36,000 Entertainment Jobs Leave State

JULY 23, 2010

By LAURA SUCHESKI

While some have admitted to themselves that companies are actually leaving the state and not coming back, few are convinced that California’s famous entertainment industry, too, is vulnerable. After all, Los Angeles is the world leader in films and television and has been since the advent of both industries.  But a report released yesterday by the Milken Institute finds that 36,000 jobs have left the state, and California’s market share of the industry is decreasing. Technological advances have made video production more portable, which means it’s easy for entertainment businessmen to take their productions to countries and states where tax incentives welcome them.

The report, “Film Flight: Lost Production and Its Economic Impact on California,” examines the job exodus from the entertainment industry in California and the unfavorable policy conditions that are forcing them out. According to the report, 10,600 jobs have left the entertainment industry and more than 25,000 related jobs have moved to other states and countries. This amounts to a loss of $2.4 billion in wages and $4.2 billion in total economic output since 1997. “The financial, geographic, and human capital advantages that put Hollywood on the map are no longer enough to sustain the industry’s growth in the state,” says the report.

With increasing frequency, movies are being shot out of state and out of the country. Even movies that should be a shoe-in for Southern California are relocated. The upcoming film Battle: Los Angeles, about an alien invasion of the city located conveniently in the heart of the entertainment industry, is being filmed in Louisiana. Shreveport will play the part of Santa Monica. And post-production and special effects companies are following them to business-friendly states and countries, meaning that even the cutting-edge technical finishes can be wrapped up elsewhere.

What is the difference between California and entertainment-friendly states and countries? The Milken Institute argues that other states and countries have been adopting innovative policies that “ensure the improvement and growth of their infrastructure and labor forces” and “gain the cooperation and support of local communities and businesses by offering incentives, education about local economic benefits, and addressing community concerns.”

The difference in polices have caused some locations to attract large projects which cause economic growth. Canada is an increasingly popular destination for film and television production. Canada began introducing incentives in 1998 and aggressively bolstered local infrastructure to attract business.

“Vancouver’s capabilities are now so sophisticated that the city has become the main center for television filming in North America outside of Los Angeles and New York,” claims the report. Recent blockbusters including teen favorite Twilight movies and DC’s Smithsonian themed Night at the Museum were filmed in Vancouver. Montreal can play many different European and American cities, and has hosted The Mummy, 300 and Get Smart in recent years.

California has appropriately responded to the exodus of small budget films by offering tax incentives for films on small budgets of $75 million or less, but this report argues that the incentives need to be offered to large productions as well. The high costs of doing business in California treat major productions, an integral part of our state economy, very coldly.

“Los Angeles County… was once a leading center in financial services, aerospace, and the garment manufacturing industry—but these have all eroded sharply,” warns the report in closing. “Especially in the current climate, California cannot allow another key industry to slip away.”