According to a new report in the Financial Times on Saturday, the Milken Institute, a California think tank, has found that the currently ongoing strike by scriptwriters and actors in Hollywood has drained roughly $5 billion from the state’s economy.
The study found the movie industry in Hollywood was intricately intertwined with a raft of other industries and small businesses which supported its operations. As a result, the strike has had effects which reverberated through the local business economy, hitting businesses such as caterers, rental companies, dry cleaners, and transportation companies.
In the report, Kevin Klowden, chief global strategist at the Milken Institute, said, “All these different people who provide support services that make productions happen – they’re getting nailed.” He added that the strike is even affecting the local job market.
He said, “The jobs for average people in Hollywood – not the stars but the average people – have always been viewed as great middle class jobs. When that’s disrupted, the ripple effect on LA is more broad.”
He noted that even when the strike ends, the recover of the region will be “not nearly as fast as you would think,” since many of the businesses which are being hit by the strikes may relocate to other regions in the interim, and not be present to provide services once productions resume.
The labor issues in Hollywood began on May 2nd, when the Hollywood writer’s union, the Writer’s Guild of America, went on strike. Then, in mid-July, the Screen Actors Guild-American Federation of Television and Radio Artists, representing actors, went on strike as well. This produced the first simultaneous strike involving both actors and writers in 63 years in Hollywood.
Both unions are issuing the same demands, calling for increased salaries, higher royalties, and a formalized framework of rules defining what role artificial intelligence will play in the motion picture industry.
The latest round of negotiations between the writers and actors unions, and the Alliance of Motion Picture and Television Producers, which is representing the studio heads occurred in late August. However the sides failed to reach an agreement on a number of issues, and the strike remains in effect.
California’s state treasurer, Fiona Ma, issued an “urgent appeal,” to the heads of the studios, asking them to return to negotiations to produce a deal, due to the threat the strikes pose to “the stability and value of retiree investments” in California.
