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Tuesday, February 18, 2020

California Drives Out Movie Production

Jen Maffessanti at the Foundation for Economic Education:
In fact, in 2017, only ten of the top 100 movies produced that year were made mostly in California.
It’s no secret that the entire state of California is experiencing a large and sustained out-flow of residents, but Los Angeles County, in particular, is showing the biggest losses. The question is why.
Why is the film industry abandoning its Mount Olympus?...

Sticking with labor costs, California has the second-highest minimum wage in the country at $13 an hour, though that’s set to increase to $15 an hour by 2022. And though there’s still some back-and-forthing going on regarding the notorious AB5 law, many businesses in the state are being told they need to hire their freelancers as (far more expensive) permanent employees.
Not only that, but California’s real estate and housing markets are among the most expensive in the country, a trend that shows no real sign of improving. The state’s zoning and building regulations make innovation difficult. Special preferential political treatment of the California agriculture industry has led to water rationing for individuals during drought conditions.
Take the high costs in California, combine it with fewer people going to the movies, and the result is a shrinking profit margin for production studios.

In fact, drinking water isn’t the only beverage subject to regulation in California. Furthermore, the state’s 2019 kerfuffle with electricity provider PG&E’s rolling blackouts for customers during high winds is also largely a problem created by the meddlesome state government.
Once all of these factors—and the above list is by no means comprehensive—are taken into account, California has the highest poverty rate in the US.
It isn’t that filmmakers don’t want to film in Los Angeles—they do. But all of these combined constraints significantly increase the total costs of filming and producing in California. Heck, not even films set in Los Angeles are being shot in Los Angeles these days.
Production is moving overseas or to states such as Georgia, with generous tax incentives.
The entire state is seeing residents of all kinds leaving. In 2018 alone, the state saw a net loss of about 190,000 residents. That’s slightly more than the entire population of Shreveport, Louisiana. According to a recent UC Berkeley poll, about half of the people still living in California have considered leaving. For Hollywood, history is repeating itself. When asked why, 71 percent cited the high cost of housing and 51 percent said it was because of the high tax burden.