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Report: Reducing Red Tape Key to Survival of L.A.’s Creative Economy

A man (left) and a woman (right) in masks work in a woodshop with coronavirus safety regulations in place such as clear plastic barriers between stations.
The woodshop at Otis College of Art and Design is open to students to use during the pandemic with safety protocols. | Fawad Assadullah, Courtesy Otis College of Art and Design
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For 14 years, the Otis College of Art and Design has published an annual report on the industries that comprise California’s creative economy. But during that time, no period has upended this sector quite like the COVID-19 pandemic.

“You'll see in this year's report, for the first time, the creative economy has shrunk since the Great Recession of 2008,” said Otis College President Charles Hirschhorn Thursday during a virtual event to mark the report’s release. “Because of this, this might be our most important report yet. ”

Hear key cultural leaders from around Los Angeles discuss the role of arts and culture in shaping the world’s future on this "Southland Sessions" episode.
Change(Makers): The Future of Arts and Culture

The shuttering of theaters, film productions, museums, dance studios and more during the coronavirus crisis has had a catastrophic effect on the creative sector. It was a development that no one saw coming, given the record growth of the creative economy by almost 16% after the Great Recession.

Industries such as entertainment, digital media, architecture, creative goods, fashion and performing arts added about 146,000 payroll jobs collectively between 2008 and 2019. But COVID-19 ushered in a wave of job losses that brought this expansion to an abrupt halt last year. Los Angeles County was particularly hard hit, suffering 109,400 job cuts from February to December.

“It's no secret that the COVID-19 has absolutely devastated parts of our economy, but the job loss in the creative economy workforce has been especially dramatic,” said U.S. Rep. Karen Bass (D-California) via video at Thursday’s virtual meeting. “And it's also, outside of Los Angeles, been relatively unknown, so part of my job here in Washington, D.C., is to make sure that people remember the creative economy when we respond to COVID. ”

Nationally, 63% of artists and creative industry workers are currently unemployed, but California overall has seen a rate of job loss (13.3%) in the creative economy that’s higher than the national rate (8.2%).

Nationally, 63% of artists and creative industry workers are currently unemployed, but California overall has seen a rate of job loss (13.3%) in the creative economy that’s higher than the national rate (8.2%). The motion picture and video production industry has accounted for much of the state’s employment losses, with 60,000 such jobs erased during the pandemic. Bass said that she’s also concerned about the pandemic’s effect on “all the ancillary businesses that are not directly related to motion pictures but support the industry. ”

The COVID-19 vaccine rollout can help the creative economy rebound from the crisis, but efforts to immunize the public against the virus are moving at a slower pace than expected — both at the state and national level. The longer it takes for California to open up again, the worse the prognosis is not only for the creative sector but also for the state’s economy generally, according to Adam J. Fowler, director of research at Beacon Economics, the firm that authored the 2021 Otis Report on the Creative Economy.

“We call it the creative economy, but the economist in me wants to stand up and say this is the economy. These are very hard-hit sectors," Fowler said. "The creativity and the skill sets that go into the professionals across sectors are so vital."

The sheer amount of pandemic job losses across creative sectors in California surprised Fowler. Architecture lost 2,700 jobs, creative goods and products lost 5,800 jobs, entertainment and digital media lost 128,100 jobs, fashion lost 22,870 jobs, and fine arts lost 15,900 — for a combined statewide job loss of more than 175,000. But Fowler believes the creative economy can bounce back, just as it did after the 2008 recession. His hopes are buoyed by the fact that these industries were growing at a breakneck pace before COVID-19 forced them to shut down. The recovery process, however, will be a long one, he suspects.

Architecture lost 2,700 jobs, creative goods and products lost 5,800 jobs, entertainment and digital media lost 128,100 jobs, fashion lost 22,870 jobs, and fine arts lost 15,900 — for a combined statewide job loss of more than 175,000.

“We've got a long way to go in terms of the labor force,” Fowler said. “When we look at the unemployment rate and the payroll employment — those have really taken a hit. Oftentimes, during downturns, it's an opportunity for industries to reevaluate their work, so I think it's an unknown question about how the labor market looks different coming out of a COVID-induced. recession.”

A rendering of a fashion studio with COVID-19 regulations in place such as social distancing and plastic barriers.
A rendering of the adjustments to the Otis College of Art and Design's fashion studio should re-opening schools be more of a possibility. | Courtesy Ehrlich Yanai Rhee Cheney

The variety of industries that make up the creative sector will likely recover at different paces, with those that suffered the fewest job losses primed to rebound from the pandemic more quickly. Architecture has been relatively stable, Fowler pointed out, while fashion has seen manufacturing move out of Southern California during the pandemic. The fine and performing arts field has disproportionately suffered losses over the past year and might very well be one of the last creative sectors to return to normal when the pandemic ends.

Fowler also fears that smaller arts organizations might struggle to recover, noting that it’s as important for a small experimental theater to rebound from the pandemic as it is a large arts enterprise. Both nonprofit and for-profit arts organizations make up the creative sector and should have the opportunity to thrive, he contends.

“You want the rich tapestry of an economy to have lots of different artistic outlets,” Fowler said. “We don't want to have an economic recovery where only the bigger organizations are left in any of these sectors.”

The creative economy also stands out for its large percentage of contract workers. These individuals make up nearly a third of the workforce in the fine and performing arts industry as well as in the entertainment and digital media sector. In the architecture field, such workers comprise nearly 40% of the workforce.

"The pandemic unemployment assistance that allowed folks to document and apply for unemployment benefits if they were self-employed was a real game-changer for almost all of these sectors," Fowler said. "So even though their job may not be back, they've been able to keep their household relatively intact from an income point of view. And so, the question will be making sure that onramp back to wage income continues to be there and doesn't drop off prematurely."

The federal Coronavirus Aid, Relief, and Economic Security (CARES) Act and the paycheck protection program helped a variety of businesses and workers, including independent contractors, stay afloat during the pandemic, Bass noted. She described how, in December, Congress “led an additional effort to support the creative arts by increasing funds for those PPP loans and authorizing $15 billion for the SBA [Small Business Administration] to make grants to eligible live venue operators...who demonstrate a 20 to 25% reduction in revenues. ”

While we've been successful in some areas, it's absolutely clear that [the relief] Congress has provided is nowhere near enough
U.S. Representative Karen Bass (D-California)

But Bass pointed out that members of the creative economy continue to need help. “While we've been successful in some areas, it's absolutely clear that [the relief] Congress has provided is nowhere near enough,” she said. “As the pandemic continues, Congress must provide additional assistance to the creative economy and the millions of employees.”

Although California's creative economy has weathered enormous adversity during the pandemic, Fowler said that these sectors could make a full recovery with help from the government. The state can remove some of the regulatory hurdles and costly permits that financially drain creative industry professional artists and make doing business difficult for them, he recommends.

For example, a gallery owner who wants a musician to perform at an art show opening or to serve wine during the occasion must confront layers of red tape to do so, as does a fashion boutique owner who wants to display a clothing rack on the sidewalk, Fowler said. He characterized these regulations as tedious and remarked that in places such as New York, many of these permitting processes have been streamlined to make it easier for creative industry professionals to hold special events.

“We've got to make sure that infrastructure is supporting folks in these industries toward recovery and not serving as an additional obstacle,” Fowler explained. “It's a really complex issue, but it’s become apparent to me how important that is. When local governments have a lot of assets — parks, unused space that may be available to, say, dance companies that need a practice space that’s safe — there needs to be a transparent process that promotes that kind of economic activity so that these sectors can get back on their feet as soon as they can.”

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