Richard Florida, the Creative Class and Gentrification

The Shifting Human City: Essay Series on Current and Future Policy Trends in Cities; Issue One.

The Concept of the Creative Class

The idea of the creative class as an economic segment of the market, emerged as society saw the resource based economy diminish. The rise of technology and internet based businesses allowed for human capital to exceed the physical extractive industry as the primary economic driver of post-industrial countries. Light upscaling flexibility and low environmental demand of infrastructure has allowed tech to grow with electricity and hardware components being its major extractive aspects; while shifting the capital intensive acquisition to human talent. This human capital is commonly called the creative class, Richard Florida coined the term, “The creative class, includes workers in science and technology, business and management, arts, culture media and entertainment, and law and healthcare professions” (Florida, Class-Divided Cities: New York Edition, 2013). This is a shift towards human creativity and talent becoming the new extractive resource of the economic organization which has had a pronounced impact to how cities’ new era economic drivers (tech and creative companies) position themselves relative to geography and each other. With a focus on human talent, companies have clustered in areas proximal to top tier universities that produce top notch talent, municipalities (and regions) that offer incentives for the operation of their business such research and development while also locating in cities that offer a high quality of life for their residents. This is all centred around the human talent or ‘human capital’. In the same way that planning has undergone a renaissance to shift developments’ focus to the human scale, tech and talent based businesses are increasingly locating in areas that offer the junction of economic incentive and human capital to provide them an advantage over competition and stagnation. By analysing this shift in business practice and the corresponding policy creation, a pattern of social equality issues and subsequent social stratification can be observed. This is an issue that is noted by policy makers and municipalities as a rallying point for fulfilling their obligation to advancing socio-economic growth and justice respectively.

The Socio-economic Ramifications

The effects of human capital based business have re-evaluated the value of human time and the delineation of labour, and as result the residential location of higher wage earners. “Although our cities are more than ever our most powerful economic engines, they also are becoming more divided along class lines, creating distinct experiences within a given city. This divide is seen most clearly in where members of each class live.” (Florida, Class-Divided Cities: New York Edition, 2013) This shift in residential preference, is a trend that has followed the development of cities since they started growing in the industrial revolution. Concentration of wealth, by way of high wage earners and the low wage workers have always had a geographical game of ‘capture the flag’ if you will. As areas become attractive or valuable to the overall market, redevelopment is spurred, the area becomes a beacon for wealthy people to cluster, because having ‘the means’ literally means that you can live where ever is nicest or most convenient. Cities have become a stomping ground for the movement of wealthy people, “the concentration of income in the hands of a small minority has soared over the past 35 years. This concentration is even higher in big metropolitan areas like New York, because those areas are both where high-skill, high-pay industries tend to locate, and where the very affluent often want to live. In general, this high-income elite gets what it wants, and what it has wanted, since 2000, has been to live near the center of big cities.” (Krugman, 2015). This comes at the detriment of the people who lived in these areas before; As the cost of living and amenities change to cater to the wealth as a means of extracting it, this inevitably makes the cost of living outside the fiscal means of lower wage earners, forcing them to move to areas that are within the means of their earnings. This pattern can accompany social issues like race, economic migration as well as infrastructure developments and government funded revitalization efforts. This is to the detriment of what makes cities great places to live, as Richard Florida explains, the diversity of cities is what makes them nexuses for human cooperation “What gives cities their special economic and cultural energy is their diversity of people and economic functions — the way they push people of different ethnicities, incomes, cultures, races, educations, and interests into close proximity, enabling them to interact and combine and recombine in unique and powerful ways. While our cities may be increasingly diverse in terms of nationality, ethnicity, and sexual orientation, they are becoming ever-more divided by class. These mounting divides threaten both their underlying economic dynamism and potentially their social and political stability as well.” (Florida, Class-Divided Cities: New York Edition, 2013). However, the point remains that much like the capitalism that underwrites the economy, people of wealth monopolize areas with their concentrated residence and extract the greatest return in terms of amenities and proximity, in their occupation of an area they produce wealth and return on investment indirectly. The losers in this equations are often those that cannot influence the market by their presence, because they are struggling to be present. Even though those that facilitate the operation and appeal of these neighbourhoods are the low income earners that are potentially being displaced, the service class. “The service class includes the low-wage, low-skill workers who hold routine service jobs in food service and preparation, retail sales, clerical and administrative positions and the like. This is the largest class of workers, making up 48.1 percent of the region’s workforce, and includes some of the fastest growing job categories. Service workers in the metro average $34,241 in wages and salaries, just 39 percent of what creative class members make.” (Florida, Class-Divided Cities: New York Edition, 2013). This difference in wage can amount to a vast difference to the ability to live in areas and the and the power to adjust the cost of rent due to demand, which leaves the question which class can afford the bidding war? The creative class can. This moves the obligation of finding equitable solutions to the government by way of policy and other legislative tools/ mechanisms. As we explore the historic results of interventions, we can begin to understand their short comings and the ways we can create more accessible, socially diverse and economically viable cities.

The Reality of Innovative Inclusionary Policy

We should focus on two aspects of policy concerning addressing the social deficit created by a human capital centred market; as well as two aspects of policy that look to encourage the growth of these sectors and mitigate the impact on the social fabric. First the former coupling of policy ideology looks at direct interventions to preserve social diversity and create social mobility in cities and urban areas. In looking at the conditions in which low wage earners live, the most readily available tool from the policy perspective is to invest in social services that lower the cost of living and increase access to opportunity, the most commonly seen policy interventions are transit investment and social housing.

These policies in themselves are great social equalizers but historically they only elevate the conditions of the area, increase the land value and push low income people out. Transit has obvious attractive features that commonly result in a concentration of wealth, Toronto’s Urban Centre conducted a report that analysed the development of economic disparity projected into 2025, it shows the concentration of high earners on transit corridors as this land has increased amenities and opportunities. The report classifies the division of wealth as multiple “cities” operating in the same municipality. “City #1 has grown to cover most census tracts close to the north- south and east-west subway lines. By 2025, these census tracts will become increasingly desirable areas of the city, attracting higher- income residents who want good access to downtown Toronto by public transportation and the amenities of a central location” (Hulchanski, 2006). The ease of transportation attracts wealthier, environmentally conscience people and drive up the cost of living; this is in part why social housing is the policy focus that should’ve been emphasised more heavily. “The modern high earner, with his or her long hours — and, more often than not, a working partner rather than a stay-at-home wife — is willing to pay a lot more than the executives of yore for a central location that cuts commuting time.” (Krugman, 2015). This is why policy should be shifted to public housing, because where we live is a basic human need and the most valuable thing we can offer the most disadvantaged.

However, due to the low levels of available capital in most governments, the cost of providing social housing to the low income residents of a municipality is a struggle: the price of urban land is high, the return on investment is a slow return if at all (a substantial segment of low earners are often on fixed incomes, and rely on government redistributive programs to survive) so the emphasis isn’t often directed to addressing this vital social need. When municipalities in particular do embark on public housing developments, they commonly do so in partnerships with the private market to supplement the costs. This creates issues for the social diversity of an area, in projects where municipalities are able to secure a substantial number of units for low income earners they are often either segregated from the main development creating a social divide that harms the social cohesion and mental wellbeing of those receiving social housing or not adequately sized to house a spectrum of residents that need housing assistance like single parent families and new families. Traditionally, in areas in which the social housing units are mixed, the number of social units are much lower; not really addressing the need in the first place but making taxpayers foot the bill for cheaper access to land for developers to make substantial profits off of. “New York housing policy has enticed real-estate developers to build affordable housing by giving them so-called “density bonuses.” Developers building market-rate or luxury housing would receive a tax break for every new unit of affordable housing they added to the mix. The results were made clear during the Bloomberg years: In just under ten years, only 2,769 new affordable units were built due to density bonuses, and in total, an estimated 385,000 units of affordable housing actually disappeared from the market.” (Fraade, 2014). As demonstrated, neither of these scenarios help to provide for the people that these collaborations are aimed at helping, thus making them inefficient interventions and a waste of public assets.

The city of Vancouver addressed the creation of socially inclusive policy and fostering creative socio-economic growth in a number of innovative and interesting approaches. They created housing areas that focused on creative people and industries both as economic areas and freedom to artist addressing both ends of the creative spectrum, “developed [the municipality of Vancouver] flexible zoning (live-work/work-live) to permit “creativity” in work and living spaces, and fostered individual creativity through subsidized housing for creative workers (direct support for creativity)” (Warfield, 2007) The municipality looked at housing creative/ human capital based enterprises by subsidising the individual rather than blanket policy. Their policies did specify to some degree the criteria for housing interventions but were more focused on the areas that the residents where contributing to rather than their specific categorical economic output. This type of policy moves in the direction of subsidising the individual which is a rising trend in progressive policy making and when you consider the effects that these policies produce it makes a lot of sense. Much like how social redistribution targets economic relief to a designated segment of the population, individual subsidies offer people a flexibility to both be secure and develop without the constraints of requirements which helps flourish. The energy of the individual to become more productive outputs that if they are successful economically, creates more return on investment. unfortunately, the city of Vancouver could not pass legislation that subsidize the individual, they’ve made moves to transition away from traditional policy positions which is the trend signalled by urban policy professionals. “It’s time to stop the old “industrial policy” approach of subsidizing private firms and industries and focus instead on developing the broader creativity of workers.” (Florida, The Real Reason Creative Workers Are Good for the Economy, 2013) The policy referenced in Vancouver looks to separate creative outputs and economically creative business as streams of influence for a diverse economic portfolio and cultural development but in reality this separation isn’t a real thing, even the creator of the ‘creative class’ terminology addresses the flexibility of the term and why designating policy towards a specific stream of industry is ineffective. “creativity extends far beyond, specific firms and industries. Roughly 2 million people are employed in creative occupations across the U.K. economy, more than 40 percent of which are in other industries.” (Florida, The Real Reason Creative Workers Are Good for the Economy, 2013) as culture evolves the things we value shift and creative outlets become economic drivers while creative economic businesses become the platforms or catalyst for more creative product produced either internal to the organization or through the use of the product, understanding the cohesive nature of the developing economic realities that tech companies and other creative human capital derived businesses create will help policy makers establish a focus that fosters economic growth and social diversity. “The value complications inherent in providing traditional forms of direct funding to artists — e.g.: someone decides what is “creative” and what should be funded — is creatively avoided through the provision of “space” as a form of direct support for creativity. The live/work zoning is a relatively value-free initiative to foster creativity — it provides a “container” for creativity but not restrictions on the content. Resultantly, creative pursuits could be inclusive of everything from culture-centric endeavors to econo-centric productions.” (Warfield, 2007) Looking at some policy moves that deal with housing controls and an inclusive ideology that should be used when addressing the creative class can have a positive impact on the socio-economic diversity and the social mobility of low income segments of the population.

Moves to Create More Equitable, Creative City Centres

Creating policy that addresses the shifting demographics of cities need to be both well versed in the historic trends of the market and precedence of social interventions to inform the creative incentives and tactics that create scenarios which attracts employers without too much undue public burden. This can be a tricky situation to address given the financial constraints of most municipalities, the competitive nature of the global economy and the need to serve the collective public with fiscal restraint as their elected representatives. Cities need to constantly “reinvent” themselves; they do this by upping densities, investing in transit/ connective infrastructure and improving their public realms to be more attractive and beneficial to residents and business. “Rising demand for urban living by the elite could be met largely by increasing supply. There’s still room to build, even in New York, especially upward. Yet while there is something of a building boom in the city, it’s far smaller than the soaring prices warrant, mainly because land use restrictions are in the way” (Krugman, 2015) building vertical towers to the sky isn’t what most cities want, so they restrict densities and don’t fully revamp the vertical plane to create a liveable balance between height and density. Building public housing requires capital they [municipalities] don’t have, so they use their policy positions and intangible assets to attract cooperative investment to facilitate their constant re-creation. Cities are effectively creating market opportunity for investments, like governments have allows done, the most common example is the extractive resources that used to dominate the economic markets. Inclusive redevelopment policy that emphasises the cohesion of social diversity in housing must be at the forefront of whole jurisdiction zoning bylaws and must be implemented by cities so as to forego the clustering of wealth outside the jurisdiction of socially minded policy. Most cities that can use this type of policy applies to are already large economic centres. Cities are facilitating the projected population growth in their jurisdiction, working in regional cooperation to enact blanket policy that addresses the social needs of low wage earners so that they are no longer the victims of urban revitalization. This is how politicians can avoid corporate flight to suburbs, mandate social cooperation systems and hold development and growth accountable to supporting society. Mandatory inclusive units, allowances to redevelop public housing with 100% replacement of units by previous dimensions in lieu of certain development charges and further incentives to increase units are the policy trends that addresses the need to redevelop, increase density and serve all of the population. New York City has been trying to lead the way in this type of inclusive policy, “De Blasio’s plan, … promises a mandatory inclusionary zoning program: Developers will be required by law to make a certain percentage of all new units affordable. It contains plans to overhaul the city’s zoning and property-tax laws, which currently place stifling restrictions on new residential development. And it commits city resources to stopping illegal evictions, a favored tactic of landlords in a city where the rental vacancy rate is an extremely low 3.12 percent, and gentrification is everywhere.” (Fraade, 2014) this policy perspective, is a shift towards understanding the factors that affect the socially disadvantaged in the market economy. Regardless of the development, low wage earners are the backbone to the economy, they work in shops and fulfil the services that gentrification brings; subsequently displacing them, so that they can serve in their former neighbourhoods or commute long distances to earn minimum wages is a failure to the redistributive nature of social democracy and their basic human value in society. Understanding the balance in the economy is the greatest tool for crafting inclusive policy position, “The income gap between creativity-intensive talent and routine-intensive labor is bad for social cohesion” (Martin, 2014). It is far past due for lawmakers to realise that the lowest rung of society serves the “motor” function of operating society, regardless of their economic input per person as the creative human capital centric economy has failed to understand in its evaluation of human time and labour.

Works Cited

Florida, R. (2013, Jan 24). Class-Divided Cities: New York Edition. Retrieved Dec 07, 2016, from from the Atlantic: CityLab: http://www.citylab.com/housing/2013/01/class-divided-cities-new-york-edition/3819/

Florida, R. (2013, Sept 13). The Real Reason Creative Workers Are Good for the Economy. Retrieved Dec 07, 2016, from the Atlantic: CityLab: http://www.citylab.com/work/2013/09/real-reason-creative-workers-are-good-economy/6804/

Fraade, J. (2014, May 22). On “Density,” the Most Slippery Word in Urban Planning. Retrieved Dec 07, 2016, from The Baffler: http://thebaffler.com/blog/on-density-the-most-slippery-word-in-urban-planning

Hulchanski, J. D. (2006). The Three Cities Within Toronto. University of Toronto, Urban Centre. Toronto: Urban Centre Publishing.

Krugman, P. (2015, Nov 30). Opinion: Inequality and the City. (The New York Times) Retrieved Dec 07, 2016, from The New York Times: http://mobile.nytimes.com/2015/11/30/opinion/inequality-and-the-city.html?smid=tw-share&_r=1&referer=

Martin, R. L. (2014, Oct 10). The Rise (and Likely Fall) of the Talent Economy. The Harvard Business Review.

Warfield, R. S. (2007). The Creative City: a matter of values. The University of Toronto, Urban Studies. Toronto: University of Toronto Press.