WGA strike's economic impact expected to be huge

LOS ANGLES (Hollywood Reporter) - If the writers strike persists through the end of the month, it could suck $200 million from the entertainment industry’s contribution to the Los Angeles economy, one expert predicts.

Jack Kyser, chief economist for the Los Angeles Economic Development Corp., said that more informed data will come with the November release of state employment figures, due December 21, but using the 1988 WGA strike as a guide, fallout is expected to be significant. Beyond that, a full economic recovery could take months.

In March 1988, the entertainment industry employed 80,000 people. A month later, about 9,000 writers nationwide hit the picket line and 6,000 additional industry workers in Los Angeles, though nonwriters, were quickly thrown out of work because of the strike.

Entertainment-industry employment in L.A. then dropped to a low of 57,000 in July and snapped back in August to 68,000 as the strike ended and television production scrambled to get back on track. But, three months later, the industry was still 1,000 employees short of where it was before the strike, Kyser said.

Today, entertainment is the third-largest industry in Los Angeles, behind international trade and tourism, and employs 254,300 people, Kyser said.


If the strike continues for five months, as it did 19 years ago, and similar employment patterns emerge, more than 73,200 people working in entertainment could find themselves jobless, though fewer than 8,000 of them would be striking writers. In the first month alone -- again using history as a guide -- up to 60,500 writers and nonwriters could be out of work.

Such figures do not take into account collateral damage to industries that do business with entertainment, such as truck rental, hotels, security guards, restaurants and rental of portable toilets.

Even real estate, already an economic trouble spot, could take a hit due to strikers. During the 1988 strike, high-end homes on the west side of Los Angeles suddenly weren’t selling as well as they had been, Kyser said.

“If the strike is settled Monday, it will have been an annoyance. If it lasts five months, it will mean real pain,” he said.

The comparison to 1988, of course, isn’t perfect. For one thing, the L.A. Economic Development Corp. wasn’t around to adjust official state data back then, so independent contractors, freelancers and the like weren’t counted.

Using unadjusted state numbers this time, as well, there were 138,800 entertainment industry employees in L.A. at the end of October. If 23.8 percent are knocked out of work in the first month, as was the case 19 years ago, up to 33,000 people, including the 8,000 strikers, would be temporarily jobless. If the strike lasts for five months and 28.8 percent of the industry’s L.A. employees are rendered jobless, as happened 19 years ago, up to 39,000 people would be out of work.

According to Kyser, the entertainment industry -- when humming along with no strike to contend with -- contributes $80 million per day to the L.A. economy, or nearly $30 billion per year. Each $70 million film creates 928 jobs, 697 of which are indirectly tied to the production.


The nonprofit group FilmL.A. said there were 9,281 on-location productions in L.A. during the third quarter, of which 1,897 were for feature films, 1,434 for commercials and 5,950 for TV shows.

Collateral damage has already been rough, said Mark Deo, executive director of the Small Business Advisory Network. He said more than 100 businesses have contacted his firm for advice on navigating the strike.

Examples include: a battery manufacturer that has seen 30 percent of its business fall off and has already laid off some of its 20 employees; a caterer for “Ugly Betty,” “24” and “Mad TV” that has lost nearly all its business; a wardrobe cleaning business, whose staff of a half dozen people are out of work.

“I don’t blame writers or studios, but if this continues, the pain will be massive,” Deo said. “Fifty percent of the country’s gross domestic product comes from businesses with less than 100 employees, and they don’t have a writers guild speaking on their behalf.”

Reuters/Hollywood Reporter