Dr. Michael Carroll chats with (left to right) Dr. Katerina Rüedi Ray, Frances Strickland and President Sidney Ribeau before the presentation of the results of the arts’ economic impact study.

Dr. Michael Carroll chats with (left to right) Dr. Katerina Rüedi Ray, Frances Strickland and President Sidney Ribeau before the presentation of the results of the arts' economic impact study.

Arts contribute $2.4 billion annually to region's economy, study finds

It’s a rare thing in life when something that is pleasurable and spiritually, intellectually and emotionally nourishing is also good for us economically. But that is exactly the case with the arts, a large audience at the Valentine Theatre in Toledo heard Oct. 2 when Dr. Michael Carroll, a BGSU economist and director of the Center for Regional Development delivered the results of his four-year study on the impact of the arts on the regional economy. Frances Strickland, first lady of Ohio, was a special guest for the evening.

Dr. Michael Carroll

The arts are big business in northwest Ohio, the comprehensive study found. Arts and culture industries generate more than $2.4 billion in economic activity in northwest Ohio per year. They also help produce $246.5 million in federal, state and local tax revenue, and support more than 33,000 jobs in the region. “That would be the equivalent of dropping 10 of the North Toledo Jeep plants into the region, or 95 Bass Pro shops, or 10 of the Whirlpool plants in Clyde—it’s equal to the labor force of Sandusky County,” Carroll said.

Every dollar spent by arts and culture industries in northwest Ohio creates $1.62 for its economy, added Carroll, who conducted the study for the Northwest Ohio Arts Exchange (NWoAX), which represents regional arts organizations.

Study significance
The study is relevant, he said, “because there is a growing body of research that shows a thriving arts community is crucial for the health and vitality of a region.

“The quality of life within a region, of which the arts are an essential component, is inextricably linked to a firm's decision about location,” he continued. “If northwest Ohio hopes to secure a vibrant economic future, a quantifiable measure of arts activities is needed to retain and recruit companies within the region.”

A distinct feature of the study, the economist said, was its focus on the 27-county region serviced by the Center for Regional Development. With a population of 1.8 million, the region stretches east to Sandusky and south nearly to Columbus, comprising roughly the northwest quarter of the state. “Very few of these economic impact studies are done regionally,” he said, noting that urban or statewide studies are more common.

In those 27 counties, his report indicated, arts and culture industries annually generate:

• $1.5 billion in direct economic activity.

• $928.6 million in indirect and induced economic activity. Indirect economic activity refers to business-to-business purchasing, such as an advertising agency buying its computers from another northwest Ohio company, Carroll explained. Induced economic activity is spending by employees of the 19 industries included in the study.

• More than $150 million in federal tax revenue.

• Nearly $97 million in state and local tax revenue.

Despite being home to Toledo, the largest city in the region, Lucas County accounts for only 33 percent of the economic activity measured by the study. “It’s not just an urban phenomenon,” Carroll said. “More than half of the impact is rural.” He attributed that to several factors, including the number of advertising agencies throughout northwest Ohio, the presence of Sauder Village and Sauder Woodworking in Archbold, theaters around the region, and arts and culture-related activity in northern Wood County. “It's pretty diverse,” he said of northwest Ohio's creative industries.

Data studied came from IMPLAN, an economic impact modeling system, rather than surveys. The system repackages Internal Revenue Service and other federal data for use in economic impact analysis.

The 19 examined industries follow a model developed by Americans for the Arts, the nation's leading nonprofit arts advocacy organization that has done similar economic impact studies. They range from arts-centric businesses such as nonprofit museums and theaters to for-profit telecommunications and advertising companies.

The industries and their economic impact on the region are, in descending order by dollars: newspaper publishers ($301.7 million); radio and television stations ($256.3 million); advertising and related services ($181.3 million); motion picture and video industries ($117.5 million); specialized design services ($108 million); museums ($107.6 million); ornamental and architectural metal work ($106 million); photographic services ($90.7 million); promoters of performing arts/agents ($88.4 million); independent artists, writers and performers ($80.7 million); sign manufacturing ($70.9 million); videotape and disc rental ($68.4 million); performing arts companies ($44.4 million); custom architectural woodwork and millwork ($8.4 million); sound recording industries ($8 million); book publishers ($4.4 million); musical instrument manufacturing ($2.6 million); cable television networks ($993,679), and audio and video media reproduction ($751,984).

Moving beyond the study
Pointing out that “jobs created in these industries pay above-average wages,” Carroll said the creative industries may want to promote themselves as a cluster—an economic development strategy and a means for working more efficiently.

The creative industries have the same social structure as any knowledge-based industry, he said. “It’s hard to develop because clusters depend on networks—and we already have it. Cluster-based economic development is a strategy that targets existing firms and requires a high level of social capital and interpersonal relationships,” he added, citing one such cluster of regional greenhouse growers that has proven successful. “We can do this with the creative cluster here in northwest Ohio,” he said. “Its impact is big and it’s going to get bigger. It can fill in as other industries move.”

In introductory remarks, Strickland echoed Toledo Mayor Carty Finkbeiner’s sentiment that even if the arts did not contribute economically, they are still to be valued for all they bring to cultural and civic life. “But the way the world is trending now,” she said, “we have to make the connection between the arts and the economy. Often overlooked and under-considered is the role they play in innovation,” she went on, describing arts as “the pollinator of ideas and innovation, even in science. We have to let the world know of their importance.”

Following Carroll’s presentation, Dick Anderson, chairman and CEO of The Andersons Inc., noted that the creative cluster could exert more influence on policy and economic planning in the region. He called for collaboration with other states that have made progress in this area, notably Maine and North Carolina. “Much can be learned from them,” he said.

The study "shows northwest Ohio to be a dynamic center of art, design, culture and entertainment—in short, a creative hub in a creative state," said Dr. Katerina Rüedi Ray, director of the BGSU School of Art and a member of the NOoAX Advisory Board.

The exchange is a group of artists and arts educators, administrators and advocates who are dedicated to fostering the growth and development of northwest Ohio's arts community. Founded at BGSU in 2003, the group meets annually for discussions of the state of the arts in the region. Those discussions led to the Center for Regional Development for the economic impact study.

October 8, 2007