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

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.

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.

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.

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.

Both Holmes and Ohanian are interested to see how politicians respond to the strike, which could determine its end.

For example, in March, LA Mayor Karen Bass publicly stepped in to mediate between school workers of the SEIU Local 99 and the Los Angeles Unified School District, with leaders from both parties praising the mayor for being “a partner” who had been present “incessantly” to broker the agreement, the LA Times reports.

Holmes expects to see more consistent statements from Bass and California Gov. Gavin Newsom about reaching a resolution to end the strikes. Both are likely to lean on messaging about how the strikes are impacting ancillary workers (the caterers and set-builders, for example) who aren’t involved in current negotiations, Ohanian says.

“They could be a quasi representative for all the people affected indirectly in the industry,” he says.

On Friday, Los Angeles mayor Karen Bass called for an “immediate” resolution of the strikes and stated she is “ready to personally engage with all the stakeholders in any way possible to help get this done,” Variety reports. Bass did not take sides in the negotiations but said the resolution must be “fair and equitable,” and that “the economic conditions of the entertainment industry are changing, and we must react and evolve to this challenge.”

One complicating factor will be how Bass and Newsom make their statements with consideration to their donors. While both are invested in support from unions as well as writers and actors, they also receive donor funding from studio heads represented by the AMPTP.

“They’re trying to mediate a fight between two of their kids, and any deviation from purely neutral will be viewed as damaging to the other side,” Ohanian says. “I still think they can help the two sides understand where they’re coming from, but it’s extremely complex.”

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