Friday, February 13, 2009

Part I: Articulating the Economic Impact of the Arts

Since I committed to writing this series of posts on why the arts should be a part of an economic stimulus package, the issue has become even more urgent here in Michigan. Yesterday, Gov. Granholm announced (among other things) the zeroing out of all operational arts grants in the state. This is a move that will be devastating to arts organizations and cause major job losses around the state.

Because art is seen as affecting the quality of life and not the necessity of life, it is almost always the first item on the cutting board. It gets relegated to the status of pork barrel. Art is always asked to pay the price for the economic mismanagement of all other sectors. And it always does because artists don't require a profit to keep doing what they're doing. Unlike those who will shut their doors or ship jobs overseas if their profits aren't high enough, artists are going to keep practicing their art until they starve to death from it.

Cutting the Arts is Short-Sighted

What is sad is that cutting the arts results from a short-sightedness in not seeing how arts can play a role in economic recovery. And if our politicians are short-sighted, I'd say that even more blame has to fall on those of us who see the value of arts but have not articulated it in a language that can be understood outside our auditoriums, museums, concert halls, and stages.

It is not enough, as was written over at Theatre Ideas, for us to say, "but it's art--it's important." It is, but a lot of things are important--even critically important. The response from the artistic community can not be a self-absorbed one. It must be focused on what it can bring.

Speaking in Numbers

If we want to make a case for the importance of the arts, one of the cases that has to be made is an economic one--and one of numbers. While this study is starting to get a little dated, it is still an important one: In 2002, 3,000 non-profit arts organizations were surveyed and studied. These were the results from "Arts & Economic Prosperity: The Economic Impact of Nonprofit Arts Organizations and Their Audiences" (the bolding is mine):

According to the report, America's nonprofit arts industry generates:

  • $134 billion in economic activity every year, including $24.4 billion in federal, state, and local tax revenues.
  • The $134 billion total includes $53.2 billion in spending by arts organizations and $80.8 billion in event-related spending by arts audiences.
  • The $53.2 billion represents a 45 percent increase (from $36.8 billion) since 1992.
  • The $80.8 billion in event-related spending by arts audiences reflects an average of $22.87 per person in spending for hotels, restaurants, parking, souvenirs, refreshments, or other similar costs-with non-local attendees spending nearly twice as much as local attendees ($38.05 compared to $21.75).
  • The $134 billion in total economic activity has a significant national impact, generating the following: 4.85 million full-time equivalent jobs.
  • $89.4 billion in household income.
  • $6.6 billion in local government tax revenues.
  • $7.3 billion in state government tax revenues.
  • $10.5 billion in federal income tax revenues.

Americans for the Arts has published more recent data based on their ongoing research (and lest you worry about whether there is fuzzy math involved, the research does use Dun & Bradstreet data to map and report on arts-related businesses):

The $166.2 billion in total economic activity has a significant national impact, generating the following:

  • 5.7 million full-time equivalent jobs
  • $104.2 billion in household income
  • $7.9 billion in local government tax revenues
  • $9.1 billion in state government tax revenues
  • $12.6 billion in federal income tax revenues

So if we're looking for measurable stimulus, let's start here. I find 5.7 million jobs to be both significant and measurable. The tax revenue generated from non-profits (and think about that one for a moment given that they are exempt from many forms of taxes) is pretty significant.

When we cut the arts, are we saying we don't need jobs? That we don't need tax revenue?

Non-Artists Benefit Economically from Vibrant Arts Organizations

There is another statistic that I'm still trying to find that has found a correlation between how much is spent in each community for every dollar spent on a ticket to an arts event. It is significant in that it is a measure of how much economic impact the arts has on its local community. For every dollar they bring in in ticket sales, far more money goes back into the community in lodging, meals, paint supplies, lumber, fabric, marketing, advertising, etc.

There has been a lot of talk in recent years about the rise of the creative class. Businesses that are failing are those that have failed to innovate and respond to changes in the world. They've cut out research because there isn't an immediate contribution to the bottom line. They eliminate products that have low contribution margins even when those products have value. The arts have the ability to attract workers from the creative class in a way that high salaries won't.

It's Local

Arts spending is also more local than most other spending. When I write about theater, I'm not writing about theater that takes place in New York or London. I write about theater that is happening in my community--just as there are others like me writing about the theater and art that is taking place in their communities. Art doesn't belong to the big cities like Chicago or Washington D.C. (though those are the places where art is most likely to survive in the absence of ongoing funding). It belongs and is taking place in every city and town across the country.

The ironic thing about the Oklahoma senator's amendment to remove arts spending from the economic stimulus bill is that it will hurt small-town America far, far more than it will places like New York, L.A., or Chicago. It's the heartland that he's stuck a knife into, not the coasts where organizations are surviving on the strength of longstanding endowments.

More Research Is Needed

There has been great progress in the past ten years in quantifying the economic value of arts. But there is still a long way to go. There are many things that artists "think" or "feel" that arts benefits, but without the hard data, we'll continue to have people who think that the benefits of art are purely subjective and apply only to a small niche of the population.

I would love to see a study done on the correlation of property values and strong arts communities. We know that the arts can draw people to a community and gets them to stay. It builds bonds between people. When a community is attractive to people, that tends to have an effect on property values--however, I know of no hard data I could point to on that subject. Yet, it is measurable.

Yes, art is subjective. The need for it, though, and its benefits are something that can be measured and must be if it is going to survive.

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