Ohio Creative Industries' Economic Contribution

This section outlines the methodology used to estimate the economic and fiscal contribution of creative industries for Ohio and regions across the state. The methodological discussion is divided into several sections including a primer on the IMPLAN economic modeling software, the data included in the analysis, a discussion of the difference between economic contribution and economic impact analysis, industries identified as creative industries, and the geography included for each region.

First developed in 1976 by the U.S. Forest Service (USFS), IMPLAN or impact analysis for planning, is an expanded input-output (I-O) model that allows users to examine the relationships between industries in a geographic location. Using data from a variety of government data sources, IMPLAN is rooted in a social account matrix (SAM) model that contains 546 industries and allows users to examine how the injection of a dollar in an industry flow throughout a state, regional, or local economy. The IMPLAN model allows users to estimate the impact of these changes in demand in terms of employment, employee compensation (payroll), value added, and economic output. In addition, IMPLAN can estimate the entire economic contribution of one or multiple industries to a state, regional, or local economy in a year. Finally, IMPLAN allows users to estimate the tax revenue associated with an industry in a regional economy.

The data presented in the analysis were derived from the IMPLAN model for the State of Ohio for the years 2019 and 2020. The results presented in this report have been adjusted to reflect 2022 price levels. For each creative industry, the following were estimated:

• Employment: An industry-specific mix of full-time, part-time, and seasonal employment. IMPLAN Employment is not equal to full time equivalents and includes wage and salary employment and proprietors. [1]
• Labor Income (Payroll): The total payroll cost of the employee including wages and salaries, all benefits (e.g., health, retirement), and payroll taxes. Also includes proprietor income. [2]
• Value Added: An industry’s contribution to Gross Domestic Product. Represents economic output minus intermediate inputs.
• Economic Output: The total annual production value of each industry or commodity. Output is equal to revenue plus/minus changes in inventory. [3]

In addition to the direct employment, payroll, value added, and economic output contribution of each industry, IMPLAN estimates the rates of change that describe how a given change in a particular industry generates impacts in the overall economy. These additional rounds of economic impact or contribution are known as multiplier effects and often include the following:

• Indirect Effects: Economic effects stemming from business-to-business purchases in the supply chain. For output, indirect effects represent the sum of local business to business purchases per dollar of output. For employment, indirect effects represent the number of jobs per $1,000,000 of business-to-business purchases by all resultant rounds of local industry purchases.
• Induced Effects: Economic Effects stemming from household spending of Labor Income, after removal of taxes, savings, and commuter income. For output, induced effects represent the sum of local household purchases per dollar of output, based on labor income payments made by the target Industry and the local Industries from which they purchase. For employment, induced effects represent the number of jobs supported in local Industries per $1,000,000 of direct spending in the target Industry as a result of household purchases derived from labor income payments throughout all rounds of the impact. [4]

Finally, IMPLAN generates an estimate of local, regional, state, and federal tax revenue associated with the economic impact or contribution within the study area. Importantly, the IMPLAN estimates of tax revenue are not based on specific rates within localities but are instead derived from statewide tax revenue data that is then allocated by county and industry. Therefore, the IMPLAN tax estimates are meant to give a general picture of the impact or contribution of an industry on local, regional, and state tax revenues.

[1] IMPLAN:  https://support.implan.com/hc/en-us/articles/115009668668-Employment  [2] IMPLAN:  https://support.implan.com/hc/en-us/articles/360024509374-Understanding-Labor-Income-LI-Employee-Compensation-EC-and-Proprietor-Income-PI-  [3] IMPLAN:  https://support.implan.com/hc/en-us/articles/360035998833-Understanding-Output  [4] IMPLAN:  https://blog.implan.com/understanding-implan-multipliers 

The analysis presented here examines the contribution of creative industries to the economy of Ohio and regional economies across the state. As such, the analysis relies on a methodology called industry contribution analysis (ICA) to estimate the employment, payroll, and economic output associated with creative industries in Ohio. ICA is a method used to estimate the value of an Industry or group of Industries in a region, at their current levels of production. It is important to differentiate ICA from economic impact analysis, which estimates the employment, payroll, and economic output of an industry change to a regional economy. Importantly, as we are interested in examining the current state of an industry or group of industries to a regional or state economy, ICA limits purchase buy-backs from industries under consideration. Additionally, when examining multiple industries as this study does for creative industries, IMPLAN’s ICA restricts indirect and induced purchases between industries under examination. This produces a conservative, realistic estimate of the contribution of those industries to a regional or state economy. [5]

[5] IMPLAN:  https://support.implan.com/hc/en-us/articles/36002585465 

CRD used an iterative process in consultation with Ohio Citizens for the Arts staff and regional members to develop the list of creative industries to be included in the analysis. The list of creative industries began with the list of creative industries used in the 2018 Ohio Creative Industries Economic Contribution Analysis, which was based on the those identified by the Americans for the Arts as creative industries. CRD then provided Ohio Citizens for the Arts with a list of IMPLAN industry codes and the associated North American Industry Classification System (NAICS) codes. Based on discussion with regional arts organizations and OCA staff, CRD added an additional nine IMPLAN industries to the analysis. The final list of IMPLAN industry codes is provided in the table below.

IMPLAN Industry Codes Included in Creative Industries Contribution Analysis

Importantly, IMPLAN industry codes often include multiple NAICS codes. As such, an IMPLAN industry code may contain a combination of creative and non-creative NAICS codes. For example, IMPLAN industry code 482: Other educational services, contains a wide range of NAICS codes including flight schools (NAICS 611512), apprenticeship training programs (NAICS 611513), and many others. However, IMPLAN industry code 482: Other educational services, also contains NAICS code 611610 that includes arts schools, dance studios, and music schools. In order to avoid overstating the impact of creative industries by including the entire IMPLAN industry code in the contribution analysis, CRD used Chmura JobsEQ to estimate a percentage of total employment related to creative industries by adding the total employment of all of the NAICS codes under an IMPLAN code and then dividing by the number of jobs in creative industries. CRD then used this ratio to estimate the percentage of the IMPLAN industry that is related to creative industries. For more details on this process and the industries affected, please see Appendix A. Additionally, some IMPLAN industries that contain a single NAICS code may only have limited aspects of its industry that are creative in nature. For example, IMPLAN industry code 385 Sign Manufacturing includes a combination of jobs that are creative in nature (graphic designers, custom welders, etc.) but also jobs that are not traditionally considered creative jobs (production workers, front-line managers, etc.). To avoid overstating the impacts of creative industries by including the entire amount of employment, payroll, and output associated with industries that have a significant portion of “non-creative” jobs, CRD used Chmura JobsEQ’s industry/occupation mix tool to identify the occupations associated with each NAICS code. Using the Americans for the Arts creative industries and occupations classifications , CRD then identified creative occupations within each industry and summed the total number of creative jobs to calculate a ratio of creative employment to total employment. [6] CRD then used this ratio to estimate the percentage of the IMPLAN industry that is related to creative industries. For more details on this process and the industries affected, please see Appendix A.

[6] Americans for the Arts:  https://www.americansforthearts.org/by-program/reports-and-data/research-studies-publications/creative-industries  

This analysis estimates the economic contribution of creative industries for the entire state of Ohio and for eight regions across the state: Akron, Canton, Cincinnati, Cleveland, Columbus, Dayton, Toledo, and Youngstown. CRD worked with OCA and the regional arts councils to develop geographies that capture the full economic contribution of creative industries in their respective regions.

Importantly, some regions across the state have counties that are outside of Ohio. While the economic contribution of creative industries is included in the analysis for each individual region, they are not included in the analysis of the state of Ohio. Therefore, it is not advisable to add the contributions of each region to arrive at an estimate for the state of Ohio as some of the regional estimates will contain contributions from counties outside Ohio.

Creative industries are a significant driver of the economy of the state of Ohio. Prior to the COVID-19 pandemic in 2019, creative industries in Ohio employed over 329,000 Ohioans which generated over $18 billion in payroll, over $30.5 billion in value added, and a total economic output of over $55 billion. To put those figures in perspective, creative industries employ over 5% of the total employees in the state and account for roughly 4% of the state’s total economic output in 2019. Creative industries directly employed over 194,000 Ohioans, support over $11 billion in payroll annually, generate over $18.5 billion in value added, and generate over $33.5 billion in economic output in 2019. Business-to-business purchases (indirect effects) by creative industries support another 58,000 workers, $3.1 billion in payroll, $4.8 billion in value added, and over $9 billion in economic output. Finally, the spending of wages by those in creative industries (induced effects) supported an additional 76,000 jobs, $3.9 billion in payroll, $7.2 billion in value added, and approximately $12.5 billion in economic output in 2019.

Economic Contribution of Creative Industries in Ohio (2019)

In addition to the significant contribution they make to the state’s economy, creative industries also generate significant tax revenues to cities, municipalities, counties, special districts, and the state. In 2019, creative industries generated approximately $1.4 billion in tax revenue to the State of Ohio, over $628 million to special districts, over $318 million to cities and municipalities, and approximately $255 million to county governments.

Estimated Tax Revenues Generated by Creative Industries in Ohio (2019)