutputState and local taxesTotal creative industries outputCreative industries value-added as % of gross product2013 Nonemployer FirmsNumber of firmsRevenueswww.otis.edu/econreport2015 Otis Report on the Creative Economy of the Los Angeles RegionBack to Contents12

KEY FINDINGSL.A.O.C.ECONOMIC CONTRIBUTIONLOS ANGELES REGION 2014(L.A. AND ORANGE COUNTIES)TOTAL CREATIVEINDUSTRY OUTPUT 176.9 BILLIONDirect, indirect, andinduced impact.Revenues, Spending, &Economic Activity.TOTAL GROSSREGIONAL PRODUCT 860.6 BILLIONA Net EconomicContribution of 109.1 BILLIONCreative IndustriesContribute12.7%Tax Revenues 7.7 BILLION 860.6 Bwww.otis.edu/econreport2015 Otis Report on the Creative Economy of the Los Angeles RegionBack to Contents13

KE Y FINDINGSL.A.O.C.EMPLOYMENTLOS ANGELES REGION 2014(L.A. AND ORANGE COUNTIES)Direct, Indirect, AndInduced Jobs744,100NUMBER OF CREATIVEINDUSTRY JOBSWage and Salary WorkersCreative Industry JobsAccount for 18% of allworkers in the L.A. region418,200744,100Direct Jobs418,200www.otis.edu/econreport2015 Otis Report on the Creative Economy of the Los Angeles RegionBack to Contents14

KE Y FINDINGSL.A.O.C.JOBSLOS ANGELES COUNTY 201418% of wage and salary employmentL.A.O.C.LOS ANGELES IS THECREATIVE CAPITAL OF THE U.S.TOP 5 CREATIVE METRO AREAS IN THE U.S.Seattle Metro AreaChicagoMetro Area91,900133,800San FranciscoMetro Area95,700New york CityMetro Area402,900Los AngelesMetro Area418,200www.otis.edu/econreport2015 Otis Report on the Creative Economy of the Los Angeles RegionBack to Contents15

About the Kyser Center for Economic ResearchThe Kyser Center for Economic Research was named in November 2007 in honorof the LAEDC’s first Chief Economist, Jack Kyser. The Kyser Center’s economicresearch encompasses the Southern California region, which includes: thecounties of Los Angeles, Orange, Riverside, San Bernardino, San Diego andVentura. The center also tracks developments and produces forecasts, studies,and reports on the California, national and international economies.The economy of the greater Los Angeles region is driven by more than its famedentertainment industry. The region’s broad economic base also includes aerospace,automotive, biotechnology, fashion, manufacturing and international trade. The KyserCenter conducts research on the individual industries of the region to betterunderstand ongoing changes in the economy.The Kyser Center is highly regarded for its accurate and unbiased assessment of theeconomy. Kyser Center economists are also sought-after public speakers andfrequent contributors to media coverage of the economy. At the heart of the KyserCenter is its mission to provide information, insights and perspectives to helpbusiness leaders, government officials and the general public understand andtake advantage of emerging trends. 2016 Los Angeles County Economic Development CorporationThe Kyser Center for Economic Research444 S. Flower St., 37th Floor, Los Angeles, CA 90071Tel: 213-622-4300, 888-4-LAEDC-1 Fax: 213-622-7100www.LAEDC.org research@laedc.orgPrepared for Otis College of Art and Design by theLos Angeles County Economic Development Corporation.www.otis.edu/econreport2015 Otis Report on the Creative Economy of the Los Angeles RegionBack to Contents16

2015 OTIS REPORTON THECREATIVE ECONOMYOF THELOS ANGELES REGIONBack to Contents

WHAT IS THECREATIVE ECONOMY?Creativity is one of the Los Angeles region’s foremost economic assets and thecreative economy is undeniably important to the region’s economic growth. Inthis report, the creative economy is defined as the businesses and individualsinvolved in producing cultural, artistic, and design goods and services. It consistsof creative professionals and enterprises that take powerful, original ideas andtransform them into practical and often beautiful goods, or inspire us withtheir artistry.The creative economy also includes organizations that provide a venue for artiststo share their work with the public such as museums, art galleries and theaters.Finally, the creative economy includes activities one does not instinctivelyassociate with creativity such as apparel, toy and furniture manufacturing all industries that depend on good design.In a broader sense, the creative economy must include a support system thatteaches, nurtures and sustains creative activity: arts programs in preK-12 schools,post-secondary arts institutions to develop talent, and philanthropic foundationsalong with other nonprofit funding organizations to provide financial resources,incentives, and services to the creative arts.In today’s economy, the market value of products and services is increasinglydetermined by a product’s uniqueness, performance and aesthetic appeal. Morecompanies are seeking employees with creativity and out-of-the-box thinking aswell as problem solving and communication skills. Business location decisions arealso influenced by factors such as the availability of a creative workforce and thequality of life available to employees. The talent that drives the creative economyprovides a competitive advantage that reaches across almost every industry in theLos Angeles region.Regions acquire a competitive advantage when they attract creative employeesbecause creative thinkers encourage innovation, which in turn fosters economicgrowth. In recent years, advanced technology jobs have been outsourced in muchthe same way basic manufacturing jobs have been sent offshore. But originalartistic creation, innovative design and other higher-level creative work cannotbe outsourced so easily. Creativity builds brand awareness and attracts talentedpeople to a dynamic environment.www.otis.edu/econreport2015 Otis Report on the Creative Economy of the Los Angeles RegionBack to Contents18

Because creativity is a dynamic function of humanity, the creative economy isa vibrant and vital force in society. Intellectual and aesthetic sensibilities leadindividuals to express themselves through the arts, solve problems throughdesign, and seek out what is beautiful and original. In many ways, the Los Angelesregion is unique because of its combination of place, resources and open attitudestoward new ideas. This openness to new ideas and the ability to make associationsand connections that other people do not see is one of the defining characteristicsof creativity. Here, new ideas are constantly given form and brought to life bycreative people.NATIONAL AND GLOBALECONOMIC CONTEXTThe industries of the creative economy in the Los Angeles region respond tothe ebbs and flows of the overall economy, not just locally and statewide, butnationally and globally as well. This section briefly summarizes recent andanticipated economic conditions and their likely effects on the state’screative industries.The year 2015 was marked by steady growth in the U.S. economy, with grossdomestic product (GDP) expected to match the previous year’s growth rate of2.4%. GDP growth has been modest, but it has also been steady and the sourceof solid job gains for several years running. By 2015, the U.S. was closing in onfull employment with an unemployment rate of 5.0%. This was an importantmilestone for the economy, as it signals a return to a more normal labor market. Atthe same time, a pickup in wage gains drove growth in household incomes, and, inturn, consumer expenditures, which make up two-thirds of the domestic economy.Apart from the energy sector, most industries of the national economy grew,adding jobs and undertaking capital expenditures on technology, equipment, andbuildings. International trade was a mixed bag in 2015. A stronger dollar enabledU.S. consumers and businesses to import more for less, but at the same time itmade it more difficult for U.S. exporters to make sales given weakness among thenation’s major trading partners.GDP growth is expected to accelerate to 2.8% in 2016, with most industries addingjobs and continuing their capital expenditures. Wage gains will spur increases inconsumer spending, while business spending will maintain momentum. Meanwhile,housing and construction is expected to do well as a result of demographicchanges: the oldest Millennials are now in their early thirties, the stage of lifeto form new households and exert greater demand for both rental and owner-www.otis.edu/econreport2015 Otis Report on the Creative Economy of the Los Angeles RegionBack to Contents19

occupied housing. Inflation, which was nearly nonexistent in 2015, is increasingsomewhat but will stay below two percent over the foreseeable future. Finally,international trade will again face challenges in 2016 as the dollar appreciatesfurther and U.S. trading partners see only marginal improvement in theireconomies, if any at all.California has outpaced the nation in terms of both economic growth and jobcreation over the past year. Nearly all of California’s industries added jobs in2015 and will do so again in 2016. With improvements across much of the state,California’s unemployment rate has converged on long-run normal levels. Personalincome, which has improved during the last several years, will grow more quicklygoing forward.What does all this mean for the creative industries of the Los Angeles region? Anumber of creative industries are related directly or indirectly to real estate andconstruction: architecture and interior design, furniture and decorative arts, andproduct/industrial design. These industries should benefit from strength in realestate and construction during 2016. Other creative sectors may be more relianton overall consumer spending or spending by individual consumer segments.These include art galleries, fashion, entertainment, toys, visual and performingarts, and digital media. Continued growth in consumer spending in the year 2016should provide a boost to these industries. Both communications and printing andpublishing may be facing structural changes, but they also tend to be pro-cyclicalwith the overall economy. As such, the outlook for continued growth implies thatthese sectors will see further expansion in the year ahead.CREATIVE INDUSTRY TRENDSEMPLOYMENTA total of 364,200 wage and salary workers in Los Angeles County were employeddirectly in the creative industries in 2014. By sector, the largest employmentcounts were in entertainment (135,200 jobs), fashion (89,200 jobs), and publishingand printing (32,300 jobs). Although Los Angeles’ iconic entertainment industryconsistently employs the largest number of workers by far – over 37% of totalwage and salary employment – the creative economy of Los Angeles is diversewith jobs distributed across a wide array of industries.Direct employment in Los Angeles County’s creative industries reached itspeak in this cycle in 2007 at 400,500 jobs. Like total employment in the region,creative employment fell sharply during the recession. Los Angeles County as awhole re

Architecture and Interior Design 37 Art Galleries 38 Communication Arts 39 Digital Media 40 Entertainment 41 . Through Continuing Education & Pre-College Programs, Otis offers a wide range of art and design courses and programs for all ages, including children and teens. For information, visit www.otis.edu. .