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The Price of Everything

Guess what: creative industries jobs are okay

Sebastiaan ter Burg

A little economics can go a long way, and that is certainly true when thinking about good jobs and bad jobs, and specifically whether some sectors have better jobs than others.

This is sometimes framed in the negative, as whether some sectors have systematically worse jobs. A long-running critique of the cultural and creative industries sector, for instance, is that its jobs are “precarious” (“precarity” is the term of art here) with the implication that maybe something should be done about this.

Modern labour economics has a particular line here that begins with the concept of “compensating differentials”. Imagine a world in which all jobs are identical except for one difference: pay.

We would expect increased competition for the higher-paying jobs will eventually bid down wages, and as workers left the lower-paying jobs, employers would need to offer higher wages to keep them. After all this entry and exit, and bids and offers, we would expect that the identical jobs would come to have identical pay. The differential would be competed away.

Now imagine that all jobs are identical except for two variables: pay and stress. Workers would leave the high-stress jobs in favour of the low-stress jobs, bidding down wages in low-stress jobs, while employers had to offer higher wages in the higher-stress jobs to bid workers back. In equilibrium, higher-stress jobs will have higher wages, and vice versa.

The point is that the higher-paid job is not a better job than the lower-paid job, nor is the higher-stress job a worse job than the lower-stress job, because in equilibrium higher wages will compensate for higher stress.

As we keep adding the differential aspects of a job – say whether it is fun, dangerous, dirty, glamorous, etc, or whether it has flexible work hours, or indeed is precarious – we expect all of these dimensions to interact, causing entry and exit, and in turn inducing employers to change the package of offerings. What the theory predicts is that eventually each job, taken as a bundle of attributes, will be more or less the same, once we account for compensating differentials.

That is, there are no good jobs or bad jobs – just different jobs.

But how does this stand up in reality? I recently ran a test of this theory looking at more than 4,000 people employed in creative jobs in Australia. The results are presented in a forthcoming book Creative Work Beyond the Creative Industries, edited by CCI researchers Greg Hearn, Ruth Bridgestock and Ben Goldsmith.

With help from Tarecq Shehadeh, we interrogated the HILDA database, which contains detailed surveys of not only job titles matched to household demographics, but also to factors relating to job security, pay levels and perceptions of fairness, workplace flexibility, safety, job satisfaction, skill requirements, work-life balance, and mental health.

Indeed, there were enough factors that we were able to piece together an account of not only the individual properties of creative industries jobs (such as wage levels and variance) but also how the different factors (the differentials) traded off against each other (how they compensated).

The results were largely as the economic theory predicted (as the figure below, which summarises some of our data, illustrates). In short, cultural and creative industries jobs are indeed more precarious (see “job security satisfaction”) but that is compensated for by other factors (for example, “I have a lot of freedom to decide how I do my own work”).

Compensating differentials in creative and non-creative jobs. (Potts & Shehadeh in Hearn et al (2014)

Now maybe this is all just much-laboured common sense, but it speaks to the importance of not getting carried away with overt boosterism (look at the new creative economy go!) or undue pessimism (look at the neoliberal exploitation!). Those thinking of entering or leaving the cultural and creative workforce, along with cultural policy-makers, might reflect on this simple bit of economics.

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