Why promoting Tinsel Town is tough sell in Sacramento
Filming in downtown Los Angeles (Photo Credit: John Guenther)
What do Canada, New York, Georgia, Louisiana, North Carolina and New Mexico all have in common? They are competing aggressively and very successfully for jobs in one iconic California industry: the entertainment industry.
When Californians talk about the need for jobs, we hear a number of legitimate questions. Is our workforce properly trained? Are we over regulated? Do we have the right alignment of business friendliness and environmental protection in our public policy?
Usually when we ask these questions, we are thinking about big employers in manufacturing, infrastructure and logistics. Maybe we should be thinking more about movie and television production.
The Voice of America recently posted a story that says, of 23 new television dramas being produced, 21 of them are filmed outside of California.
The entertainment industry this year was able to convince Governor Brown and the California Legislature for a two-year extension on film and tax credits.
But according to a highly placed source in the entertainment industry, those credits, while welcomed, will not stop runaway production, which means that jobs will continue to migrate to other states and countries.
"You have to understand that production company and studio executives are looking to make a profit, so even though they live in California, they are paid to show a healthy bottom line, and you can make more money in other states," said the source, who asked not to be identified.
"These jobs, and the jobs that they create like caterers, drivers and the other support services for production lots, hurt the state's economy," the source concluded.
This runaway production is not a recent phenomenon. The Milken Institute published a landmark study in 2010 that outlined the issues in what it called "Film Flight" in the Golden State.
Film Works L.A., which is an agency that promotes production in Los Angeles issued a report on its blog to show what an individual film or television production can mean in actual wages. The numbers are pretty impressive.
Production of the FX Network show "Justified" generated the following impact in California:
- $12,000,000 crew wages paid
- 1,320 crew hired
- $9,200,000 in vendor purchases, rentals and services
In Los Angeles County, the home of "tinsel town", the entertainment industry is still the 5th largest employer. Robert Kleinhenz, chief economist for the Los Angeles Economic Development Corporation recently told the Los Angeles Times that the industry accounts for 162,000 wage and salary jobs and another 85,000 jobs for freelancers and independent contracts. And when you take into account the ripple effect of the industry, the total of number approaches 600,000 in Los Angeles County alone.
"The regional nature of our business is a tough sell in Sacramento," said the film industry source. "Tax credits are a tough sell in California, especially when it is perceived that they are mostly for Southern California. We have to continue to try and educate policy makers to understand why these tax credits for keeping jobs in California are good for the state."
All this just emphasizes that California needs to create a comprehensive competitiveness strategy, something that hasn't existed in the state for 30 years and something the Economic Summit is encouraging the state to prioritize. The flight of the film industry is only one piece of California's competition problem and clearly it's too lucrative a business to give up without a fight.