Abstract
Cities and states across the United States have turned to cultural industries to revitalize their economies, but we argue that the dynamics of agglomeration and labor market governance are crucial to the prospects for local economic growth from these sectors. This paper analyzes recent changes in the American film industry, traditionally a “high road” model of flexible production and employment. We examine the rapid rise of state tax incentives and spatial dispersal of production within the United States, the destabilization of traditional industrial complexes in California and New York, and the development of new centers in states like Louisiana and New Mexico. Our findings suggest that the spatial fragmentation of the industry is undermining established forms of regulation, introducing a new volatility in the labor market, and challenging the ability of localities to benefit from growth in the industry.
Introduction
Across the United States, cities and city planners have sought to create a new urban economy based on cultural production and advanced services like industrial design, media relations, and information technology (Peck 2005; Scott 2004). These new sectors typically feature production systems that rely on flexible specialization and spatial agglomeration (Caves 2000; Sassen 2012). Yet, what happens when many cities pursue the same strategy simultaneously? Within an industry, the logic of agglomeration in one place runs counter to the decentralization of production among multiple locations.
Traditional theories of product or profit cycles in manufacturing accounted for geographic dispersal by distinguishing functions or stages of industrial development, in which skilled design and innovation activities remained in a home core while routinized production was transferred to lower–wage areas (Markusen 1985; Vernon 1966). But the process of cultural production often does not behave that way, and instead depends on the continued copresence and close coordination of diverse skilled and less–skilled labor to produce an original product or performance, event, or cultural experience (Caves 2000: 5–8).
Moreover, as Myrdal (1957) recognized long ago, agglomeration is a path–dependent process, driven within certain spatial and organizational conditions. 1 These include not only the sheer concentration of particular sectors, as in Sassen's (2012) focus on producer services, or of occupations, as in Florida's (2012) enthusiasm for the “creative class.” The paths of urban industrial growth also crucially depend on the forms of regulation that govern relations among the actors. Scholars distinguish between a “high road” path grounded in horizontally integrated production complexes with strong labor market institutions and dense informal networks among producers; and a “low road” characterized by deregulation, high capital mobility, and precarious employment (Greer et al. 2007; Kalleberg 2011).
In the high road version, the urban concentration of specialized firms, entrepreneurial opportunities, information spillovers, and available pool of skilled labor and other inputs create agglomeration economies and support a high–productivity, high–wage model of growth (Glaeser and Gottlieb 2009; Scott 2006). In many industries, however, the rise of flexible production has followed a low road with reduced job security, pay, and benefits for workers and a lack of institutional protections including sharp declines in trade unionism. In some emerging areas like new media and web design, even highly skilled and professional occupations can experience low road conditions like unstable employment, intensified labor, and a shift of the burden of risk from firms to workers (Neff 2012; Weil 2014).
We argue that the rise of multiple new centers of agglomeration in an industry generates critical problems for both the industry and the communities where it locates. The process of spatial expansion may lead not to an orderly, functional division of labor among sites but to competing nuclei in a more fluid and unsettled formation. The result, then, may be neither the production of parallel outcomes across cases nor an equilibrium of different niches in an urban hierarchy, but rival centers and the disruption of conditions within the existing path.
Even established “high road” industries can be subject to rapid change in their social and spatial foundations, challenging the formal and informal institutions that govern relations in the workplace and labor market. For cities, the pursuit of a cultural development model is not simply a matter of replicating a fixed formula established elsewhere but entering an historic juncture in the institutional organization of those industries, which can affect the costs and benefits of development for specific places (McKinlay and Smith 2009; Scott 2006).
This paper presents an analysis of what some consider a bellwether sector for such transitions, the American film industry. With its project–based labor process, highly skilled workforce, and networked production system, movie–making is often cited as an early and paradigmatic case of flexible specialization and creative production (Christopherson and Clark 2007; Storper 1994). Yet, notwithstanding broader trends of globalization in the industry, spatial dispersal is occurring rapidly within the United States. Since the early 2000s, dozens of states have used generous tax incentives to try to lure film production as a “quick fix” for the local urban economy. The intense competition among states has introduced a new volatility in the labor market, and threatens to undercut established standards by lowering wages and degrading working conditions.
The explosion of locational incentives and the rise of alternative industrial complexes outside the traditional centers of Los Angeles and New York have further destabilized relations of workplace governance, including patterns of skill acquisition and occupational mobility. Without investment in infrastructure and workforce development, tax breaks alone cannot supply adequately trained work forces to serve large or multiple productions or capture enough work to create sustainable, high–wage jobs. Even states that do invest in local capacity remain vulnerable to policy backlash and the ability of producers to move swiftly to other locales. As cities increasingly seek revitalization through a focus on “creative” industries, the experience of the film business is relevant for all those concerned with the prospects for “high road” urban development through this and other cultural economic sectors.
We begin with a review of the American film industry and its current transformations. We examine the rapid growth of state tax incentives to attract film production, the destabilization of traditional industrial complexes in Hollywood and New York, and the development of new clusters in states like Louisiana and New Mexico. We then report data from our field research, with particular attention to state policies and investment in new production, the effects on the organization of film work, and the implications for workers in the industry, local labor markets, and urban economic development.
The Film Industry: Agglomeration and Flexible Specialization
“The film and media industry remain the quintessential creative economy industry,” write Susan Christopherson and Jennifer Clark (2007: 88). As in other cultural sectors, filmmakers rely on third–party distributors to bring their works to a consumer market (Becker 2008). The high fixed costs involved in promoting a film and reaching a mass audience mean that distribution is typically dominated by large oligopoly corporations: In the United States, the top six major studios accounted for 83 percent of box office revenues in 2014 (Box Office Mojo 2015; Caves 2000: 95). Their market power makes the studios more than just intermediaries, and they also play a large role in script development and in securing the financial backing for many projects (Moore 2007: 17).
Movies are a risky investment, and neither producers nor distributors can be certain in advance what audiences will want (Becker 2008: 125). Yet, the business remains highly profitable. Most of the production costs go into the creation of the “first copy”; once a film is made there is relatively little marginal cost to distributing an additional print or downloading another view. And, no matter how artistically derivative or substitutable, each film is a unique product, protected by copyright law, with the potential for monopoly profits for that product (Baker 2007: 31). Thus, a single blockbuster or unexpected hit can make up for a string of losses, and it is estimated that perhaps 5 percent of movies generate about 80 percent of the industry's profits (Vogel 2007: 136).
As Moore (2007: 12) writes, “The film industry is a form of gambling, like wildcat oil drilling.” The old Hollywood system before the mid–20th century reduced risk through vertical integration: The studios directly controlled production, with their giant back lots and armies of contract employees, and distribution, through ownership of their own theater chains. By the 1950s, antitrust litigation forced them to divest the theaters, but the studios maintained their extensive marketing networks and access and so continued to dominate distribution. Without the need to provide a stream of films for their own outlets, however, they ceded the costs and risks of production to a more flexible system of independent producers who increasingly supplied the product (Caves 2000: 93–94).
The vertical disintegration of the industry led to the break–up of its factory–like labor process, yet filmmaking remained highly concentrated in the traditional cores of Los Angeles and to a lesser extent New York City. These functioned as classic horizontally integrated production complexes, with deep ecosystems of producers, workers, sound stages, supply companies, and related support services. In addition, as Scott (2005: 126) writes, the regional milieu served as “a sort of social buffer,” and performed functions of cultural socialization through its “embedded assets in the form of traditions, memories, cultures, visual cues, and so on, that filter into the consciousness of workers, and then feed in various ways into the whole creative thrust of Hollywood's dream factories.” Indeed, employment in the motion picture industry in Los Angeles County more than doubled from about 65,000 in 1983 to a peak of around 158,000 in 1998 (Scott 2005: 122).
Within this order, agglomeration aids producers by reducing costs and delays in assembling labor, maintaining production standards and values, and promoting familiarity and trust among workers brought together quickly for intense and closely coordinated work (Goldsmith and O'Regan 2005: 42; Scott 2005: 7). Producers further minimize risk through the “day labor” structure of most production jobs and by renting much of their equipment (cameras, lighting, props), thereby reducing capital investment. Dependent on a project–based, time–sensitive, and ensemble–like labor process, however, employers cannot simply disaggregate and disperse lower–skill tasks to cheaper locations. On a film shoot, the director cannot be in one site while the grips are in another. 2
Industry practice distinguishes between “above–the–line” employees, including directors, writers, leading actors, and other “talent” who work under individually brokered contracts, from “below–the–line” production workers, such as camera operators, electricians, sound crew, grips, and production assistants who frequently (though not always) are covered by collective bargaining contracts (Scott 2005: 121). Hired project–to–project for short–term spells, “below–the–line” workers typically obtain jobs through social networks and family ties, and are often brought in together as a department or minicrew (Blair 2001; Randle 2011: 149–150).
Social networks also affect skill acquisition. Most climb the job ladder through apprenticeships: A low–skilled worker, such as a Camera Loader, will apprentice with a First Camera Assistant in order to learn and obtain work. The First Camera Assistant, in turn, will attach him– or herself to a Director of Photography or Camera Operator and eventually become their “go to” assistant. Rental houses and their staffs also play a key role in craft networks, as they are privy to local production schedules and work availability, negotiate equipment rentals with workers and producers, and serve as social hubs where workers can socialize and learn new tricks of the trade while “prepping a job.” 3
Beyond such informal regulation, the film industry remains highly institutionalized with strong unions and established patterns of collective bargaining (Gray and Seeber 1996; Gray et al. 2009). While the various guild and craft unions do not act as formal hiring halls, they do codify job categories and guarantee access to qualified labor, bringing order to what might otherwise devolve into a chaotic production process (Scott 2005: 127). Many below–the–line occupations are organized by local affiliates of a single union, the International Alliance of Theatrical Stage Employees (IATSE). A contractual three–tier system of minimum pay scales, “personal service contracts” for above–scale compensation, and residual payments from secondary distribution for above–the–line talent unites stars, ordinary workers, and the unemployed. At the same time, union administration of residuals and benefit plans makes the union partners with management in governing the labor market (Paul and Kleingarter 1994).
This structure, however, remains subject to counterpressures like global competition and runaway production that threaten to fragment and disorganize the system (Elmer and Gasher 2005). As others have already shown, the international outsourcing of film production has been driven by the political economy of the industry. During the 1990s, deregulation led to further corporate consolidation, with the major studios themselves now owned by a handful of international media conglomerates (Christopherson 2005; Winseck 2011). By controlling access to the global consumer market across multiple platforms including film, broadcast television, and cable, the distribution companies can exert enormous pressure on independent producers to reduce costs. This has forced producers to intensify their production schedules, search for regions with cheaper labor, and increasingly rely on government subsidies and incentives. Canadian federal and provincial governments began offering significant tax incentives in the late 1990s, and were subsequently copied by other countries and by state governments in the United States. The media conglomerates now factor tax incentives into their strategic and financial planning, and projects are budgeted with specific credits accounted before they even begin (Christopherson 2009: 79–81; Christopherson and Clark 2007: 92–97).
The dramatic increases of state tax incentives and spatial dispersal within the United States have spurred intense political controversy, with multiple, contending studies of their economic and fiscal impacts commissioned by the industry, governments, and nonprofit policy groups (Ernst and Young 2009; Klowden et al. 2014; Luther 2010; Tannenwald 2010; see also McDonald 2011). There is not space here to review this debate, but we emphasize that our argument in this article is focused neither on the structural causes for the emergence of the new incentive regime, nor its specific budgetary impacts on state and local governments. Rather, we are concerned especially with the consequences of the new regime for the organization and developmental path of the production process, and hence its impacts on local labor markets and urban economic growth.
Our evidence shows that the rapid rise of tax incentives in film production may be undermining the forces of agglomeration and institutional regulation that have supported a high road path. In less than a decade, the traditional production complexes have seen drastic job losses (in Los Angeles) or a seesawing of employment (in New York), while competing locations in New Mexico, Louisiana, Georgia, and other states have lowered production costs. The industry has reached an historic crossroads, which raises a set of important analytic questions: What conditions are needed for film production to act as a motor of local industrial development? Can state policies foster the creation of new production complexes, or will intense competition between states simply disorganize the labor market? Can a high road path of development survive within the industry, in a way that can benefit cities and serve as a model for other cultural sectors?
Research Methods
We address these questions through a qualitative case study of the American film industry. While it has its limits, a single case study also has certain advantages. Rather than distilling the net effects of independent variables across cases as in quantitative covariate research, the in–depth case study can uncover how particular forces interact within the case, and provides an opportunity for “process–tracing” to link events with outcomes (Bennett and Elman 2006; Mahoney 2003). This was especially valuable for us to identify recurrent problems in an industry undergoing a process of change. The empirical richness of the case also offered numerous data points to ground and check our interpretations (Rueschemeyer 2003). Finally, the analysis reveals causal mechanisms and generates hypotheses that are logically comparable to other cases or sectors of the urban cultural economy (Tilly 1998: 7).
We conducted field research over several years from 2009 to 2012 in multiple locations in California, New York, Louisiana, New Mexico, Georgia, and Pennsylvania. California and New York were chosen because they have traditionally functioned as the core industrial complexes for film production in the United States. Louisiana, New Mexico, Georgia, and Pennsylvania were included because they ranked highest among incentive states in terms of attracting film production, the level of tax incentives offered, and investment in local workforce and development. These study sites are what Small (2009: 17) describes as “unique.” That is, they were selected not because they represent the “average” tax incentive program in the United States, but rather because they have made some of the strongest efforts to reproduce the conditions of agglomeration, and so best show the outcomes of using film production as a driver of urban development.
Our empirical data were drawn from formal and informal interviews with key informants in the following categories: (1) producers and management; (2) state and local government film office representatives; (3) union representatives; and (4) “below–the–line” film workers, including skilled craft–persons (boom and camera operators, sound mixers, gaffers, and first camera assistants), semiskilled workers (second camera assistants, loaders, painters, grips), and nonunion production assistants. In addition, we relied on ethnographic field observation on film shoots in the incentive states mentioned above, as well as participant observation on a three–month film shoot in New York City. We also attended a meeting in Atlanta of the Georgia Production Partnership, a nonprofit industry advocacy group, as well as a legislative hearing of the Georgia state House of Representatives Economic Development and Tourism Committee on March 2, 2011, with testimony from film workers, union officials, suppliers and small business owners, and current and former executives from NBC Universal, Turner Broadcasting, Paramount, and the Motion Picture Association of America.
Our fieldwork gave us unusually close access to the places where film workers perform their work, including more than a dozen film sets (which are generally closed to the public). This allowed us to gain an inside view of the structure of work and the everyday experience and culture of film production, and to observe firsthand the response to conditions of dispersal. Such methods were also crucial for finding workers for informal interviews and increasing our contact base through a snowball sampling of study subjects. Snowball samples risk possible bias, since subjects tend to be selected from shared social networks, but they also offer access to other knowledgeable informants who might not otherwise have participated. We attempted to partially control for bias by sampling for range across the diverse categories of respondents listed above (Small 2009: 13–14).
Finally, our analysis drew from archival documents, including stories in major news and industry media sources like Variety and the Hollywood Reporter, union and state film commission websites, blogs, and listservs run by film workers, and research reports by governments and advocacy groups. The publications may reflect their own particular interests, but they also represent information sources that participants in the film business rely on themselves to monitor conditions in the industry.
The Growth of State Incentive Programs and Spatial Dispersal
As recently as 2005, Scott (2005: 137) argued that geographic dispersal would not undermine the core functions and relative advantages of Hollywood within the industry (see also Christopherson and Clark 2007). Yet, employment in film and video production in Los Angeles County fell from 60 percent of the total nationwide in 2004 to 51 percent in 2011 (LAEDC 2012: 29). 4 Competition for film production has increased with the proliferation of state tax incentives, now offered by some 40 states. Michigan's program, for example, provided tax credits as high as 42 percent of qualified expenses on film production, while other states, like Pennsylvania and Georgia, offer packages of tax credits and/or cash rebates equaling 20 to 30 percent or more. Some, like Louisiana, allow producers to sell their unused credits on a secondary market (Associated Press 2009; Christopherson and Rightor 2010; Verrier 2009).
Since the initial rush of enthusiasm, however, several states have significantly reduced or suspended their incentive programs due to budget pressures and charges of mismanagement. In the face of a $700 million budget gap, Wisconsin drastically cut its program in 2009, limiting the total amount of credits available annually to $500,000, and then eliminated it entirely in 2013. Iowa offered one of the most generous credits at 50 percent of qualified expenses, and succeeded in drawing at least 22 projects valued at $65 million. But amid growing reports of accounting problems and lack of oversight, Governor Chet Culver suspended the program in September 2009 (Huffstutter and Verrier 2009). Kansas and New Jersey also temporarily suspended their tax credits, and in 2011 lawmakers in Michigan capped the budget for their incentive program at $25 million, a sharp drop–off from the $115 million approved in 2010, after strong criticism from a state Senate Fiscal Agency report (Eichler 2011; Henchman 2011; Soutar 2011).
Whatever the fiscal consequences for some states, intensified competition has led to deconcentration and increased volatility in the labor market, a problem exacerbated by the Great Recession. In Los Angeles, on–location filming fell a record 19 percent in 2009, and permitted production days for feature films dropped to their lowest level since 1993 (Film L.A. 2014: 14, 37; Weber 2010). The major studios laid off hundreds of employees; large postproduction houses merged while smaller shops folded; and supply companies and independent sound stages struggled to survive. The number of establishments fell more than 5 percent from 4,251 in 2009 to 4,051 in 2011, and even highly skilled workers found themselves jobless (Gumbel 2009; Lang 2011; Verrier 2009).
These impacts were reflected in the perceptions of local workers. Interviewees from Los Angeles reported a dearth of jobs in the area and having to work out–of–town for much of the year. Producers, film workers, and local union and film office officials all claimed that California workers were increasingly moving to incentive states like New Mexico, Louisiana, and New York in search of more stable work. Some settled in states like Michigan, only to move again to another incentive state after that state's program was scaled back. A Script Supervisor from Los Angeles (interviewed while working in New Mexico) explained, “About 3 or 4 years ago, in the years I've been doing this, all of a sudden there were no jobs in L.A. It was amazing. The impact of the rebates takes even more business out of California. It has changed the entire face of the business.” 5
To try to recoup its position, California passed a new, five–year tax incentive program in 2009 and in 2012, Governor Jerry Brown signed legislation to guarantee funding through fiscal year 2016–2017. Unlike many competing states, however, the program has an annual cap of $100 million, and feature film projects with budgets over $75 million are ineligible (FILM L.A. 2014: 9; LAEDC 2012: 31). Local production recovered after the recession but still shows the effects of the seismic shift in the industry: Permitted production days in Los Angeles reached 6,996 in 2013 but were still 50 percent below their peak in 1996 (FILM L.A. 2014: 14). Overall, the motion picture and video production sector in Los Angeles lost more than 16,000 jobs or 12 percent of total employment between 2004 and 2011 (LAEDC 2012: 7–8).
More than half of all film and video production jobs in the United States are still concentrated in Los Angeles, which remains the largest production complex and the key center for corporate management and deal–making in the industry. But the region continues to lose ground in its share of employment and actual production days. Losses in film production were once partially offset by growth in television; however, that is no longer true. During the 2013–2014 season, for the first time New York City outpaced Los Angeles 24 to 19 in the production of pilots for television dramas (Block 2014; Lauder 2012).
In New York, television has historically accounted for a greater share of film and video production. State and city tax incentive programs begun in 2004 and 2005 helped bolster employment after many years of decline, and from 2004 to 2011 New York State added 14,100 jobs in motion picture and video production (LAEDC 2012: 29). In March 2009, however, the state's production tax credit program exhausted all funds authorized through 2013 (Gray et al. 2009: 17–19; The Teamster 2009). The program was renewed by the end of the year, but not before a drastic falloff of business during the several months it was on hiatus. Production fell from 20 television pilots filmed in 2008 to just 4 in 2009 before rebounding to 22 in 2010–2011 (Applebaum et al. 2012: 7). According to one of the camera loaders we interviewed at that time:
There was not a lot of work. So I talked to people, and no one was really working from January till…even May. It was very, very slow. …A lot of it moved to cheaper states. The last feature I worked on, script–wise everything takes place in New York, but because the tax incentives are better in Philly than here, they shot two weeks here—all the exteriors—then went to Philly because it was cheaper and they could fake all the insides. 6
Tax incentives have since stabilized in New York at 30 to 35 percent with an annual cap of $420 million, and in 2012 the state provided additional credits for postproduction work (Klowden et al. 2014: 19–20; Verrier 2012). New York City maintains other advantages as an industrial complex; the synergistic presence of a rich theater and arts scene in addition to film and television assures a large pool of local talent. The state and city have invested considerable resources in its film industry, including support for development of sound stages and training, but workers report continued volatility in the labor market.
In little more than a decade, the profusion of state tax incentive programs has reoriented the spatial field for film production in the United States. As the industry has decentralized, however, its traditional forms of internal organization and accumulated culture have also been challenged. As McDonald (2011: 105) writes, “Over time, if experienced film crews sit idle, unable to find local work, the talent base will diminish along with the advantage of institutional ‘know–how’ California film workers possess.” Hollywood's technical workforce has been weakened due to continued job loss and the migration of workers to incentive states that offer steadier employment opportunities. Support businesses, like supply houses and sound stages, have also suffered, and in some cases they have also chased the incentives, relocating to states like Louisiana, New Mexico, and Georgia.
Creating a New Production Complex: Louisiana and New Mexico
As many states have discovered, film production is not a simple “quick fix” for local economic development. In states aspiring to attract the industry, long–term gains in employment and business may depend not just on drawing transient projects but on the creation of a new, stable production complex. That includes infrastructure and workforce development, as well as the institutional support for the industry. Such a project is no easy task, as can be seen in the experiences of Louisiana and New Mexico.
Louisiana: A Long–Term Investment
Louisiana was among the first states to use tax incentives to pursue film production. In 2002, it began offering a 15 percent tax credit for projects investing over $1 million, with an additional 20 percent for Louisiana payroll. In–state purchases totaling over $250,000 were exempted from sales tax, and in 2003 the credits were made transferable. The following years saw fluctuations in the level of state support, including a generous infrastructure incentive introduced in 2009 (Scott and Associates 2013). The program immediately became subject to abuse, however, as developers qualified for projects that included condos and golf courses, and credits were sold through brokers for cash before anything had been actually built (Riegel 2009).
That program was subsequently phased out, but the state's tax incentives remain among the most robust in the country. By 2014, Louisiana boasted some of the largest and most advanced sound stages nationwide, and an increasingly deep pool of laborers and suppliers. A 2010 report in Daily Variety concluded that the state had become “firmly entrenched just behind L.A. and New York as the country's third–busiest entertainment production center” (Egan 2010: A1). A 2013 report for the Louisiana Department of Economic Development's Office of Entertainment Industry Development noted that “in the 5–year period from 2008–12, actual certified spending in Louisiana on film production (that utilized the tax credit program) [was] up by $254.6 million…an improvement of 55%” (Scott and Associates 2013). According to a Louisiana–based Director/Producer we interviewed:
The biggest advantage of having the tax credits here is that there is an infrastructure that's being built.…I think Panavision came in first about 3 or 4 years ago and then Chapman moved in (with all their dollies and cranes) and the independent, family–owned, like Reynolds, based out of Burbank, California, and T&M opened up a big shop here. There's just so much work. Hollywood Trucks, I know one of the guys, he's a local guy, he says there aren't even enough trucks and star trailers now to supply the movies. They keep running out of equipment. 7
Louisiana has also invested significantly in workforce development. In addition to a now 30 percent rebate for film production, an additional 5 percent is awarded for hiring local workers. The local Studio Mechanics union (IATSE Local 478) responded to the influx of jobs by organizing new workers and regulating incoming productions. In the 1990s, the union enrolled around 100 members; after the incentives took effect in 2001, it increased to 150. By 2013, there were over 1,100 members with an additional 150 members of other guilds and labor unions (Egan 2010: 3A; Louisiana Office of Entertainment Industry Development 2014). 8
According to Local 478 Business Agent Mike McHugh, workers were invited to join the union without initiation fees, and the eligibility requirement was changed from having worked on three films to just 30 days experience on any film, which has become somewhat standard among union locals around the country. 9 The union tracks all incoming productions, even two– and three–day shoots, but does not overpolice low–budget productions since they provide important training opportunities for locals trying to break into the business. The union also works with state and city film offices to staff training programs supported by public funds.
Carroll Morton, a manager in the New Orleans Mayor's Office of Cultural Economy, told us that training and workforce development are part of the state's long–term strategy to build a sustainable film industry (itself an important part of New Orleans’ post–Katrina recovery plan). That includes incentives to draw production, but also the “longer–term spend” of developing a local crew base which “is a component of continuing to bring production here, but also the development of businesses that can support the industry.” 10 Across the state, employment in the motion picture and video industry grew from 3,768 in 2004 (three years into the program) to 5,378 by 2012 (Klowden et al. 2014: 6). 11
Louisiana's aggressive effort to promote its nascent production complex has produced substantial results, but not without some controversy. The state is one of the poorest in the country with a host of other pressing needs, which were already severe even before the disastrous failure of the levees in New Orleans after Hurricane Katrina in August 2005. As Christopherson and Clark note, “In her state of the state address in January 2005, Louisiana's governor, Kathleen Babineaux Blanco said that Louisiana's $73 million growth in tax revenues in 2004 would be unavailable for teacher raises because it would, instead, fund the (currently) $70 million film tax credit program” (Christopherson and Clark 2007: 96).
New Mexico: The Problem of Continuity
New Mexico's film production complex, dubbed “Tamalewood,” also enjoyed early success, in part from its proximity to the traditional industry center in Los Angeles, but also because the state offered one of the most generous incentive programs in the country. The program began in 1999 under Republican Governor Gary Johnson, but took off in the 2000s under Democratic Governor Bill Richardson with a 25 percent rebate, film investment loans for up to $15 million per project, and 50 percent reimbursement for on–the–job film crew training for New Mexicans under the Film Crew Advancement Program, or “FCAP” (Egan 2009; New Mexico Film Office 2012).
Like Louisiana, New Mexico took steps to create an industrial complex, including workforce and infrastructure development. Former Governor Richardson worked with production firms to sponsor training programs for high school and college students; the state supported competitions for seed money for films made by local Native American and women film makers; and the New Mexico Film Office and Department of Workforce Solutions cosponsored a “Retrain and Sustain” program aimed at retraining skilled workers—carpenters, painters, sheet metal fabricators, welders, landscapers—to work in film production (New Mexico Film Office 2012; U.S. Fed. News Service 2009).
For infrastructure, the state gave $10 million for the $25 million Santa Fe Studios, which featured two 19,275–square–foot sound stages, 25,000 square feet of production office space, and 57 acres for back–lot. The Santa Fe facility, as well as the larger Albuquerque Studios opened in 2007, were promoted by the New Mexico Film Office as ways to add days of shooting in the state for productions, and were strongly supported by the local film and construction unions (Verrier 2009). As IATSE Local 480 Business Agent Jon Hendry declared, “Albuquerque Studios is built 100 percent on union money; that's a union project built by Build New Mexico, which is a coalition of unions in the building trade. We lobbied through the money from the state for the Santa Fe Studios and everything you see here is union driven.” 12 In response to these efforts, employment in New Mexico's motion picture industry more than doubled, from 1,445 jobs in 2004 to 3,335 jobs by 2008 (Klowden et al. 2014). 13
New Mexico, however, shows the conflicts that can emerge over attempts to achieve economic development through the film industry. The industry and the incentive program have garnered strong support among some segments of the population, but have also been subject to political backlash. When Republican Governor Susanna Martinez took office in 2011, one of her first initiatives involved reducing the incentive, which she called “a subsidy to Hollywood on the backs of our schoolchildren” (Pollon 2011). She proposed to reduce the credit from 25 to 15 percent in an attempt to balance the state's budget (Verrier 2011). The legislature instead capped the annual total payout of tax credits at $50 million, but only after a strong lobbying effort by IATSE Local 480 and its supporters, including film workers, suppliers, and local businesses in Santa Fe and Albuquerque. 14
The cap immediately brought an environment of uncertainty and instability to the New Mexico film community, and precipitated a wave of outmigration, with some workers returning to Los Angeles, some moving to states like Louisiana, and others leaving the business entirely. Union membership dropped over 20 percent in one year, and employment dropped from 3,103 in 2010 to 2,536 in 2011 (Jennings and Nott 2012; Klowden et al. 2014: 6). 15 A local Production Coordinator complained:
You never know where the next job is coming from especially here in New Mexico when you hear talk of the incentives going away.…It is hard to watch this constant battle, this constant threat.…There's a state of flux all the time.…People breathe easy for a month or two, and then the talks starts up again.…I can tell people are nervous about this, nervous that productions just don't want to come here anymore. 16
In addition, the completion of long–running TV series like the Emmy award–winning “Breaking Bad” raised concerns that the state's tax credits were insufficient to attract new production. In March 2013, Governor Martinez vetoed a bill to increase the tax credit program, but just weeks later signed into law an increase in the state's credits, including a bonus for hiring locals and shooting in a local production facility. The bill also includes a provision that allows rollover of $10 million in unused credits per fiscal year (Couch 2013; Verrier 2013).
The New Mexico case illustrates the difficulty of creating a new industrial complex, and the importance of institutional context. Such projects require long–term commitments, which can take years to come to fruition. Seemingly overnight, state workforce and industrial development policies can be undercut by budget constraints and political change. Meanwhile, in the face of stiff competition from other states, employment remains highly precarious.
A Spatially Fragmented Industry: Conflicts and Sustainability
Competitive Pressure and Policy Conflict
New Mexico's struggles highlight the intensely competitive climate of film production, even for states that have invested in infrastructure and workforce development. The uneven economic and regional impact of the industry can also lead to divided support from state government and the local electorate, adding further uncertainty. As one local Locations Manager observed:
You could tour Santa Fe and Albuquerque and think that's a pretty vibrant film industry you've got going, but you go down to Portales or Alamogordo or Deming or Farmington and they don't know anything about it but they know their money is going towards it. The perception that it is going to help Angelina Jolie rent more kids, or whatever, is difficult for a lot of the ranchers who are dying in drought to fathom.…When the Governor came in, she was determined to disassemble corporate welfare for Hollywood as a symbolic program of what's wrong with government. 17
Merely to raise the issue of reducing incentives, however, brings a swift reaction from the industry: When Michigan Governor Rick Snyder signaled he was planning to curb the budget for film incentives, major projects like Marvel Studios’ The Avengers backed out of plans to shoot in the state (Eichler 2011). Similarly, when the Louisiana legislature briefly considered scaling back its incentive in 2009, producers quickly looked elsewhere. According to Local 478 Business Agent Mike McHugh, “That same year, Georgia got in the game with 30 percent and guess what: the first half of 2009 [in Louisiana] was abysmal. These big movies are planning 2–3 years out…they want to know if they go in 2 years from now if the system will still be the same.” 18
To retain production, Louisiana lawmakers bolstered its incentive program and committed to a policy of making the state a permanent industrial complex for film (Louisiana Office of Entertainment Industry Development 2010). As Carroll Morton of the New Orleans Mayor's Office of Cultural Economy put it, “What you can do to establish yourself so that you don't have a transient workforce for this industry is to not have a transient industry.” 19 The policy has so far enjoyed broad political support, even under a Republican–dominated state government, in part because the benefits of production have been felt more widely throughout the state. Unlike New Mexico, where expenditures have been concentrated in Albuquerque and Santa Fe, Louisiana has had significant production in places like Baton Rouge and Shreveport as well as in New Orleans.
For most states, however, tax incentives may create a supply of temporary, low–skill jobs but cannot by themselves develop a stable and high–skilled workforce or a sufficiently trained crew base to staff large–scale or multiple productions. Beyond public policy, this calls attention to the organization of the labor process in film production and its effect on workers and local communities.
Sustainable Labor Markets and High Road Development
Foster (2013) argues that tax credits can produce satellite production complexes in incentive states, but such claims underestimate the impact of decentralization on the process of film–making. On the contrary, spatial dispersal has introduced an historic juncture in the industry's path of development, destabilizing traditional forms of labor market and workplace governance. Our fieldwork evidence shows several ways that this occurs on the job, among workers in both old and new locations.
First, competition for work can be fierce. Ever since production in Los Angeles began to slump, highly skilled and experienced workers have been migrating to New Mexico and taking high– and midskill jobs or they are being flown in for temporary work. For example, when the blockbuster film The Avengers arrived in New Mexico in 2011, it brought a large proportion of its crew from Los Angeles. 20 A local New Mexico Locations Manager surmised that such staffing choices had less to do with the local workforce than with the dismal climate in Los Angeles:
They used to not hire us because we didn't have the talent and now we have the talent and now they're not hiring us because things are so horrible in L.A. that they're just bringing everybody with them to keep the embers alive.…We have the labor, but things are so bad in L.A.; I don't think anybody could have factored that in. 21
Others suggest that newly trained New Mexicans are simply unable to compete with the longer resumes of Los Angeles (and New York) workers. As one New York camera department worker on a 2011 production in New Mexico put it:
It's my sense that this market is becoming saturated already. People moved here [to New Mexico] early, and then more in 2007 or so, on the crest of the wave. Now the wave is crashing. There's not enough work for all levels and people are cutting each other's throats for it.…Here's how it works: A long time camera assistant in New Mexico who came here early in the game takes second seat to the guy who moves in from New York or most likely Los Angeles with the bigger resume. And then the guy with an even bigger resume moves in, and he's easier to work with so he gets the job. So workers displace each other. The big fish start moving away from Los Angeles when the jobs are hard to find and start eating up the smaller fish. 22
Similar views were expressed among workers in the grip and camera departments on two films we observed in Pennsylvania. In both Philadelphia and Pittsburgh, New Yorkers were called in for high–skill positions and often were able to bring their assistants with them. For low–skill positions, production companies tend to hire locals to avoid paying travel expenses and per diems for out–of–towners under the union contract. Yet, during the dry spell in New York, low–skill workers from New York were arranging for places to stay in incentive states to be able to take jobs there; some even changed their domicile status with the union in order to be hired as locals. With domicile status in an incentive state, a New York worker can be hired as a local within a less competitive job market, and when the New York market opens up they can work there as well. A New York–based camera loader explained:
I thought about relocating.…So if I move back to Detroit, I could do all the movies in Detroit. And if I got one in New York, I knew enough people that I could probably hop around couches for a while, or even, if it was worthwhile, staying in New York for a couple months. So I thought about going back to Detroit because it's super cheap. Or New Orleans is getting big. If I am sitting in New York doing nothing, week after week, which I was for a while, there's really no reason for me to be in this expensive city, if I'm not working. 23
On the other end, workers in incentive states can list themselves as New York locals and also double dip. A wardrobe person from Philadelphia explained that she was lucky enough to be dating a guy in New York and was thus able to work as a local and crash at his apartment. We interviewed a camera assistant with a similar situation. A Philadelphia electrician we interviewed also listed himself as a New York local, and, over a three–month shoot, commuted home every weekend to see his wife and young child. In the second month of the shoot, with days extended to 16 hours, 6 days a week, he still went home, but suffered from severe exhaustion. 24
Related to the problem of competition is the variable quality of skill among locals in incentive states, and their opportunities for advancement in the trades. Large–scale or multiple productions can quickly drain a local crew base, forcing productions to hire workers from outside and forego local hiring rebates. A New York–based Steadicam Operator, working in New Mexico, said, “It's tough when you go into the incentive states because the top crews are about one deep, maybe two and if there's more than that it gets a little sketchy; whereas if you're in L.A. or New York, the crew bases run pretty deep in terms of experience.” 25 This extends throughout the skill hierarchy: Loaders are very rarely brought in, but on a location we observed in Philadelphia, a camera loader from New York was hired and given housing and per diem because there were no locals left to do the work.
In some cases, productions will bring in outside workers because they do not trust that the local workforce will meet their quality standards, especially for larger–budget films. Some producers and department heads are loath to hire local workers for mid– and higher–skill positions because they tend to be less experienced and are seen as not worth the risk. In New Mexico, one Assistant Director explained: “We can't play with these positions. We need the top of the talent pool or it just ends up costing us. Yeah, we're in an incentive state, but I'm not sure we are actually saving money on crew.” 26
These views may seem biased, but film production requires an intensely cooperative labor process that relies heavily on relations of trust among coworkers and supervisors. Labor markets in film production are also highly networked and strongly influenced by reputation, so that even the perception of skill levels can drive hiring decisions. Similarly, producers are more likely to fill key departmental positions with workers from the traditional industrial core. A New Mexico Script Supervisor observed:
The producers trust people from L.A. more than they are going to trust a local person. Like they might bring in a department head from L.A. and then crew under that person with local people, but they are going to trust the department to the L.A. person. It is not apt to be the case when they are going to New Mexico and hiring department heads. They are probably going to bring in people from L.A. and then crew the lower positions with local people or extra day–players… 27
This leads to a third issue, the problem of underemployment for local film workers. Because production in states like Pennsylvania and New Mexico remains limited, most local, semiskilled workers cannot find enough work to make a living in the film industry. As one New Mexico Camera Assistant pointed out:
There are prevalent rumors of [the industry's] instability, getting into it you're inundated with that. I don't think that people getting into it are taking it seriously enough to consider it a career; they're dabbling in it. If it was being presented as a viable career, we'd be getting different people interested in it and you're not because most people don't trust it. You're getting short–timers, part–timers in their mentality and they're not even putting their all into it, which doesn't help it to actually become a functioning industry or place to work. 28
We found that workers in states like New Mexico and Pennsylvania were actually switching positions from film to film in order to secure a job in any department. That kind of lateral mobility is not common in places like New York or Los Angeles, where crafts are represented by different locals of IATSE and workers are restricted to work within their trades. In most states, however, the IATSE Studio Mechanics local represents a broad range of trades, and union members are able to work in any one of them. On a film we observed in New Mexico, some of the grips had filled Electrician positions on other productions; the sound person worked in Video on his last movie; one of the Electricians had worked as a member of the Transport team; and a craft service worker had previously worked as a grip. This kind of interdepartmental mobility may enable workers to more easily acquire jobs, but makes it more difficult for them to hone their skills or make their name in any one area, and ultimately limits their mobility in a trade.
The scarcity of work can mean there are fewer clear avenues for local workers entering the industry to advance in their careers. Both Louisiana and New Mexico provide tax breaks for on–the–job training of local workers, but producers remain reluctant to invest resources to develop local talent. The Director of Photography on a production in New Mexico said that he had received “dozens of calls” from assistants wanting the first assistant job, but needed a higher level of skill than what the locals could offer. He explained: “this kind of training does not happen overnight, it takes years and years of experience. We needed qualified workers so we brought them in from New York and Los Angeles. Sometimes with these big actors all you have is one take. We cannot tolerate on–the–job training. You can't hire a local just to save 25 percent and get 75 percent accuracy. This is a talent rebate not a tax rebate.” 29
The actual work of on–the–job training falls to the department heads, who are responsible for the performance of their crew. Lack of training and experience among locals can increase the burdens for more experienced workers and strain relations on the set. As a New Mexico Production Coordinator commented:
It is a strained relationship between the locals and the non–locals.…It is hard because there are a lot of people who have their established crews coming to New Mexico and they want to bring their whole crew but it costs a lot more money because you're paying people per diem but not getting any money back [in rebates]. It is tough on the department heads because there's an expectation that's not always met. 30
Such tensions can lead to the swift termination of workers, potentially jeopardizing individuals’ future job prospects. On a 2011 production in Georgia, several camera workers were fired due to lack of experience with digital camerawork (the company spent a day shooting tests and the workers failed to record the work of the day, a huge loss). A new group of skilled camera workers was brought in from New York and Los Angeles to join the lower–skilled workers who had migrated the year before from Texas and Florida.
These observations underline the institutional conditions and path–dependent nature of individual skill acquisition and workforce development. As a New York camera assistant working on a production in New Mexico remarked, “It takes a long time to build the work base. It doesn't happen overnight.” 31 The norms, habits, and social monitoring of work become part of the accumulated culture of a mature industrial complex; by contrast, the growing need for workers to travel around the country for jobs has disrupted previously embedded forms of workplace governance. The risks of employment have been intensified and increasingly transferred onto employees, with sometimes tragic results. The 2014 death of camera assistant Sarah Jones, who was hit by a train during an unpermitted shoot in southern Georgia, brought national attention to problems of occupational safety and regulation in incentive states (Kelley 2015; McNary 2014). 32
Conclusion: Agglomeration, Path Dependence, and Urban Cultural Industries
The concept of agglomeration has been a key to sociological studies of the “new urban economy” of cultural and creative industries. In this article, our contribution has been to focus on the path–dependent dynamics of agglomeration: For cities, the impact of growth depends not just on the sheer concentration of new cultural sectors or workers but also crucially on the historic evolution of the formal and informal institutions regulating employment in those sectors. The rise of the urban cultural economy can support a high road path of local development, but even for highly skilled workers it can also succumb to a low road.
These contradictory pressures are illustrated in our analysis of the American film business. Our fieldwork allowed us to look beyond aggregate data and examine the experience of workers in the labor market and the workplace. From that perspective, we find that the industry is at a crossroads, both in its geographic structure and in its governing institutions. The expansion of multiple production complexes within the United States has fragmented the spatial foundations of the labor process, including work in principal photography and for postproduction as well. The hypermobility of producers and the intense competition between states have introduced a new volatility into the labor market, undermining the bases for the industry's traditional high road order.
What happens next? It is possible that the conditions we observed are simply a transitional phase to a new market equilibrium and a reordered urban hierarchy, though as yet we cannot know that for sure. As the established clusters of Los Angeles and New York face new challenges, it is by no means certain that the new centers will take hold, and one outcome could be an extended period of disorganization and chaotic competition. Nonetheless, the process of change underlines the importance of the path of institutional governance. Indeed, we can hypothesize that for cultural industries the spatial expansion into new centers logically destabilizes existing arrangements and opens up a juncture in their internal organization between high and low road alternatives.
The consequences can be seen by comparing film production with other urban cultural sectors. In the 1980s and 1990s, American cities quickly adopted a strategy of promoting “urban entertainment districts” to revive declining downtown or waterfront areas (Hannigan 1998; Judd 1999; Zukin 1995). The strategy included a familiar menu of projects including sports arenas, festival marketplaces, historic museums, and other cultural attractions to draw tourists and visitors to the city. An early example was in Baltimore's Inner Harbor, but despite massive subsidies in that city and elsewhere such developments frequently generated mainly low–wage service jobs with few benefits to the surrounding community (Cohen 2015; Harvey 2001).
More recently, however, coalitions of community organizations, immigrant workers, and labor unions have mobilized campaigns to raise standards and bring new forms of regulation to these types of enterprises. Scores of municipalities have passed “living wage” ordinances that mandate higher–than–minimum wages for jobs in businesses that contract with local governments or that benefit from public subsidies or tax breaks (Luce 2014). Other coalitions have negotiated “community benefits agreements” specifying conditions that developers must meet in return for local political support (Parks and Warren 2009). In landmark agreements in 2001 around the sports and entertainment district near the Staples Center in Los Angeles and in 2013 on the redevelopment of the Kingsbridge National Guard Armory in the Bronx, local residents have won concessions like requirements for local hiring, job training, and living wages, along with community provisions for affordable housing and local contracting and procurement with minority– and woman–owned small businesses (Gross et al. 2005; Moss 2013).
Other efforts to use such mechanisms have been less successful, but the direction of urban economic development remains a contested terrain. The emergence of new creative industries also shows the role of institutional governance in the trajectory of growth. The movie business was already unionized when the vertical disintegration of the industry began in the 1950s, and the various craft unions were able to maintain their power under the flexible reorganization of production. In emerging sectors like new media and web design, skilled workers have not yet succeeded in finding ways to regulate the conditions of their employment, and so remain vulnerable to low road outcomes (Krätke 2012; Neff 2012).
The situation in the film industry is still evolving, but for now we can identify some apparent trends. First, it seems clear that despite the uncertain impacts and political backlash, the new incentives regime is not going away. Yet, cities and states might weigh their options carefully in pursuing the film industry as a motor of urban economic development. The overall effect of incentives, on both economic growth and state revenues, remains in dispute and the policy choices are neither simple nor easy. As Local 480 business agent Hendry said of New Mexico, “The thing about incentives is you put a 25 percent figure out there, you immediately get busy. Any other tax credit, like infrastructure, it takes a while: you have to build roads and run electricity and attract companies. It takes 4–5 years to create the jobs; you have to train and everything else. With movies, six months after we started writing checks you have people banging on the door to say ‘we want more checks.’ It was a short–term fix.” 33
The problem is the short–term fix does not last. It is not enough for cities and states to just give away tax credits. To secure long–term gains they may need to invest substantial resources in local workforce training and infrastructure. This requires careful planning and involves high upfront costs and considerable risk. As Peter Dekom, an industry attorney and advisor to the New Mexico film program, remarked, “The bottom line is there really aren't enough film productions in the United States for every state to play in this game, and eventually the states where it doesn't make economic sense aren't going to be players” (Huffstutter and Verrier 2009).
Those still in the game must show an ironclad commitment, as the industry can and does react swiftly against even the hint of policy retrenchment. In the face of recessionary fiscal crisis and political opposition, states like Michigan and Wisconsin effectively abandoned their programs. States with more robust economies, like Georgia, may be better positioned to sustain their efforts, but in poorer states like New Mexico and Louisiana the policies may conflict more directly with other pressing public needs.
Finally, even a public commitment to workforce and infrastructure development may not be sufficient. Cities and states cannot simply import an industry ready–made; by building up alternative local production complexes, they are themselves creating and entering into an historic juncture in the development of the industry. Without stable, nationwide governance institutions, the intense competition may simply reinforce volatility and a low road path.
Here, the role of the union is critical. To date, the film industry unions have strongly supported incentive programs in their respective states. Local unions in Louisiana, New Mexico, Georgia, and elsewhere have used the growth of production in their regions to organize new members and expand their rolls, notwithstanding the effects on workers in Los Angeles or New York. The principal craft union, IATSE, already bargains national baseline contracts to discourage low road competition between regions, but much variation persists in enforcement and in the negotiation of informal local exceptions to attract work. IATSE and other film industry unions may need to find new ways to achieve labor market governance of multiple agglomerations across regional boundaries.
For sociologists, however, the experience of workers in the American film industry offers a new perspective for studies of the new urban cultural economy. Growth in these sectors can be seen as emerging from the intersection of local place–making with the path of development in the industry, a process that opens up pressures on all sides. How do different stakeholder groups negotiate such pressures, and how do they build or maintain their relationships under shifting conditions? Can high road development survive spatial fragmentation, and close off the path toward the low road? What is the role of state policy and worker organization in contributing or responding to such conditions? We hope these questions can usefully inform further research in the film business and in other urban cultural industries.
Footnotes
Acknowledgments
The authors would like to thank Lois Gray, Maria Figueroa, and the editors and reviewers of City & Community for their helpful comments and assistance; the authors alone remain responsible for any errors. Special thanks to the many individuals in the film industry who generously offered their knowledge and advice, and to all the film workers whose time, participation, and insights made this project possible. Support for this research was provided by the American Sociological Association's Fund for the Advancement of the Discipline Award supported by the ASA and the National Science Foundation, and by a Research Grant and Faculty Fellowship from Fordham University.