By now you’re probably well aware of the trend of cities moving into “innovation” and “creative industries”.
For many years, it’s been argued that innovation and creative industries are key ingredients for economic growth, but new research shows that is far from the case.
Instead, many studies show that innovation leads to increased employment and job creation, but that it also increases inequality, leads to higher unemployment, and can result in increased unemployment.
In short, innovation leads not to more jobs, but to less.
The Economist reports that the top 10 cities in terms of innovation per capita are: 1.
Washington DC, 2.
San Francisco, 3.
New York, 4.
Philadelphia (NC), 9.
New Orleans, 10.
Washington D.C. In the last decade, the growth of these cities has slowed considerably.
“The top 10 fastest-growing cities in the US have all seen growth in the last five years, while the bottom 10 cities have seen no change in the past 10 years,” according to The New York Times.
According to a University of Maryland study, “the number of people working in creative industries has grown in recent years by a third, while innovation and entrepreneurship has not.”
This article by the Economist explains why: “Over the past five years the number of graduates from creative industries at universities has more than doubled from the same period in 2012 to reach 19.5 million.
But innovation and entrepreneurial activity has not risen as fast.”
The Washington Post reported that “New York City has been hit hard by the economic downturn, with a number of universities focusing on how to improve their business climates to attract more students to the city and the city’s thriving tech industry. According to a study from the Brookings Institution, the region has experienced a 30 percent decline in its share of total research jobs.
“In the past decade, New York City, a major hub for the creation of new tech companies, has seen its share of research jobs fall by more than 50 percent, from 1,500 jobs per person in 2000 to 705 in 2020.
New York’s job loss is also associated with a sharp rise in the number of startups in the city.”
In the New York area alone, an applicant for a computer science job in New York was only worth about $8,000 in 2016.
(Source: The New York Post) The Economist notes that “creative work has become so competitive that it has led to a surge in the hiring of people in creative fields, including science, engineering, and math, and an increase in the total number of college graduates who are now employed in these fields.”
(source The Economist) In the public policy world, these trends are particularly appreciated.
This story from The Wall Street Journal is illustrative: “[S]uch a change in policy is likely to be especially consequential for the tech sector, where a combination of a booming tech economy, the rapid expansion of new technology startups, and an expanding pool of high-skilled workers is leading to more companies seeking to invest in these new technologies and create more jobs for their people.”
And these trends are already being felt in cities like San Francisco.
At the start of this year, the SF Office of Economic Analysis (SOA) released a report on innovation and creativity.
They analyzed the financial services sector in SF and found that “[t]he financial services sector is in a position to create more than 200,000 new jobs and create at least 10,000 more people each year, and will be able to do so without reducing the size of the economy.”
While the report found that the financial services industry was a strong driver of economic growth in SF, it found that innovation has been the major driver of growth for SF’s economy.
These data represent a clear message: We need to be more aware of how these industries work.
It’s important to note that this report does not have any data on whether the tech industry has an impact on inequality.
But we do know that a “significant portion of the economy’s revenue is generated by creative activities.”
Indeed, a recent study by the Institute for Policy Innovation and the Economic Policy Institute found that: “[i]n 2012, the finance industry generated $3.3 trillion in revenues, which was higher than all the other industries combined.