Although Wall Street can feel far removed from Broadway, there’s no denying the powerful impact that the economic conditions can have on the health of the artistic sector. The sharp contraction in economic activity that followed the onset of the COVID-19 Pandemic had a devastating effect, with the arts declining at twice the rate of the rest of the economy. In 2021, prospects seemed brighter with the United States’ gross domestic product (GDP) expanding at a rate that hadn’t been seen since the mid-1980s. However, about halfway through 2021, the growth was accompanied by the specter of a new economic fear: inflation. So what is inflation and what does it mean for the financial health of the performing arts as we embark on a new year?
Simply speaking, inflation is a systemic rise in prices. This undercuts everyone’s financial well-being since the impact of inflation directly translates to a decrease in purchasing power. A dollar simply won’t buy what it used to. Now, this increase in prices is typical and small increases over the years are to be expected, but in recent times, inflation in the United States rose sharply with the Bureau of Labor Statistics reporting a 9.1% rise in consumer prices from June 2021 to June 2022. To put that in perspective, in the five years preceding 2021, rate increases hovered between 1.2 and 2.4%.
Unfortunately, the inflation that followed the COVID-19 Pandemic was not gradual or encouraging to investors, and comparisons to the inflation levels of forty years ago began to hang in the air. Initially, there was a fleeting hope that the trend would be transitory, but as rates continued to rise and the United States Federal Reserve increased the federal funds rate multiple times in response, it became clear that inflation was here to stay for a bit.
Now, this kind of economic condition is not beneficial to the average person. It means less money in the bank as available cash is eaten up by the rising prices of food, gas, and other necessities. But how does this pertain to the dance industry and what is the impact of inflation on the performing arts? History has shown us–as recently as 2020–that tough economic times often mean trouble for the arts sector.
We can remind the world that the arts are something worth protecting, despite their vulnerable economic standing.
Rapid inflation spells trouble for the dance industry for the same reason that the recent pandemic was so tough–the field relies on people to flourish, both for staffing and for consumption. There is, at this time in history, no successful dance performance without at least one human performer and one human audience member, interested in paying for the privilege to observe said performer, and more, of both performers and audience members, are of course preferred. When consumers feel uncertain about their financial well-being, they are less likely to spend money on live performances or donations to arts organizations, both of which are necessary to keep the dance industry, as we know it, up and running. Individual dance artists, as a result, are likely to book less work, see fewer pay increases, or perhaps experience a decrease in pay altogether.
Aside from the people-related constraints, the arts also have several institutional constraints that make them more vulnerable to harsh economic conditions. Unlike other sectors which can cut back on working hours to weather a financial storm, restricting rehearsal hours in a dance company will directly impact the quality of the performance, something that the company will rely on to attract and maintain crucial financial donations. Perhaps then, the answer is to increase productivity, to generate more income through additional performances. This, too, is unsustainable, since increasing performance frequency and duration can lead to higher rates of injury and burnout among the performers. Also, performances, though in theory an avenue for income, can also be a financial burden if ticket sales do not cover the cost of producing the show in the first place. Touring, though usually a way to increase income and grow public awareness of a performance, company, or ensemble, becomes less feasible. Audience turnout is lower and the cost of executing a tour markedly increases during periods of inflation, thanks to rising transit prices. Borrowing the necessary funds is another path organizations might consider to make ends meet for the short term, but this too is unsustainable and detrimental to the longevity and overall financial health of any organization.
There is another problem that the performing arts face when presented with economic downturns. New art and, as a result, creativity suffers since organizations turn to reliable staples that have performed financially well in the past. It is rare to see a ballet company skip out on their Nutcracker season or their well-rehearsed Balanchine program in favor of new choreography. Typically, it is the present-day choreographers who lose out in this scenario. Yet, as Patricia McFate states in her piece The Effects of Inflation on the Arts, “today’s iconoclast is tomorrow’s giant.” How will we ever see the next Twyla, Alvin, or Martha if young up-and-comers are never given the stage? When performing arts struggle to gain and maintain an audience, is it possible that their old reliable programs are out of touch with what today’s audience might want? To gain new viewers–and maybe recapture some old ones–it might be wise for dance artists to turn away from the tried and true hits of the 20th century in favor of some new, fresh work.
Of course, with inflation as with many a predicament, the first step in overcoming it is to accept it. Artists must recognize that their behavior must flex with the financial behaviors of their benefactors and audiences. Knowing that the hard times will come is crucial for handling them. Touring closer to home, presenting less elaborate programs, and cutting back on costuming, lighting, and set design are all feasible actions to mitigate the impact that inflation might have on the bottom line. As for individual dance artists, their behaviors may drastically differ depending on their circumstances. Generally speaking, in a field as unsteady as the performing arts, it is always a good idea to have some form of a backup plan. Whether that’s a secondary career, a side job you can expand, or something else, the unfortunate necessity of a second or even third stream of income becomes even more apparent in times of financial hardship.
Artists must recognize that their behavior must flex with the financial behaviors of their benefactors and audiences.
Inflation takes a larger bite out of a budget than you might see in fairer economic climes. Therefore, it is important for those operating with tighter funds to remain vigilant about their expenses. Even dance artists who feel financially secure may want to consider making less risky financial decisions. Traditionally speaking, for those who invest, things like gold or real estate have been solid hedges against inflation, but the past is not necessarily predictive of future economic behaviors. Everything is cyclical, and even though an inflationary period can feel scary, the storm can be weathered, and it appears that even though prices and inflation are still rising, it is at a slower rate than in previous months.
There is no sunny, positive note to round off this article. Economic conditions are not great right now, and they don’t appear to be significantly brightening any time soon. The reality is that the arts are often an unfortunate victim of financial strife. However, we can continue to advocate for their existence, pushing to educate future generations to become participants and patrons. We can remind the world that the arts are something worth protecting, despite their vulnerable economic standing. In a world that values and rewards output and productivity, we must stand athwart the tide as a reminder that human culture and value are not and should never be measured in dollars and cents. Lean times will come and go, but–hopefully–the arts will survive.