How tax breaks and cheap labor built the Hollywood of the South

When discussing the impact of the writers’ and actors’ strikes, Americans still use “Hollywood” as shorthand for the entire TV and film industry.

But as this summer of labor struggle has proven, the entertainment industry’s borders are porous. The current Writers Guild of America and SAG-AFTRA work stoppages are profoundly impacting Georgia, where the film and television industries are the fastest growing in the nation. 

In 2022 alone, the industry employed an estimated 20,000 workers in Georgia on 412 films, television shows, and music videos, spending $4.4 billion in the state. Georgia also has over 6 million square feet of film stages, second only to California.

So, how did Georgia become the Hollywood of the South in the first place?

The beautiful scenery and diverse people and places certainly help. But at the end of the day, it’s all about the economic incentives from tax credits and non-union labor. Or, as former Atlanta athlete Deion Sanders famously rapped: “Must Be the Money.”

‘If the tax credits are strong, Hollywood will come.’

If the strikes currently shutting down the scripted TV and film industry had come 20 years ago, Georgia would have barely noticed.

Hollywood didn’t have Georgia on its mind until the 1970s, when Deliverance made a big splash in 1972, prompting Georgia’s pioneering first film commissioner, Ed Spivia, to attract more productions to the state. But even in the eighties and nineties, only a handful of productions a year were shot in the Peach State. In 2003, Georgia’s film and TV production union, IATSE Studio Mechanics Local 479, had only 191 members. 

Then came a bit of local pride. In 2004, Georgia missed out on the production of Ray, a biopic about Georgia native Ray Charles, to Louisiana because of that state’s generous tax incentives.

That loss helped Gov. Sonny Perdue convince the state legislature in 2008 to offer a 20% incentive on productions of $500,000 or more, plus an additional 10% if the movie or TV show added the state’s peach logo to its credits. The combined 30% discount, which is uncapped and doesn’t have a short-term sunset clause, helped grease the wheels forof Hollywood’s migration from California.

The film industry spent $93 million on Georgia-based productions in 2007, but by 2016 that figure had ballooned to $2 billion. For 2019, the Georgia Department of Economic Development reported a massive $2.9 billion in revenue from almost 400 productions filmed in the state – and an expenditure of $961 million in tax credits. The department estimates that tax breaks exceeded $1 billion in 2021 and 2022, respectively. That’s behind only New York and California, which cap their film tax breaks at $420 million annually. 

“If the tax credits are strong, and they last, Hollywood will come,” a movie producer who did not wish to be named told Atlanta Civic Circle.

Non-union labor

The industry’s less publicized secret is that it also seeks to exploit cheaper non-union labor in Georgia.

The U.S. movie production industry was worth $95.4 billion in 2022, but a disproportionate amount of that cash fattened the designer wallets of Hollywood’s elite—corporate CEOs and star actors. There’s no red carpet for the low-paid, overworked freelancers and temporary contractors hired for non-union productions—often without offering health care. 

Film production is heavily unionized in California and New York, but far less so in Georgia. Unionized productions can’t employ non-union workers, and SAG-AFTRA and IATSE union members can’t work on non-union productions. That said, a lot of Georgia film jobs are non-union.   

Non-unionized workers don’t have the same protections and benefits as their unionized colleagues and make about 40% less. Last year, union members in the film industry made an average of $2,200 a week, compared with $1,300 a week for non-union workers, according to the Bureau of Labor Statistics.

Georgia has about 20,000 film production workers–and less than half are unionized. Atlanta is the state’s massive hub for union membership; about 5,000 workers based in Atlanta belong to IATSE Local 479, which covers “below-the-line” workers in the industry, such as crew members that work as stagehands, hair, make-up and costume designers. The SAG-AFTRA Atlanta local (for actors, stunt performers, dancers, voiceover artists) has another 3,000 members. There are also about 50 WGA members statewide. 

Capital Flight?

Hollywood has demonstrated it isn’t afraid to leave a state if the grass is greener elsewhere.

Just ask Louisiana, the ex-Hollywood South. The film industry was thriving there until a 2015 law signed by Gov. Bobby Jindal capped the amount of tax credits redeemed at $180 million yearly. Hollywood packed up and largely fled east to Georgia soon after.

Republican governors and statehouses tend to offer plenty of sizable tax incentives to attract capital. Still, they’ve been less enthusiastic about doing so for Hollywood in recent years because of the industry’s politics, which skew Democratic and liberal.

Georgia lawmakers floated a bill in 2022 to cap the state’s film and TV tax credits at $900 million and restrict film companies from selling them – but pulled the bill before a vote. The Georgia Department of Economic Development, for one, wants to avert the threat of capital flight from Hollywood. Last month, Andrew Capezzuto, the agency’s general counsel, warned against capping the credit at a hearing held by a new joint legislative panel reviewing all of Georgia’s income tax credits and sales tax exemptions.

“To be able to rely on incentives that are predictable is very important for us to remain competitive,” said Capezzuto.

But the jury is out on the sheer economic benefits of Georgia’s film and TV tax credit. The state has reported that it generates as much as $9.5 or $11 billion in annual revenue, but that depends on a 3.57 “multiplier” impact. Using that math, for every $1 in direct film production spending, $3.57 cycles through the Georgia economy. But the Georgia Department of Audits and Accounts said that’s double what the multiplier should be in a fall 2022 follow-up review of the film tax credit. 

Some economists say the tax credit is mostly a boon to the film industry itself. Jeffrey Dorfman, the state’s chief economist, has suggested tax credits should be used to jump-start industries, but may not be needed once those industries are established.

The state legislature’s Joint Tax Review Panel is meeting later this month to recommend potential changes to the state’s tax incentives in time for the 2024 legislative session.