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CityLab

What Critics Get Wrong About the Creative


Class and Economic Development
The Fall of the Creative Class? Not so fast.
RICHARD FLORIDA | @Richard_Florida | Jul 3, 2012 | 19 Comments

A recent article in the inaugural issue of Thirty Twomagazinepurports to


undercut my theory of the creative class and economic development. With an
attention-getting headline, "The Fall of the Creative Class," writer Frank Bures
relates how he and his wife moved to Madison, Wisconsin, for a "variety of notvery-well-thought-out reasons," among them the fact that Madison had "been
deemed a 'Creative Class' stronghold by Richard Florida, the prophet of pros
perous cool."
Bures article is framed around anecdotes about his and his wifes
misadventures in Madison and ultimate relocation to Minneapolis. While it
makes for a compelling narrative, are we really to believe he upended his
entire life on the basis of a book he is so evidently skeptical of? His own moves
to creative class hotbeds, Madison and Minneapolis, seem to undercut his
claim that "the migration of creative workers to places that are tolerant, open
and diversewas simply not happening."
The crux of his argument appears to be that my creative class theory simply
apes the better known and longer-standing human capital approach. This,
unfortunately, is where the piece really goes off the rails, relying heavily on
questionable studies and cherry-picked negative comments from academics
with their own personal axes to grind.
Bures misunderstands the similarities and differences between the creative
class and human capital theories of regional development. Both seek to gauge
the underlying skills and capabilities of people and associate them with
measures of economic growth and development. As I related in the original
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version of The Rise of the Creative Class, the human capital approach was what
inspired me to develop an alternative measure of human skill.
The two measures have meaningful, important and very useful differences.
Human capital theory uses educational attainment (typically the percentage of
adults with a college degree), a very broad measure that excludes such
successful entrepreneurs as Bill Gates and Steve Jobs, who didnt graduate
from college. My creative class measure is based on the work people actually
do, as measured by detailed Bureau of Labor Statistics data. This allows
researchers and economic developers to zero in on the actual occupational
categories science and engineering, arts and culture, business and
management, meds and eds that make up the creative class and other
occupational classes. My team and I have also done detailed empirical and
statistical comparisons between the two.
The creative class is not just a proxy measure for college graduates. Roughly
three-quarters of college grads in America work in creative class jobs, but four
in ten members of the creative class16.6 million workersdo not have
college degrees.
Bures cites a 2009 study that purports to nd no connection between my
creative class theory and economic development, quoting one of the studys
authors as saying: The measurement of thecreativeclass that Florida uses in
his book does not correlate with any known measure of economic growth and
development the emperor has no clothes. I asked a senior economist
colleague of mine to rerun these numbers. The results were profoundly
different.Where the study Bures relies on found a correlation of .001 between
average wages and the creative class, my colleague found the correlation to
bea whopping .84, signicantly higher than that for human capital/ college
grads (.65).
Other independent studies document the considerable role of the creative
class in regional economic development.In a series of careful and detailed
studies, some of which were published under the auspices of the Federal
Reserve Bank of New York, the economists Jaison Abelof the New York Fed
and Todd Gabe ofthe University of Maine foundthat the creative class is a
distinct measure from educationally based human capital, and that the creative
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class adds considerable economic value on its own.


When Dutch economists Gerard Marlet and Clemens van Woerkens compared
the human capital and creative class approaches and published their results in
the journalUrban Studies, they concluded that my creative class measure sets
a new standard for measuring skill and talent. "With our Dutch data set," they
wrote, "we do nd evidence that Floridas Creative Class is a better predictor of
city growth than traditional education standards. Therefore we conclude that
Floridas major contribution is his successful attempt to create a population
category that is a better indicator for levels of human capital than average
education levels or amounts of highly educated people.
A newly released study titled Education or Creativity: What Matters Most for
Economic Performance? in the journal Economic Geography (available online
here) used advanced statistical models to compare the effects of the creative
class and human capital across the 257 EU regions.

There is a large consensus among social researchers on the positive


role that human capital plays in economic performances. The
standard way to measure the human capital endowment is to
consider the educational attainments of the resident population,
usually the share of people with a university degree. Florida (2002)
suggested a different measure of human capitalthe creative
classbased on the actual occupations of individuals in specific
jobs like science, engineering, the arts, culture, and entertainment.
Our results indicate that highly educated people working in
creative occupations are the most relevant component in explaining
production efficiency.

Bures invokes the old chicken and egg dilemma of what comes rst, jobs or arts
and cultural creativity, an overly simplisticformulation Iwrote about herelast
month. As proof, he cites a study that purportedly uses "Granger causality
tests" to tease out the relationship between arts funding and regional growth
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development. The study(which as far as I can tell has not been published) has
little to do with my theory. Despite what Bures or others may try to claim, Ive
never said that arts spending is a driver of economic development. Rather, my
argument is that open-minded, diverse and tolerant places where vibrant
artistic, ethnically diverse and gay and lesbian communities have settled and
thrived reect underlying characteristics that are more likely to be accepting of
new ideas, and better able to incubate new innovations and house and
motivate entrepreneurial business ventures. Still, the ndings that Bures
summarizes are decidedly mixed. Arts funding seemingly does contribute to
economic development in four of the 15 metros covered by the study, including
his own chosen Minneapolis-St. Paul.
But when all is said and done, artistic and cultural creativity do add to regional
economies. At its best, innovation whether it occurs in leading cities or in
highly successful companies like Apple means mixing new designs (artistic
and cultural creativity) with technological creativity and ultimately with
economiccreativity (entrepreneurship) to create revolutionary new products,
build new rms, and create and transform whole industries. A detailed study I
conducted with my colleagues Charlotta Mellander and Kevin Stolarick,
published in the Journal of Economic Geography, found three occupational
groups to be associated with increased regional wages: science and
engineering; management and business; and arts, design, media and
entertainment.
I actually laid all this out in a 3,000 word letter I sent Bures, after he contacted
me to get my take on his article. In the course of his essay, Bures says my
"answers didnt really shed any more light than [my] books." Below, I've copied
the text of the letter I sent him. You be the judge.
Full Text of My Response Letter to Thirty Two Magazine

Thanks for your interest in my research. I have taken some time to


go through your questions. The bottom line is that the Creative Class
approach has been subjected to vigorous debate, critique and
vetting and careful (and some not-so-careful) empirical analysis.
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That analysis has used a wide range of statistical techniques.


While some have questioned the view (which is the nature of
scientific progress ala Kuhn), the best, most careful and detailed
research, including a wide range of independent studies, confirms
the differential migration and clustering of the Creative Class and
its effects on regional economic development measured as income
or wages, when controlling for other factors. Much of my own work
on this subject, conducted jointly with Kevin Stolarick and Charlotta
Mellander among others, has been subject to detailed peer-review
and published in the highly regarded Journal of Economic

Geography among other academic outlets, which counts eminent


urban economists like Edward Glaeser and economic geographers
on its board and is a high-impact journal both in economics and
geography. Ive consulted with a wide range of other scholars and
summarize my own and their key conclusions below. I hope you find
this helpful to your article.
Can he show me an urban area that has experienced measurable
economic growth as a result of an influx of creative individuals?
There are many. In fact, there is a wide consensus among
economists, economic geographers and sociologists that the United
States has witnessed a substantial migration and sorting of more
highly-skilled, highly educated and creative individuals over the
past several decades. This is detailed in sources as varied across the
ideological spectrum as Christopher Berry and Ed Glaesers work on
the divergence of human capital, and Glaesers book Triumph of the

City, Bill Bishops The Big Sort, Charles Murrays new book Coming
Apart, and my own Atlantic essay on The Means Migration. There
are many, many more. This migration has shaped the rise of some
cities and metro areas while adding to the challenges of others. In
terms of specific metros, places such as greater Washington DC,
Greater Boston, Greater NY, Greater San Francisco and innumerable
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others have benefited from this migration. Also, New York City
Mayor Michael Bloomberg has noted the importance not just of
regional flows or migrations of people to regional growth but of
international flows in his op ed in the Financial Times this past
week, entitled Cities Must Be Cool, Creative and in Control, where
he writes:
As individuals and capital become ever more mobile, cities are
in competition for people, visitors and business. Until
recently, competitiveness was outside a mayors domain
because the factors defining it were decided at the national
level. But today, with more than half the worlds population
living in cities generating about 80 per cent of global output
and businesses formulating growth strategies around urban
markets, cities cannot afford to cede their futures to national
governments.
...
In this respect, part of what sets cities such as New York and
London apart cannot be captured by rankings. Recent college
graduates are flocking to Brooklyn not merely because of
employment opportunities, but because it is where some of
the most exciting things in the world are happening in
music, art, design, food, shops, technology and green
industry. Economists may not say it this way but the truth of
the matter is: being cool counts. When people can find
inspiration in a community that also offers great parks, safe
streets and extensive mass transit, they vote with their feet.
How does he address the criticism that he is just describing the
effects of growth rather than the causes?
There is a huge literature on this. Economists are in wide agreement
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that human capital broadly defined is the major cause or


determinant of economic growth. This has been shown in a host of
studies at the national level by Robert Barro and many at the local
level. Robert Lucas, the Nobel Prize winning economist from the
University of Chicago, notes that the clustering of human capital in
cities is the primary determinant of economic growth in his seminal
essay on The Mechanics of Economic Development. Human capital
is a measure of skill broadly. So there is no debate on this: human
capital causes economic growth.
The debate is over how to measure human capital. Most economists
operationalize this as education level. The creative class measure is
an alternative measure of skill that operationalizes skill by
occupation, using the occupational codes from the Bureau of Labor
Statistics. I discuss my reasoning for this in numerous places
including The Rise of the Creative Class and Flight of the Creative

Class, in my response to Ed Glaesers review of Rise, and my essay


Revenge of the Squelchers in Next American City. The basic
reasoning is that occupation captures not what people study but
what they actually do, and also that it is a more heterogeneous
measure than simply tracking the share of adults with college
degrees. Pragmatically, one can use it to identity occupational
cluster strengths in a region, in a way comparable to Michael
Porters use of industrial cluster analysis to identify industrial
cluster strengths.
My Creative Class measures are highly correlated with the
conventional education based one at about .9, so they tend to
measure the same thing.
A detailed study by McGranahan and Wojan used more recently
released O*NET data on actual occupational skill to test the
definition of the creative class. When they did so, they made some
minor revisions and refinements, but found that the original
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creative class measure does a very, very robust job of capturing


occupations which are based on underlying creative skill.
That said, there are important differences that suggest the
importance and utility of the Creative Class or occupational
approach. Across the entire United States, nearly three-fourths
(72.2 percent, to be exact) of adults with college degrees are
members of the Creative Class. But less than 60 percent (59.3
percent) of the members of the Creative Class have college degrees,
according to a detailed analysis by Kevin Stolarick and Elizabeth
Currid-Halkett. In other words, four in ten members of the Creative
Class16.6 million workers do not have college degrees. As
Stolarick and Currid-Halkett write: Thus, while some correlation
would be expected, our results indicate that human capital and the
Creative Class do not necessarily capture the same people nor is a
measure of eachs respective presence in a regional economy
indicative of similar trends.[1]
There is a substantial body of research that shows that the Creative
Class measure operates in addition to and through other channels
than the standard education-based human capital measure and
outperforms it in many instances. A large-scale study by Stolarick,
Mellander, and me shows that the Creative Class has a bigger effect
on wagesa key element of regional productivity whereas
education tends to have a greater effect on income. Independent
research by economist Todd Gabe and others backs this up, showing
that the Creative Class continues to have a substantial effect on
regional economic growth when controlling for the effects of
education and other factors. More to the point, having a Creative
Class job also brings economic benefits that extend beyond those of
going to college. A college graduate working in the same occupation
as a non-college graduate earns approximately 50 percent higher
wages. But having a Creative Class job adds another 16 percent,
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about the same as another 1.5 years of additional education,


according to Gabes research.[2]Even more important, just
counting years of education ignores a lot of people who do very
creative work, including world shaping entrepreneurs such as Steve
Jobs and Bill Gates, or artists and others who did not complete
college.
In some sense the argument about what causes what is a nonargument. Economic theory tells us that human capital is the
engine of growth. The whole question of chicken and egg in this
sense is moot; growth is an ongoing iterative process.
One thing my research tries to get at that the conventional
literature does not, is what causes the concentration of the creative
class and of human capital broadly. Here, I argue that it is openness
and low barriers to entry that matter. This idea is catching on. Scott
Page has written an important book on the economics of it, The

Difference. Ronald Ingelharts detailed World Values Surveys have


identified openness toward various types of people including gays
and lesbians as a key component of post-materialist cultures of
advanced nations, and economists Marcus Noland and Howard Peck
have identified (more backward) attitudes toward homosexuality to
be associated with lagging development in the Middle East. My Black
Box paper with Mellander and Stolarick shows the effect of these
factors using structural equation models, while my housing paper
with Mellander, There Goes the Metro, documents their effects on
housing prices over and above income and conventional human
capital.
Is there some statistical evidence that young creative
professionals are migrating to creative cities?
Yes, detailed studies by Joe Cortright for CEOs for Cities show the
migratory pattern of young creatives to certain regions and to
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urban centers of those regions.


The question is not one of age, but of skill and occupation broadly. I
continuously point out in my studies that Creative Class theory is
not about age but about skill. I do mention that previously economic
development practice had focused on families, which is important,
but that in todays society single people make up roughly 50 percent
of all households, as Eric Klinenbergs Going Solo points out. I also
note via Cortrights studies that young people are the demographic
group most likely to move, so attracting them can be beneficial.
More recent research zeros in not just on age, education or
occupation/class but the actual skills that lie behind work. In other
words, they provide a fundamental measure of human capital as
skill. This work is based on the Occupational Information Network
(or O*NET) database developed by the Bureau of Labor Statistics,
which provides richly detailed information on the mix and level of
skills required for more than 800 occupations. Various research
teams including my own have used these data to identify the
fundamental skills underlying Creative Class and other types of
work, to chart the economic returns to these core skills, and
ultimately to map their distribution across the US economic
landscape.
There are three core types of skills, according to this line of
research. The first is one we are all familiar withbasic physical
skill of the sort associated with traditional work. Its attributes
include good hand-to-eye coordination, strength, and dexterity.
The second two types of skills are those associated with Creative
Class work. This second basic skill typecognitive skillis
reasonably well understood. It involves the ability to acquire
knowledge, process information, and solve problems. This basic
intellectual and analytical horsepower has been identified as the
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core skill underpinning the knowledge economy by writers from


Peter Drucker and Daniel Bell to Robert Reich and Charles Murray.
However, there is a third type of skill set that is even more critical.
The O*NET data defines its core attributes as the capacities used to
work with people to achieve goals. You can call it social
intelligence. Its salient characteristics are discernment,
communications abilities, leadership, awareness, and the like.
Highly developed social skills include the capacity to bring the right
people together on a project, persuasion, social perceptiveness, the
ability to help develop other people, and a developed sense of
empathy. These are the leadership skills that are needed to
innovate, mobilize resources, build effective organizations, and
launch new firms.
Recent research by economists William Strange, Marigee Bacolod,
and Bernardo Bluk; the economic geographer Allen Scott of UCLA
and my own team has examined the geographic distribution of
these skills. Jobs requiring physical skill cluster in smaller and
medium-sized metro areasindustrial centers where land for
factories is relatively inexpensive. Jobs featuring analytic skills are
sparse in these places and heavily concentrated in the largest metro
areas, indicating rising benefits from having larger numbers of
well-educated, highly intelligent people working close together. And
jobs requiring the highest level of social skill are the most
concentrated in the very largest metro areas. In fact, these skills
seem to grow ever-more essential as local economies grow larger
and more complex. What this research has helped us understand is
that it is not just the accumulation of knowledge or cognitive ability
that drives the growth of cities, but the additional clustering of
social-intelligence skill. This clustering of social-intelligence skill
increases the quality of the combinations and recombinations that
drive innovation and economic growth.
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Has he run economic models, or Granger causality tests, using


the standard measures of economic growth to test the Creative
Capital theory? If not, why?
There have been many, many tests of the creative class theory,
including some my own research team and I have run. I am not
aware of any that use Granger causality tests, but they do use varied
types of regression models and our own research uses well-specified
structural equation models.
In the original edition of Rise, I cited the research of Robert
Cushing, a former University of Texas sociologist and statistician.
Cushing undertook a systematic comparison of the effect of the
three main theories of regional growthGlaesers human capital
theory, Putnams social capital theory and my own, which he
referred to as the creative capital theory. He built statistical models
to determine the effect of these factors on regional growth between
1990 and 2000. To do so, he included separate measures of
education and human capital; occupation, wages and hours worked;
poverty and income inequality; innovation and high-tech industry;
and creativity and diversity for the period 19701990. His results
were striking. He found no evidence that social capital leads to
regional economic growth; in fact the effects were negative. In a
related study he found that leading high-tech regions had higher
income and higher levels of growth but scored below average on
almost every measure of social capital. They had less trust, less
reliance on faith-based institutions, fewer clubs, less volunteering,
less interest in traditional politics and less civic leadership, but
much higher levels of protest politics and diversity of
friendships. In his own words, conventional political involvement
and social capital seem to relate negatively to technological
development and higher economic growth. Using creative
occupations, bohemians, the Milken High-Tech Index and
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innovations as indicators of creative capital, he found that the


creative capital theory produced formidable results, with the
predictive power of the Bohemian and Innovation Indexes being
particularly high. He concluded: [The] creative capital model
generates equally impressive results as the human capital model
and perhaps better.[3]
Several other independent statistical studies also confirm the
creative class approach. A detailed study of regional development in
the Netherlands found the Creative Class to considerably
outperform the standard human capital measure in accounting for
employment growth, leading its authors to conclude that Creative
Class sets a new standard for measuring skill and talent especially
when considering regional labor productivity. With our Dutch
dataset we do find evidence that Floridas creative class is a better
predictor of city growth than traditional education standards, they
write. Therefore we conclude that Floridas major contribution is
his successful attempt to create a population category that is a
better indicator for levels of human capital than average education
levels or amounts of highly educated people. The point is, as Florida
stated, not which or how much education people can boast of, but
what they really do in working life.
Economist Todd Gabe has found the Creative Class to have a strong
positive effect on regional earnings as well as to lessen
unemployment, especially since the crisis. Research by Wojan and
McGranahan focusing on rural counties examines the relationship
between measures of growth over time and Creative Class indicators
at the beginning of the period. They uncover pretty strong effects
related to the creative economy, controlling for a wide range of
other factors. Potential endogenity should be of less concern in the
research using individual-level data. Gabes research published in
the Handbook of Creative Cities and elsewhere does so and
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identifies the strong effect of Creative Class occupations on


reducing unemployment and enhancing earnings.
So the effects of the creative class on employment and earnings are
clearly documented not just by my own research but by
independent research in the field.
One last point: a growing number of scientists have come to favor
simulation or adaptive agent models over more conventional
regression techniques.Robert Axtell of George Mason University, a
leading figure in adaptive agent modeling, has also built adaptive
agent models which show the growth effects of the clustering of
Creative Class individuals ala a basic Lucas-Jacobs clustering model.
These models show that the migration and clustering of highly
skilled creative class like individuals shapes the growth and
development of cities over long time horizons.
I hope these responses help with your article.

[1] Kevin Stolarick and Elizabeth Currid-Halkett, Creativity and the Crisis: The
Impactof Creative Workers on Regional Unemployment, Martin Prosperity
Institute, September 2011.
[2] Todd Gabe, The Value of Creativity, in David Emanuel Andersson, ke
EmanuelAndersson, and Charlotta Mellander, eds., Handbook of Creative
Cities (Cheltenham,UK: Edward Elgar, 2011), pp. 128145.
[3] See Robert Cushing, Creative Capital, Diversity and Urban Growth.
Unpublished manuscript, Austin, Texas, December 2001.

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About the Author


Richard Florida is the co-founder and editor at large of CityLab and
a senior editor at The Atlantic. He is the director of the Martin
Prosperity Institute at the University of Toronto and a professor of
global research at New York University. MORE
ALL POSTS | @Richard_Florida

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