Tuesday, November 14, 2017

The Rise of the Creative Class, the New Urban Crisis, and the Promise of Inclusive Growth (part one)

By Stephanie Allen, Project Assistant

You’d be hard pressed to find an urban planner or economic developer in the western world who hasn’t heard of Richard Florida and his 2002 book The Rise of The Creative Class. The book was wildly popular. And, depending on who you ask, it either predicted or drove the revival of postindustrial cities. Cities and towns across the United States developed strategies to help them attract the creative class. And, for the most part, the cities and towns (big and small) that were successful in attracting these sought after knowledge workers have prospered.

However, as Florida’s new book points out, that prosperity has come at a cost. The rise of the creative class and the increasing economic inequality and segregation that has seen the downfall of the middle class and the suburbanization of poverty seem to go hand in hand. According to Florida, the rise of the creative class caused what he’s calling “the new urban crisis” in his book of the same name, The New Urban Crisis: How Our Cities Are Increasing Inequality, Deepening Segregation, and Failing the Middle Class – and What We Can Do About It.

Reviews of Florida’s new book, which came out in April, have titles like “Rise of the Creative Class Worked a Little too Well,” “Is the ‘creative class’ saving our cities or making them impossible to live in?” “How Our Reignited Love Affair with Cities Created an Urban Crisis,” “Does Creativity Breed Inequality in Cities?” and, my personal favorite, “Richard Florida Is Sorry”he’s not, by the way (that’s because he is among those who would say he predicted, or rather under-predicted, the rise of the creative class, but didn’t drive it).

For years economic developers have created strategies to attract these young, mobile knowledge workers to their cities, towns, and regions based on Florida’s theory that attracting the creative class would grow their economies. And, the places that were successful in attracting a large creative class, like San Francisco, San Jose, Austin, Los Angeles, Denver, and Portland, have seen a great deal of economic prosperity. Along with this prosperity, though, have come soaring rates of economic inequality and segregation.

As the knowledge workers of the creative class (aka, the upper middle class or, more precisely, the college educated, mostly white children of the upper middle class*) rediscovered the city, they spurred gentrification, displacement, and skyrocketing home prices and rents. The less affluent and less advantaged have been increasingly priced out of such cities, making the landscape of the United States more and more economically segregated, and, in turn, making it harder and harder for the less affluent and the less advantaged to gain access to the kinds of opportunity required to live the American Dream of upward social mobility.

This kind of economic inequality is problematic. It isn’t just bad for the wallets of those attempting to climb up the ladder of the American Dream. Research suggests that this kind of inequality makes us all (upper, middle, and lower classes) less happy and less healthy. Research also suggests that as inequality rises so do rates of violent crime. And, if that’s not enough, while specific cities may prosper as their economic inequality increases, the data suggests that when we zoom out to the state level we become, on average, less wealthy—income per capita decreases as economic inequality increases. So, even as cities prosper based on the clustering of the knowledge workers of the creative class, we’re actually all getting a bit poorer, on average.

The new urban crisis impacts all of us. And, it seems as if it is the inevitable product of the kind of knowledge clustering that spurs innovation and drives the economy. In a recent piece in The Atlantic, Florida calls this “the fundamental contradiction that stands at the heart of today’s urban knowledge capitalism.”

So, after years of hard work attracting the creative class, are we simply doomed to increasing inequality; decreasing health, wealth, and happiness; and increasing rates of violent crime?
Perhaps. In his book Florida suggests that the problems that have created this crisis are systemic and deeply rooted in the American economy. If that’s so, they might be best addressed at the national level. But, that’s not likely. And, reviewers like this one think Florida knows it.

So, what can we do?  Focus on inclusive growth. In recent articles on his City Lab website (like this one and this one), he calls on local governments, economic development organizations, non-profits, philanthropic organizations, and urban anchors (like high-tech companies and real estate developers) to foster the creation of inclusive growth and reduce barriers to economic opportunity.
I’ll talk about what inclusive growth is and how we, as economic developers, can promote it in next week’s post.

*Full disclosure, I am the white, college educated child of upper middle class parents.