january 23, 2012 3t overview rsm 2115 kevin stolarick, phd research director

January 23, 2012

3T OverviewRSM 2115

Kevin Stolarick, PhD

Research Director

Understanding Economic Activity

Regional (Smith, Marshall)

Understanding Economic Activity

Regional (Smith, Marshall)

Industrial(Porter)

Understanding Economic Activity

Regional (Smith, Marshall)

Industrial(Porter)

Education, Skills(Glaeser)

Understanding Economic Activity

Regional (Smith, Marshall)

Industrial(Porter)

Education, Skills(Glaeser)

Occupational(Florida)

Understanding Economic Activity

Regional (Smith, Marshall)

Industrial(Porter)

Education, Skills(Glaeser)

Occupational(Florida)

BOTH

Why Occupations?

• Among all people who either work in the IT industry or work in an IT occupation (or both):–50.2% work in an IT occupation but not in the IT industry–25.7% work in the IT industry but aren't in an IT occupation–Only 24.1% work in an IT occupation in the IT industry

IT Occupations

IT Industry

What is it about Pittsburgh?

The “4Ts”

Technology

Regional Growth

The “4Ts”

Talent

Technology

Regional Growth

The “4Ts”

Talent

Tolerance(Inclusiveness)

Technology

Regional Growth

The “4Ts”

Talent

Tolerance(Inclusiveness)

Technology

Territory Assets(Amenities)

Regional Growth

The “4Ts”

Talent

Tolerance(Inclusiveness)

Technology

Territory Assets(Amenities)

Regional Growth

and Prosperity

The Rise of the Creative Class

The Rise of the Creative Class

What is the Creative Class ?

What You Do (Job Occupation)

vs.

Where You Work (Industry)

10 Year Job Growth Estimate• Working Class 10%• Service Class 14%• Creative Class 20%

Who Works in Creative Class ?

Creative Class Economy: TAPE

T = Technology and R&D Innovation

A = Arts and Culture

P = Professional and Managerial

E = Educating and Training

18

U.S. Creative Economy

Knowledge Service Working

Workers (Talent) 40,379,520 59,769,270 31,949,350

% of Workforce 30.5% 45.1% 24.1%

% of Wages 48.8% 30.4% 20.6%

Who are the 40,000,000?

Occupations Workers Salary ($B)

TComputer and mathematical 3,076,200 213.0

Architecture and engineering 2,430,250 160.9

Life, physical, and social science 1,231,070 73.4

Healthcare practitioners and technical 6,713,780 416.5

A Arts, design, entertainment, and media 1,727,380 79.6

PManagement 5,892,900 541.7

Business and financial operations 5,826,140 349.6

Legal 976,740 83.4

Sales and related occupations 4,298,620 147.7

E Education, training, and library occupations 8,206,440 371.9

Total 40,379,520 2,437.7

19

U.S. Creative Growth

Occupations Growth (2004-2014)

New Jobs(000; by 2014)

TComputer and mathematical 30.7% 1,389

Architecture and engineering 17.1% 876

Life, physical, and social science 16.4% 531

Healthcare practitioners and technical 25.8% 3,047

A Arts, design, entertainment, and media 14.9% 851

PManagement 11.3% 2,757

Business and financial operations 19.1% 2,163

Legal 15.9% 336

Sales and related occupations 9.6% 408

E Education, training, and library occupations 20.0% 3,558

20

Workforce Structure - Classes

Service Creative Working

Canada 7,068,19546.2%

4,317,12528.2%

3,154,29020.6%

Ontario 2,700,56345.6%

1,748,25829.5%

1,239,06520.9%

Toronto 1,145,00045.3%

840,71833.3%

472,83518.7%

Employment Structure of the Labour Market, 2008

Creative Service Working0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

28%

46%

21%

42%

35%

20%

Canada

Employment Wages

Employment Structure of the Labour Market, 2008

Creative Service Working0%

10%

20%

30%

40%

50%

60%

30%

46%

21%

49%

29%23%

Ontario

Employment Wages

Employment Structure of the Labour Market, 2008

Creative Service Working0%

10%

20%

30%

40%

50%

60%

33%

45%

19%

54%

29%

17%

Toronto

Employment Wages

25

Share of creativity-oriented jobs is increasing

26

- Creative jobs are more common in larger cities- Eastern Ontario somewhat higher mainly due to Ottawa

Creative Ontario

34.7%

37.5%

37.0%

43.9%

26.4%

26.6%

26.0%

27.8%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

Ontario

Eastern Ontario

Ontario

Eastern Ontario

Ontario

Eastern Ontario

Ontario

Eastern Ontario

TO

TA

LC

MA

CA

RU

RA

LPercent of labour force

27

Creative Jobs as a Percent of Total Employment

28

Service Class Jobs as a Percent of Total Employment

29

Working Class Jobs as a Percent of Total Employment

30

Agricultural Jobs as a Percent of Total Employment

31

32

Nearly 80 percent of jobs in Canada are in services industries

Employment by Industry in Canada from 1976 to 2006

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

6,376.6

Service Sector

12,498.4

3,370.9

Goods Producing Sector 3,985.9Em

plo

ymen

t (x

1,00

0)

Output by Industry in Canada from 1976 to 2005

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

114.5

Goods Producing Sector

429.8

72.8

Service Sector

849.2

GD

P (

bil

lio

ns)

Unemployment is higher in routine-oriented occupations especially in early 90s recession

-35

The “4Ts”

Talent

Tolerance(Inclusiveness)

Technology

Territory Assets(Amenities)

Regional Growth

and Prosperity

Technology“A high technology base is both a necessary condition for and a result of a region having a strong creative economy.

Being known as a "high-tech" region helps to attract the creative workforce, which, in turn, generates new technologies making the region even more high-tech.”

Technology• High Technology:–Concentration of high-tech

companies–Growth of high-tech companies

• Innovation:–# of patented innovations per

1,000 people–Growth in patented innovations

Technology

-1.000

0.000

1.000

2.000

3.000

15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00%

% Creative

Pat

ents

per

1,0

00

Technology

-3.00

-2.00

-1.00

0.00

1.00

2.00

15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00%

% Creative

Tec

h P

ole

(lo

gg

ed)

Talent“The concentration of people in the Creative and Super Creative Classes, has a stronger relationship with economic growth.

Creative people don't just cluster where the jobs are. They cluster in places that are centers of creativity and also where they like to live.

Places need a people climate -- or a creativity climate -- as well as a business climate.”

Talent

• Talent Index (Bachelors Degree and above)

• % Super Creative (scientists,engineers, artists, musicians, designers)

• % Creative Workers(super creative + professionals)

Talent

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

0.00% 5.00% 10.00% 15.00% 20.00% 25.00%

% Super Creative

% C

reat

ive

Talent

8.0%

13.0%

18.0%

23.0%

28.0%

33.0%

38.0%

15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00%

% Creative

Tal

ent

Ind

ex

Tolerance/Inclusiveness“Diversity has become a politically charged buzzword. To some it is an ideal and rallying cry, to others a Trojan-horse concept that has brought us affirmative action and other liberal abominations.

Creative Class people use the word often, but not to press any political hot buttons. Diversity is simply something they value in all its manifestations.”

Tolerance/Inclusiveness

• Melting Pot Index (% foreign born)

• Gay/Lesbian Index (% gay & lesbian population)

• Boho Index (% culturally creative)

• % Nonwhite & Non-black• % Interracial Marriage• Composite Diversity Index (CDI)

Tolerance/Inclusiveness

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00%

Melting Pot Index

% C

reat

ive

Tolerance/Inclusiveness

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

-0.40 -0.20 0.00 0.20 0.40 0.60

Gay Index (logged)

% C

reat

ive

Tolerance/Inclusiveness

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

0.50 1.00 1.50 2.00 2.50

Bohemian Index

% C

reat

ive

Territory Assets“What Creative people look for in communities are abundant high-quality amenities and experiences, an openness to diversity of all kinds, and above all else the opportunity to validate their identities as creative people.

Places are valued for authenticity and uniqueness … Authenticity comes from several aspects of a community … It comes from the mix … Authenticity is the opposite of generic.”

Territory Assets (Quality of Place)• Economy/Growth• Housing• Culture• Climate• Education• Healthcare• Recreation• Dis-amenities

– Crime, Weather

• Transportation– Connectedness

Creativity Index“The key to understanding the new economic geography of creativity and its effects on economic outcomes lies in the 3T's of economic development: Technology, Talent, and Tolerance.

Each is a necessary but by itself an insufficient condition: To attract creative people, generate innovation and stimulate economic growth, a place must have all three.”

Creativity Index

• Technology

• Tolerance (Inclusiveness)

• Talent

LEADING INDICATOR

The “4Ts”

Talent

Tolerance(Inclusiveness)

Technology

Territory Assets(Amenities)

Regional Growth

and Prosperity

The Current Picture

56

“Urban” Policy

Urban policy

is not

social policy.

57

“Urban” Policy

Urban policy

is not

social policy.

Urban policy

is

economic policy.

58

“Urban” Policy

Urban policy

is not

social policy.

Urban policy

is

economic policy.

What happens when you’re not “urban”?

What’s your economic policy?

59

“Urban” Policy

What about “non-urban” areas??

•Think Big•Look Big•Use a shotgun, not a rifle• (Super secret strategy #4)

60

Think Big

Connecting the Disconnected

61

62

Look Big

63

Use a Shotgun not a Rifle

64

(Super Secret Strategy #4)

Thank You

Kevin Stolarick

kms@rotman.utoronto.ca

www.martinprosperity.org