As Hollywood Struggles, the Region’s Economy Feels the Pain

The challenges faced by Hollywood workers have become an all-too-familiar story in recent years.https://wordpress.com/

A script supervisor making regular trips to a food bank every other week. A cinematographer who relocated to Georgia in search of more filming opportunities. An art department coordinator forced to apply for office jobs just to keep up with rising rent.

The economic outlook for Los Angeles—home to a population larger than many states—has been clouded by a series of events that have significantly impacted the entertainment industry. Market saturation triggered a consolidation among streaming platforms, while the Covid-19 pandemic brought production to a halt. Last year, the strikes by writers and actors stretched for months, providing studios with ample time to consider filming in other regions offering generous tax incentives.

When the strikes finally ended, many hoped Hollywood’s production schedules would bounce back. Instead, for many workers, the situation only worsened.

According to a report from FilmLA, the official film office for the City and County of Los Angeles, film production in the third quarter of 2024 dropped 5% compared to the same period in 2023. Paul Audley, president of FilmLA, expressed surprise that instead of the anticipated rebound from what he called “the strike effect,” there was a significant pullback as the fall season approached.

Since the Writers Guild of America strike began in May 2023, employment in the motion picture and sound recording sectors in Los Angeles has fallen by 15%, according to the Bureau of Labor Statistics.

For makeup artist Deborah Huss Humphries, the past few months have been particularly tough. A seasoned professional who once turned down work due to a packed schedule, Huss Humphries has seen the industry shift over the last three decades, with productions gradually leaving Los Angeles, then the state, and ultimately going overseas. During difficult years, she found ways to survive, but now, after exhausting her savings to cover living costs, she feels uncertain about the future.

“What I keep telling myself is, ‘OK, relief has to be coming,’” she said. “But now, I’m not so sure.”

Patrick Adler, co-founder of Westwood Economics and Planning Associates, which has studied Hollywood’s trends, sees the strikes as a turning point. He pointed out that strike settlements usually lead to higher production costs and that the work stoppages prompted studios to rethink their expenses and explore filming in locations like New Mexico and Georgia.

“The cost of living in Los Angeles has surged relative to other filming destinations, creating larger cost disparities,” said Dr. Adler, an assistant professor at the University of Hong Kong.

A joint report by Westwood Economics and Otis College of Art and Design revealed that, in 2013, the film and TV sectors made up 64% of Los Angeles County’s broader entertainment industry. By 2023, that share had dropped to 52%. Other entertainment fields, such as video games and spectator sports, are now generating more employment.

In October, California Governor Gavin Newsom and Los Angeles Mayor Karen Bass unveiled a proposal to increase the state’s film tax incentives to $750 million annually. If the plan is approved by state lawmakers, it could take effect by July.

In a statement, Mayor Bass emphasized, “The entertainment industry is the cornerstone of our city, and we will continue to do everything we can to support the many Angelenos who make it thrive.”

This summer, Mayor Bass established a council of entertainment leaders to explore ways to keep more productions in Los Angeles. She also signed an executive order to streamline the permitting process for filmmakers in the city. According to the Los Angeles County Economic Development Corporation, the entertainment sector contributes over $115 billion annually to the local economy and supports 681,000 jobs.

However, other states are aggressively working to draw productions away from California.

Georgia, for instance, offers an uncapped tax incentive program that has attracted billions of dollars in investments from Hollywood studios. New Mexico has also successfully courted executives with tax breaks and the appeal of its natural landscapes and proximity to California.

Since 2019, Netflix has invested $575 million in New Mexico, including production for shows like Stranger Things. Last year, the company significantly expanded its Albuquerque studios, adding four new soundstages, among other facilities.

At least 38 states now provide some form of tax incentives, according to a survey by The New York Times.

Even if California’s proposed tax credits are approved, some industry members worry the damage has already been done.

Vince Gervasi, president of Triscenic Production Services, which offers storage services for major studios, lamented that the much-needed relief should have arrived sooner. His company, which typically generates $25 million annually, saw a $9 million drop last year.

“People have been financially devastated,” said Gervasi, whose business is located north of Los Angeles. Some competitors have either left the industry or moved out of California entirely.

For many workers in Southern California, including Huss Humphries, it’s becoming clear that the industry’s landscape is shifting irreparably.

A member of the International Alliance of Theatrical Stage Employees union, she recently started organizing biweekly food banks to support struggling Hollywood workers. These workers come from all age groups and levels of experience and meet at a union hall to share their struggles and offer mutual support.

Huss Humphries recently found work on a TV show filming in Palm Springs, about 100 miles from Los Angeles. However, she remains disheartened by the ongoing decline of Hollywood productions.

“It’s really tough to watch the industry I’ve loved for so long unravel,” she said before boarding a shuttle back to Los Angeles. “I’ll be preparing the next food bank.”