Hollywood strikes have already had a $3 billion impact on California's economy, experts say: It's causing 'a lot of hardship'

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People take selfies beneath the Hollywood sign as the WGA (Writers Guild of America) strike continues on July 12, 2023 in Los Angeles, California. The TV and film writers' strike has crossed 100 days since the Writers Guild of America and the Alliance of Motion Picture and Television Producers failed to reach an agreement on a new contract, and it's likely to have cost the California economy at least $3 billion so far. That's according to estimates from Todd Holmes, a professor of entertainment industry management at Cal State Northridge, based on economic analysis from the last Writers Guild of America strike that started in 2007. That strike led to 37,700 lost jobs and a $2.1 billion blow to the California economy, according to the Milken Institute, an economic think tank. Holmes took that $2.1 billion figure and adjusted it for inflation and other factors to come to a new strike-induced loss of upwards of $3 billion for the state of California today. It's likely to be even higher now accounting for the additional members of the Screen Actors Guild-American Federation of Television and Radio Artists, the union which represents various performers, joining picket lines in July. Widespread impacts from restaurants to real estate The strikes don't impact just writers or actors. Halted productions impact all kinds of businesses, including companies that provide catering for productions, restaurants near studios, prop houses, set builders, dry cleaners, professional drivers, florists and more. "A lot of different people are impacted surrounding the industry," Holmes says, "and it's causing them a lot of hardship." People who hold entertainment jobs and entertainment-adjacent roles account for almost 20% of the LA-area income, says Lee Ohanian, an economics professor at the University of California, Los Angeles. "The economic impact is even bigger because average compensation in the industry is considerably higher" than the average earner, he tells CNBC Make It. That can have a big downstream effect if those workers pull back on their discretionary spending, especially for big purchases like buying a car or a home. In one high-profile instance, actor Billy Porter said in an interview with Evening Standard he is selling his house to save money during the strikes. A housing crunch could push rent prices higher and cause lower earners to leave the state, said Kevin Klowden, lead author of the Milken report, according to LA Times reporting: "We saw an exodus in the last writers' strike," he said. Across the state, some 700,000 people are employed in entertainment jobs, or close to 5% of the California workforce, Ohanian says. How long could the strike last Some experts say the current strike could set the record for the longest writers' strike in Hollywood history. A 1988 strike lasted 22 weeks, while the strike in 1960 (also the last time writers and actors were both on strike) lasted 21 weeks. Now entering its 15th week, the current strike would surpass both of those records if it goes on until mid-October. "I could easily see that being broken," says Ohanian. "Typically, workers have less of an economic cushion than the corporate side, so oftentimes in long strikes the unions tends to cave. But thus far, we're not seeing that, and this could certainly reach the six-month mark." If strikes last until October, Holmes estimates the economic cost will total closer to $4 billion to $5 billion. "With the dual strikes, if it were to go beyond that into November, that estimate would be closer to $5 billion-plus," Holmes says. Why this strike could break records: Union solidarity versus disjointed studios On Friday, WGA leaders met with negotiators for the Alliance of Motion Picture and Television Producers, which represents Hollywood studios and streamers, for the first time since the strike began May 2. However, the two parties reached a stalemate over two key proposals to establish minimum staffing levels in episodic TV and a guaranteed minimum number of weeks of employment. The union also confirmed it's seeking the right to honor other unions' picket lines, meaning even if WGA gets a deal, writers will still want to honor striking SAG members, and work won't resume until both strikes are resolved, Variety reports. The WGA represents 11,500 members, while SAG-AFTRA represents roughly 160,000 members. However, "as united as writers and actors are, it's more disjointed on the studio side," Holmes says. That's because, in addition to traditional studios like Disney and Warner Bros. Discovery, the AMPTP represents tech companies like Amazon and Apple that have changed the landscape with streaming. For these tech companies, the production and entertainment slice of their business is a much smaller piece of what they do, Holmes says, so it's going to be easier for them to hold off on negotiating a deal compared with traditional studios where a work stoppage may have a bigger impact on their bottom line. Politicians could bring strikes' end: 'They're trying to mediate a fight between two of their kids'