High cost put on writers strike

Fallout from the Hollywood writers strike will cost California’s already struggling economy an estimated $2.1 billion, a new report concludes.

Although the writers strike ended four months ago, effects of the three-month walkout continue to ripple across the state’s economy, causing a projected net loss this year of 37,700 jobs directly and indirectly tied to the entertainment industry, according a study released Thursday by the Milken Institute.

The report is the first to examine the statewide costs of the writers’ work stoppageand it is at significant variance with prior estimates, pointing out the difficulty economists have in reaching a consensus because of varying methodologies. An earlier study by the UCLA Anderson Forecast projected that the strike would cost Los Angeles County economy roughly $380 million, while the Los Angeles County Economic Development Corp. estimated a local impact of $2.5 billion.

The strike shut down scripted TV production, paralyzing much of the entertainment industry, a key driver of the California economy. Coinciding with a housing market downturn, the walkout was one of several factors slowing the state’s growth, the report says.

“This was not a discrete one-time hit,” the Milken study said. The strike “had a substantial impact on California’s economy in general and on Los Angeles County in particular.”

Although the strike ended in February, many of those who lost their jobs -- set decorators, lighting technicians and makeup artists among them -- were not hired back as studios scaled back production.

The strike’s effect was further magnified because workers who lost their jobs curtailed their spending. Additionally, a number of businesses that service the industry, from caterers to hotels to dry cleaners, also were squeezed.

The study says personal income is projected to fall $3 billion, and wages and salaries $2.3 billion in 2008 because of the strike.

The losses will diminish by early next year as production returns to normal levels -- unless the Screen Actors Guild strikes after its contract expires June 30.

“A SAG strike would have a devastating effect on the California economy because it would be occurring right at the point when we hope the economy begins to come out of recession,” said Ross DeVol, director of Regional Economics at Milken and one of the report’s authors.

--

[email protected]