A Comment on Georgia Department of Economic Development Report: ‘The Economic Impact of the Film Industry in Georgia’

15 Pages Posted: 24 Feb 2020

Date Written: January 27, 2020

Abstract

This article comments on the recent economic impact report (Meek Report) commissioned by Georgia Department of Economic Development (GDEcD) on the economic impact of the film industry in Georgia.

• Following the charge of the GDEcD, the Meek Report examines only the benefits of the film industry and does not consider the costs of the state’s film tax credit program. The state has issued nearly $5 billion in film tax credits since 2008, and it approved $860 million in film tax credits during FY 2019. The annual amount of forgone tax revenue represents approximately three percent of the state-funded budget or $230 dollars per Georgia household.

• Though the Meek Report acknowledges the existence of the strong body of research on film incentives and economic growth, it does not report the consensus findings of existing studies, which do not support the hypothesis that film incentives have a net positive impact on state economies.

• Rather than use available records of direct spending on film production from state government agencies, the Meek Report concocts an estimate of direct spending using a dubious method that is not adequately described, nor does it appear to be sound. The estimated direct spending estimate is inconsistent with other available measures and is not credible.

• The Meek Report uses an excessive multiplier to estimate indirect and induced effects from film production spending. The origins of the multiplier are not explained, and when combined with the excessive direct spending estimate, it inflates total economic impact well above its likely impact.

• Film employment can provide a misleading representation of the industry’s impact on the Georgia economy. Recent growth in film industry jobs likely reflects a shift from full-time to part-time workers.

• Using the Meek Report’s estimate of film industry jobs, the cost of film tax credits is $49,000 per job, (full-time and part-time). When GDEcD film employment data is adjusted for full-time equivalency (FTE), the cost is $110,000 per FTE job.

• The Meek Report highlights that the average wage for film jobs exceeds the average wage of the state. The comparison of averages is misleading, because the mean is skewed upwards by the exceptional salaries of a few actors, directors, etc. who are not representative of typical Georgia film workers. The median wage of US film workers equates to $39,000 (FTE), which is below the median wage of $48,000 of all jobs. Typical film workers do not earn high wages.

• The methods and data described in the Meek Report do not support its claims that the film industry is responsible for $8.6 billion in output or 51,000 jobs. Available records of direct film production spending combined with reasonable multipliers results in an estimated economic impact of Georgia’s film industry of between $3.4 and $5 billion in total output and around 30,000 total jobs.

• Direct film spending represents close to $3 billion of Georgia’s economy, which is approximately 1/200th of the state’s $600 billion economy. While film production in Georgia may exceed other states, contrary to popular perception, the film industry is not a major driver of economic output or jobs in the state.

Keywords: Film Tax Credits, Movie Production Incentives, Georgia Film Industry, Economic Impact

JEL Classification: H20, H71, H81, L82, R11, R58

Suggested Citation

Bradbury, John Charles, A Comment on Georgia Department of Economic Development Report: ‘The Economic Impact of the Film Industry in Georgia’ (January 27, 2020). Available at SSRN: https://ssrn.com/abstract=3526169 or http://dx.doi.org/10.2139/ssrn.3526169

John Charles Bradbury (Contact Author)

Kennesaw State University ( email )

Dept. of Economics, Finance, and Quant. Analysis
560 Parliament Garden Way NW
Kennesaw, GA 30144
United States

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