Words about Buildings & Food
New data from the County Business Patterns shows a big loss in film jobs for Georgia since 2013. However, there has still been healthy growth overall since the state introduced up to 30% in transferable tax credits for film productions, with a 74% growth rate since 2010, and 29% overall since 2012.
In 2014, non-exhibition motion picture employment declined to 2,845 in 2014, a 1/3 drop from the record high of 4,282 in 2013. The reasons for this volatility are not yet clear, but the most likely explanation is just an anomalous growth rate in 2013, which was nearly double that of the previous year. And the average growth rate since 2010 is still quite healthy at over 26%/year, more than double that of the industry nationwide (11.6%), and also well above most other states, with one notable exception…
Utah, the Beehive State (yes, I had to look that up). My preliminary glance at the data showed that Utah’s growth rate, which was astronomical in 2013 (nearly quadrupling from 749 to 3,573), declined, but still showed healthy numbers, especially per capita. 2014 saw film employment at 2,821, nearly identical to that of Georgia, a much larger state, and an average annual growth rate of over 90% since 2010. What had previously appeared to be a bizarre anomaly is clearly becoming something of a trend. Is this a Sundance thing, or something more. Any Utahns out there, please post your thoughts in the Comments section below…
On Wednesday, March 23, the North Carolina General Assembly surprised many of us with a truly radical bill, HB2, which bars anti-discrimination bills passed by local governments. Yes, I said that correctly. This is an anti-anti-discrimination bill, and if I remember the transitive property correctly, that would make it a pro-discrimination bill. There is not even a pretense of religious views required for businesses to discriminate on the basis of gender, gender identity, sexual orientation, etc. And to make sure it slipped past any possible opposition, it was introduced in the morning, passed by both houses in an “emergency session” with virtually no Democratic support (Senate Democrats walked out of the session), and signed by Governor Pat McCrory, elected four years ago as a “moderate” pro-business Republican, that same night. Oh, and while they were at it, they threw in a prohibition on local increases in the minimum wage. Let the backlash begin…
The next day (today), APM’s Marketplace covered a story on a similar, albeit less extreme, version of this type of bill recently passed by the Georgia legislature. This one, like many others recently proposed and/or passed, merely allows businesses to discriminate in their hiring and service provision based on their stated religious views. And now, media companies like Viacom, Disney, Sony and Lionsgate are threatening to stop filming in Georgia if Governor Nathan Deal (R) signs it into law.
This is a big deal, folks. Deal and the Republican lawmakers in the majority have touted the success of their 30% tax incentives for film productions as having brought billions of dollars to the state’s GDP, but by catering to a vocal minority, and of course the American Legislative Exchange Council (ALEC), they threaten to reverse those gains.
And it’s not just those “Hollywood liberals” who are concerned. Opponents also include Coca-Cola, Delta Airlines, and that notoriously left-wing organization, the National Football League, which has threatened to withhold a future Super Bowl if the bill goes into effect. And this lesson goes even further. Georgia has been trying to grow its biotechnology sector, but at the same time passed incredibly restrictive laws regulating various kinds of research and the handling fetal stem cells for that research. How do they possibly hope to have it both ways?
In North Carolina, leading businesses like Dow, Redhat and Biogen have also been outspoken in their opposition to HB2, with tweets like this from Redhat President & CEO Jim Whitehurst: “At #RedHat we strongly value diversity: http://red.ht/1MCUERn . HB#2 is a clear step backwards. Sad day. #WeAreNotThis”
I hope that North Carolina, my current residence, and Georgia, my previous residence, wake up in time to realize that bills fostering bigotry and discrimination aren’t just bad for democracy, they’re bad for business. Times have changed since the Jim Crow era, and businesses know that they lose a huge competitive advantage in hiring if they can’t get top talent to move to as state perceived as bigoted and backward. These regressive laws might help consolidate the base voters (in both senses of that word), but they are most certainly bad for business.
After over ten years of movie production tax incentives (MPIs), Georgia may finally be reaping the rewards of their generous tax credits in the way of a local film industry growth. MovieMaker magazine just named Atlanta the number one city for filmmakers to live and work, and the 2013 employment numbers showed a nearly 100 percent growth from the previous year.
Atlanta was just named first among the “Best Places to Live and Work as a Moviemaker 2016: Top 10 Big Cities,” up from sixth last year, according to MovieMaker magazine this month, with Savannah coming in first among the top ten small cities (“Best Places to Live and Work as a Moviemaker 2016: Top 10 Small Cities and Towns“).
So Atlanta beat out New York, Austin, Los Angeles and Albuquerque, in the following four spots respectively. Chicago, Seattle, Boston, San Francisco and Memphis rounded out the top ten.
Atlanta’s top position was, according to the article, based on several key factors: generous 30% tax credits; a growing talent pool that increasingly includes directors and producers, as well as talent for larger on-screen roles; a hip-hop scene to rival New York and L.A.; good restaurants; affordable housing; and the fact that “217 days of the year are pure sunshine.” Another oft-mentioned factor, overlooked here, is the city’s Hartsfield Jackson International Airport, the busiest in the world.
Maybe more importantly, film employment has increased dramatically in the state. According to recent figures released from the Bureau of Labor Statistics, Georgia saw a 94 percent growth in employment in motion picture production and distribution, and a 187 percent growth since 2010.
Looking at a comparison of Georgia and 11 other states with MPIs over this period, most have stayed rather steady over the 12-year period. Utah saw a large increase in 2013 as well, but this might be a statistical aberration, given the low-level of employment in all the previous years. California and New York were left off this intentionally, since both states’ much higher overall numbers obscure the differences in the smaller states, but neither showed anything like Georgia’s growth over the last few years.
This brings up a few questions: is this meteoric rise for Georgia due mostly to the state tax incentive, or are other factors at least as important? And given the success of the industry in recent years, are incentives still necessary going forward, or could they be reduced or eliminated? Time will tell, but as a recent Atlanta Journal Constitution article indicates, the state seems committed to continued support for the incentives.
In a new report by Joe Cortright at City Observatory shows that between 2007 and 2011, jobs grew in central cities while actually declining somewhat in the periphery. Or more specifically, employment within a 3 mile radius of the city center grew 0.5%, while jobs beyond that radius declined by 0.1%. This indicates a reverse in the long-term trend of suburban job growth and slower or negative urban growth.
This seems to strengthen my observation, with Cathy Yang Liu, that central cities have an advantage in growing segments of the economy; in particular, creative industries. In our 2012 article “Are Central Cities More Creative? The Intrametropolitan Geography of Creative Industries,” we noted that creative industries are more centralized, though in the period studied (1998-2002), growth in the suburbs still outpaced those in the central cities. Apparently this trend continued between 2002 and 2007, but reversed dramatically between 2007-2011. According to Cortright, “Our analysis of census data shows that downtown employment centers of the nation’s largest metropolitan areas are recording faster job growth than areas located further from the city center.”
And it appears that creative industries are driving this new growth. The report goes on to say that
“The strength of city centers appears to be driven by a combination of the growing attractiveness of urban living, and the relatively stronger performance of urban-centered industries (business and professional services, software) relative to decentralized industries (construction, manufacturing) in this economic cycle.”
And this may suggest a longer-term trend. As Cortright concludes, “…there are structural forces that suggest the trend of center-led growth will continue.” Sounds about right to me.
Yesterday the California Legislative Analyst’s Office (LAO) issued a new report on the impacts of that state’s 10% tax credit for film and television production. This follows on the heels of a similar report from North Carolina. Both states are debating whether to continue the tax credit programs, and these reports are bad news for supporters of movie production incentives (MPIs) in both states.
The California LAO study avoided clear recommendations for lawmakers, but their key takeaways were:
- States shouldn’t compete for film productions using subsidies
- Since they do compete, California may need to protect its industry by doing the same
- But lawmakers should proceed with caution, since the subsidies are both expensive, and do not pay for themselves
Obviously the admonition to other states is somewhat predictable, given the fact that Los Angeles County alone is home to some 50% of film industry employment nationally. And it is true that film production has declined in the state, both because of general declines in the industry and losses to other states. But the last issue — that the high costs of MPIs are not offset by the economic benefits — challenges more rosy pictures painted by many previous studies, including one from the Milken Institute from February. According to that report:
California should not attempt to capture or keep productions that are looking for the highest possible incentives — that’s a game it can’t win. Instead, the state must facilitate the preservation of the core employment base and production infrastructure, as well as help local filmmakers restructure and adapt to the new age of digital production and distribution… California should ensure enough incentives to balance out its higher costs and the increasing aggressiveness of other states without sacrificing its future. (Klowden et al., 2014)
The LAO study revisits an earlier study by the Los Angeles County Economic Development Corporation (LAEDC), which suggested that “…every $1 of tax credit returned $1.11 in state and local revenue.” The LAO estimated that a more accurate figure would be %0.65 for every $1 spent. In addition to the cautions suggested above, the report points out that film and television production could decline in the state regardless of legislative actions, that subsidizing this industry both sets an awkward precedent and could stoke a “race to the bottom” with other states, and that the effectiveness of MPIs could be difficult to assess in any case.
The California study follows closely a memo by the North Carolina Fiscal Research Division (FRD), which itself was a response to an industry-supported study by researchers at North Carolina State University. Though the memo was more preliminary than the California LAO report, it did find several concerns with the more optimistic results of the NC State report. Similar to the California case, initial calculations suggest that instead of returns of $1.06 and $1.42 for state and state + local for each $1 of tax credit, the FRD found returns of $0.46 and $0.61 per $1 respectively. The 25% tax credit for North Carolina productions is set to sunset at the end of 2014, barring action by the legislature to extend it.
Look for more such dueling studies as increasingly states question the efficacy of MPIs as a tool for employment and economic growth going forward.
It’s been a busy few weeks for me…
First, I traveled to San Antonio for my fourth Urban Affairs Conference. My presentation was a comparative study of 22 states offering movie production incentives (MPIs) over the last 10 years, with a special focus on the metropolitan nature of film employment. [see the complete presentation here].
Film industry employment is metro employment
Besides showing that across states, an increase in film industry employment has a lot more to do with the level of existing employment — showing a path-dependent relationship — than with the level of tax incentives available, I was able to show that film jobs are heavily concentrated in metropolitan places. In a pooled sample from 2007-11, 94% of film industry workers lived in metro areas, with nearly half (43%) in the metros’ central cities. In addition, over half (53%) lived in the top 10 filmmaking cities, with nearly 40% of workers residing in the greater Los Angeles (*including Riverside-San Bernardino) and New York metros.
In Georgia, nearly 90% of film industry jobs were in the 4 central counties of the Atlanta metro (Fulton, DeKalb, Cobb & Gwinnett).
The rise of “Hollywood South”
Anyone who has lived, worked, or even visited Atlanta lately can easily recognize the signs: a line of white trailers, covered windows with adjacent scaffolding and lighting rigs, and the occasional celebrity/zombie sighting… all evidence of the recent growth in film & TV production in Atlanta and the surrounding area.
Yesterday I was fortunate enough to attend the Second Annual Atlanta Studies Symposium, held at the newly acquired and renovated Georgia State University Centennial Hall, formerly housing the Atlanta Life Financial Group. This is noteworthy because GSU has led the revitalization of downtown Atlanta, taking over former office towers and commercial spaces nearly as fast as their tenants could skedaddle to the northern suburbs. But I digress…
Amidst a great assortment of presentations on Atlanta past and present, I was on a panel that included research on the option of local, organic food for low-income urban families; and a look at the new trend in “open streets” programs in cities around the U.S. and beyond. I had tough acts to follow, but I persevered. Mine was the last panel presentation of the day, before the closing keynote by Regime Politics author Clarence Stone, so I felt some pressure to keep my audience awake so they wouldn’t miss hearing from this icon of urban politics. I was really wishing I could still make some changes to my PowerPoint, but I was forced to improvise a bit at the last minute when, just moments before the panel began, I received a tweet informing me of an article just released by The Hollywood Report entitled “How Georgia Toppled Louisiana in Attracting TV Productions.” Needless to say, I wanted to include this in my talk, so I found myself opening by reading quotes off my iPhone… [See my tweet/blog piece on this article shortly]
After giving a litany of recent productions shot in or near Atlanta in the last several months, including the Hunger Games series (all 4 films so far and counting); Anchorman 2, which had my beloved Manuel’s Tavern converted to a New York watering hole after replacing all the Atlanta sports memorabilia (and one naked portrait) with that of NYC teams; and of course The Walking Dead, whose popularity is such that after 4 seasons, it has spawned a cottage industry of TWD locations tours.
According to Georgia’s Film, Music & Digital Entertainment Office, nearly $1 billion was spent directly in the state in fiscal year 2013, generating an estimated $3.3 billion in economic impact. That’s an increase of $55 million from FY2012, and nearly a quarter of a billion since FY 2011, when the industry spent $689 mil. That is nothing to sneeze at. But of course they didn’t mention the cost of the program, which could be up to 30% of that direct expenditure, or upwards of $300 million from state revenues, since the tax incentives are based on the production budget, not the taxes owed. Producers are allowed to sell their excess credits, often heavily discounted, to other companies and individuals who owe Georgia state income taxes, which has spurred a new industry for brokers of such tax credits.
So given this growth in productions, what does that mean for the Georgia-based film industry? So far, it’s hard to tell. Based on the latest numbers I have (2011), film industry employment is at approximately the same level as it was in 2000, prior to the passage of a series of increasingly generous tax credits. There has been some growth since the bottom of 2004, following the passage of the first film tax credits in Louisiana, but the biggest spikes come immediately after increases in the credits, and then drop and/or level off (see the chart below).
Occupational data looked a bit more promising, but while the four major film & television occupations showed growth overall, only the largest and least production-specific group — Audio & Video Equipment Technicians — showed actual growth. (see the following chart).
In short, the last 2 years may in fact tell a different story, but in the mean time, I think we should be asking some tough questions about how this program is working, and whether it is really benefiting Georgia taxpayers, or even Georgia filmmakers.
This week marks the 30th anniversary of the Apple Macintosh computer. I don’t think that it is an exaggeration to say that this humble machine changed my life.
For those of you unfamiliar with it, here are a few fun facts:
- 128 kilobytes of RAM (that’s right, not megabytes, let alone gigabytes)
- One 400 kb. 3.5″ floppy drive (with one additional external drive optional)
- No hard drive (unless you count the hardshell “floppy”)
But it was still quite innovative in its time, with:
- The first GUI on a personal computer
- The first mouse
- The first screen with black text on a white background (it had a 9″ monochrome monitor)
- First modifiable fonts & bitmap art, a.k.a. “what you see is what you get” (WYSIWYG)
- And although it came with a word processor (MacWord) & paint program (MacPaint), I paid a bit extra for Microsoft Word for Macintosh 1.0.
It doesn’t look it now, but it was actually quite sexy back then. But why did this particular machine change my life? Well, first, I bought it my first year of grad school, January 1985. A critical time, to be sure. It was my first computer, and though I used it primarily for typing papers, it changed the way I understood technology and how it worked in everyday life. I don’t know if it was love at first sight, but I started a relationship that wasn’t like the one I had with my toaster or my alarm clock. It truly was a “personal” computer.
Professionally I became quite competent with MS-DOS computers, and programs like Lotus 1-2-3. But my first love was always there. In my first business as a computer consultant I used both systems side-by-side. I still remember using special software and a cable connection to copy Lotus files to the Mac so I could do 3-way sorts using MS Excel for Mac, before it was even available on the PC. I thought I was pretty cool, I guess…
Eventually I decided to focus on the Mac exclusively, despite the fact that it was even less ubiquitous then than it is now. My first company was called Human Technologies, and the logo was a Macintosh icon with a smiley face on the screen (no doubt a copyright infringement, in retrospect, but fortunately I remained well below Mr. Jobs radar. That company was never much more than a sideline, but it helped lead to a series of temp jobs, and eventually a regular gig doing admin for a prepress company’s desktop publishing division. All because I knew Macs…
After that came a stint as a Mac tech, after which my partners and I started what must have been one of the first Mac-based Web design and hosting companies in the Philadelphia area. We had a good run, but trying to host websites on a bank of mid-1990s era Macs was a challenge. But I think it’s safe to say that we had a lot of fun trying…
Apple was about to go through some tough times itself… with a shrinking market share and the post-Jobs strategy of aping IBM-clones. But then Steve Jobs returned triumphantly, and the glory days of Apple would begin a few years later; first with the iPod and iTunes Store, then the mobile phone that changed everything.
Strangely, I was slow to get on the iPod and iPhone bandwagons, though I’d always had a Mac as my primary computer. My first iPod was a 1G Nano, and my first iPhone was the 4. But now, when people hassle me for being an apple fanboy because of my MacBook Pro, iPad, iPhone 5s, Apple TV, and even an old iPod Nano (I love the radio feature for NPR on the go), I have to tell them this long history.
Ok, maybe I am a fanboy… but I come by it honestly. Apple has always been there for me, and it’s co-founder has always been one of my heroes. And yeah, maybe I wasn’t there for the Apple II, let alone the Apple I, but I can’t imagine what my life would be like if I hadn’t seen that SuperBowl commercial 30 years ago this week, followed by an intriguing introduction by my first graduate stats professor.
So, happy 30th birthday, Macintosh! And they said it wouldn’t last… Here’s to 30 more years of thinking “different.”
Please excuse the somewhat off-topic post, but as I sit here at 11:20 a.m. exhausted from doing battle with USAA Federal Savings Bank, I can’t get my mind back to work until I get this off my chest.
Yesterday I deposited a $250 check from my local state college (Georgia Institute of Technology), drawn on a small community bank (Bank of America), into my USAA checking account in the only way possible for a bank with no retail outlets: at the local UPS Store, where USAA offers “Easy Deposit” services.
I then made a couple of payments & purchases, totaling $143.35, thinking the remaining $106.65 would get me through to my monthly check next week. Little did I know, USAA, not trusting that Georgia Tech and B of A would honor that hefty sum, released only the first $100 of the $250, holding the balance for 7 business days (July 30). And yes, the fine print on their website says “Your deposit will be reflected in your account immediately. Funds may not be available for immediate withdrawal,” but could I reasonably expect that this small sum from a state organization would be subject to a hold?
To answer that question, I consulted the Consumer Financial Protection Bureau (CFPB), the agency set up as part of Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), and whose director, Richard Cordray, was finally approved by the U.S. Senate last week after nearly 19 months of Republican-threatened filibusters. Here’s what they had to say on the subject:
Generally, if you deposit a check for $200 or less in person to a bank employee, you can access the full amount the next business day. If you deposit more than $200, you can access $200 the next business day, and the rest of the money the second business day…
It may take longer for you to access your deposit for a few reasons:
- If you have a new account or if your account has been overdrawn too many times in the past six months;
- If you make a deposit over $5,000;
- If you make a deposit at an ATM owned by someone other than your bank or credit union; or
- If the bank or credit union reasonably believes the deposited check may be uncollectible.
So I called USAA, where I was told that all funds are subject to holds pending collection based on unspecified criteria in their “system.” I asked if all funds in fact were held, to which the supervisor answered “no.” “So on what basis were my funds held?” She was not at liberty to say, as that information is “proprietary.”
“So how can I, as a consumer, know when, how much, or how long my funds will be held before I deposit them in your bank?” She could not answer that question. She did inform me, however, that even after the funds are collected, which in most cases is between 48-72 hours (2-3 business days), the hold remains in effect for the entire 7 business days “in case there is a charge back from the issuing bank.” In other words, USAA can hold your money up to 5 business days after they get paid “just in case.” And this is not spelled out in their disclosure statement.
Frustrated, I hung up. Then I realized that one of the payments I made from this account was an electronic payment on a credit card bill. Since there was no sign that this payment had hit my account, I called USAA back to find out what would happen, and how, if at all, I could prevent further problems. I was told that USAA may pay the bill and charge me a fee, or they may return the payment request unpaid and charge me an even higher fee. He thought the latter was more likely, but again, the “system” would decide.
Realizing I would need to deposit funds to cover this $43.65 “overdraft,” I prepared to head back to the UPS Store to transfer funds from another bank account. I was in the car when I realized… “what if they hold some of all of this new deposit?” So I made a third call to USAA…
I explained the situation to the pleasant customer service representative, and after a long hold I was cut off (my fault). To my surprise, I immediately got a call back from this representative, who told me that they were now releasing the funds in my account, but that the payment was presented overnight, and was returned unpaid, which would prompt a $29 overdraft fee (remember, but for the held funds, I had a positive balance). I could, however, request the fee be waived once it showed on my account (given my experience, I’m not holding my breath).
Next I called my credit card company, who said that they would not be submitting the payment request a second time (something usually done for bank drafts), and that I would be hit with a returned-check fee of $25 dollars which could only be waived upon receipt of a letter on USAA letterhead stating that the problem was a result of USAA’s error (again, not holding my breath).
So, after wasting an entire morning, and incurring fees at this point totaling at least $54, I still don’t know where I stand. Once the dust settles, I see myself wasting another several hours of hypertension-inducing customer service calls to finally resolve this situation. And all because USAA bank chose to cloak its deceptive banking practices in overly-vague “disclosure” language.
Please, Director Cordray, now that you’ve finally begun your long-delayed engagement, make sure the CFPB has some regulatory teeth. In the mean time, please feel free to let USAA know how you feel about their policies. And remember to never expect your funds deposited at USAA to be available before 7 business days.
- 3 Easy Ways to Avoid Overdraft Fees (dailyfinance.com)
As you may know from my previous post, last week I attended the Experience the Creative Economy Conference in Toronto. One topic of the “Small Group Chats,” — four 30-minute open-ended discussions repeated on two consecutive mornings — was on “Inequality and the Right to the City.”
During the session, I alluded to one of my favorite quotes from Dietrich Bonhoeffer, a pastor who broke from the German Lutheran Church over opposition to the Nazi regime, and who ultimately was executed for his role in a failed assassination plot on Hitler. In his essay “The Church and the Jewish Question,” he said that our role
“is not just to bandage the victims under the wheel, but to put a spoke in the wheel itself.”
As biographer Eric Metaxas1 notes, this is an awkward translation, but it is generally understood to mean that we must stop the wheel of injustice by jamming a stick in it, which is a pretty radical way to stop a wheel, as you know if you’re a cyclist like me (does anyone else remember that harrowing race scene in the 1979 classic Breaking Away?). My interpretation is that the two approaches are not either/or, but both/and. It is not enough to merely bandage the victims, nor should we ignore the victims while we continue in the larger task of spoking that wheel of injustice.
Applied to the issue of inequality, this means battling it at both the micro and macro levels. Much of the criticism of the move toward more creative work is that it seems inevitably tied to increased levels of inequality. First, it is important to note that to some extent, the increase in wage inequality is a statistical problem; if incomes rise for some, even if all do not benefit, those at the lower end of the income scale are not worse off in absolute terms because others are doing better. Income is not a zero-sum game, after all, but I do not wish to get bogged down in the debate about relative vs. absolute poverty today, though it is a legitimate debate.
Another realm of urban inequality is spatial. Gentrification and the resulting displacement of economically disadvantaged residents is a common outgrowth of an increase in creative workers, especially in the central cities of the U.S. where a blend of federal housing and transportation policies and private market forces led to “white flight” and the great suburbanization of the post-war period. But as Jane Jacobs and others have pointed out, the city is a constantly changing organism, and displacements are an inevitable result of the spatial equivalent of Schumpeterian “creative destruction.” Here is where I want to revisit Bonhoeffer: rather than blindly battling urban redevelopment, we should be fighting the root causes of inequality, while simultaneously aiding those victimized by a broken system.
From a policy perspective, this means seriously addressing the issue of residential displacement by both slowing down the sometimes rapid rates of neighborhood transitions with strong laws protecting both renters and owner-occupiers such as rent-controls and property tax relief for owners and landlords catering to the long-term residents. At the same time we need to work on the causes of increasing inequality and decreasing social mobility.
1Eric Metaxas, Bonhoeffer: Pastor, Martyr, Prophet, Spy, (Nashville: Thomas Nelson, 2010), p. 154.