Tax credit program has helped stem runaway production, but...

Funding for the program is not adequate to meet demand and there are too many restrictions, according to a Milken Institute report. Still, the study finds that film and TV tax credits have helped keep more production in the state. In the first two years, 125 projects were funded, and this year, 27 are on tap. Interestingly, the report comes out just as the state legislature considers a five-year extension. While it's hard to argue with success, I continue to question the need for these giveaways, even if it means a few more jobs. Where's the tax break for plumbers or accountants? Anyway, here's an interesting graph from the Milken report:

Our definition of employment in the entertainment industry includes two North American Industry Classification System categories: motion picture and video industries, encompassing subcategories for production and postproduction; and independent artists, writers, and performers.9 In California, the industry accounts for 1.1 percent of the state's nonfarm employment and 2 percent of the aggregated wage bill in 2010. As of August 2011, the industry employed 175,900 people.10 The historical trend shown in figure 2 demonstrates that the industry's employment in California has hovered around 160,000 for most of the past decade, down from 180,000 during its heyday in the late 1990s. Even so, recent employment growth has been robust. An examination of monthly employment between 2010 and 2011 shows that the industry added an average of nearly 20,000 jobs per month at a time when the state's total employment was still diminishing on a year-over-year basis.

A couple of points worth noting. One is how tiny Hollywood really is - 1.1 percent of California's total employment, which is well down the list of major industries. That's the beauty of this state's economy - no single business dominates. (I remember my NY-based editor at Forbes questioning the need for so much Hollywood coverage, given its limited influence on the overall economy, and he's right.) The other point is that for all the Sturm und Drang about runaway production, film and TV employment seems to be holding up. Understand that the category tends to be volatile (along with it being difficult to track because so many people work as freelancers) but for what it's worth, entertainment jobs in L.A. County were actually up in April compared with a year earlier. In February, employment was near an all-time high. Here's the thing: runaway production has been a source of concern going back to the 1950s and I'd bet good money that it would still be an issue if the tax credit program were funded for $1 billion a year over the next 50 years. But just because a few blowhards make it a big deal doesn't mean the rest of us have to.