For decades, state and regional governments across the globe have engaged in a high-stakes "arms race" of financial incentives, offering billions of dollars in tax credits and rebates to lure major motion picture and television productions. The underlying logic remains consistent: by subsidizing Hollywood, a state can jumpstart its local economy, create thousands of high-paying jobs, and establish a permanent creative infrastructure. However, a growing body of evidence from economists and industry analysts suggests that these programs often result in a "race to the bottom," where the primary beneficiary is the film studio rather than the local taxpayer. A new report from workforce training operator Kalison Studios has cast a harsh light on this disparity, revealing that in many burgeoning film hubs, the promised "economic miracle" is more of a transient mirage.
The Oklahoma Paradox: High Profile Productions vs. Low Local Returns
In 2023, Oklahoma appeared to be at the zenith of its cinematic ambitions. The state’s rebate program, which had been progressively sweetened to attract major studios, successfully lured high-profile projects that garnered international acclaim. Taylor Sheridan’s "Tulsa King," the blockbuster "Twisters," and the critically acclaimed "Reservation Dogs" all utilized Oklahoma’s diverse landscapes and financial sweeteners. The crowning achievement of this era was Martin Scorsese’s $200 million epic, "Killers of the Flower Moon." The production was a massive undertaking, transforming the city of Fairfax into its 1920s counterpart and hiring an army of carpenters, set decorators, and landscapers.
On the surface, the infusion of capital seemed transformative. However, the Kalison Studios report provides a sobering counter-narrative. Despite the state seeing roughly $100 million in annual production spending, only 30 percent of that capital actually goes to in-state workers in the form of wages. This data suggests a profound structural leak: while the "spend" is high, the money frequently flows back to out-of-state talent, specialized contractors, and senior crew members who are flown in from established hubs like Los Angeles or New York. For every dollar touted by officials as an investment in Oklahoma, only 30 cents stays in the pockets of Oklahomans, raising serious questions about the long-term viability of such aggressive subsidy models.
A Statistical Disconnect: Mapping the Local Hire Gap
The findings from Kalison Studios highlight a global trend of "transient production" where local hiring rates fail to keep pace with financial incentives. While California and the United Kingdom boast local hire rates of 98 percent, other regions that have rapidly expanded their incentive programs show significantly lower returns for their resident workforce:
- Ontario, Canada: 86 percent local hire rate.
- New Mexico, USA: 82 percent local hire rate.
- Australia: 82 percent local hire rate.
- Georgia, USA: 72 percent local hire rate.
- Hungary: 68 percent local hire rate.
- Oklahoma, USA: 30 percent local hire rate.
Glenn Kalison, founder of Kalison Studios, notes that the discrepancy often stems from a lack of "below-the-line" depth. In regions like Georgia, which has marketed itself as the "Hollywood of the South," the rapid growth of the industry outpaced the development of a local workforce capable of filling senior technical and creative roles. "Georgia is surprisingly low," Kalison remarked, noting that while the state has done more than most to address the issue, there remains a "transient class" of workers who fly in from California to occupy high-paying positions, taking their earnings back to the West Coast when the production wraps.
The Georgia Cautionary Tale: From Boom to Empty Soundstages
Georgia’s journey serves as a primary case study for the risks of subsidy-dependent growth. Between 2015 and 2022, the state distributed a staggering $5.2 billion in tax credits to film and TV studios. During this period, Georgia became the primary filming location for Marvel Studios and major franchises like "The Suicide Squad" and "Creed III." State officials championed the program as a cornerstone of middle-class job creation. However, an independent audit during the peak of this boom estimated that the state saw a return of only 19 cents in tax revenue for every dollar it gave to studios.
By 2024 and looking into the 2025 fiscal outlook, the fragility of this model became apparent. As other regions—including international competitors like the United Kingdom—instituted even more aggressive incentives, Georgia’s production volume began to crater. Production spending in the state is projected to plummet to $2.3 billion across 245 productions in 2025, a sharp decline from its 2022 peak of $4.4 billion across 412 productions. Perhaps most damaging was the departure of Marvel Studios to the U.K., where labor costs are lower and studios are not required to cover the same level of employee health insurance costs. Today, many of the massive soundstages built in Georgia during the boom years sit empty, serving as quiet monuments to the volatility of the industry.
A Chronology of the Incentive Arms Race
The current state of film subsidies is the result of a multi-decade escalation that began in the late 1990s and early 2000s.
- The Early 2000s: Canada, particularly British Columbia and Ontario, pioneered aggressive tax credits to lure "runaway productions" from Hollywood. States like Louisiana responded with their own programs, sparking a domestic competition.
- The 2010s: Georgia enters the fray with an uncapped tax credit, leading to a massive construction boom of production facilities. Other states, including New Mexico and New York, ramp up their programs to remain competitive.
- 2020-2022: The streaming wars lead to a "content gold rush." Production spending reaches record highs globally. States like Oklahoma and New Jersey expand their programs to capture the overflow.
- 2023-Present: A period of contraction begins. Economic pressures, industry strikes, and a shift in streaming strategies lead studios to become more cost-conscious. The "race to the bottom" intensifies as states realize that without a deep local crew base, the subsidies are essentially subsidizing out-of-state labor.
The California Model: Protecting the Global Epicenter
In contrast to the transient nature of production in Oklahoma or Georgia, California maintains a dominant lead in local job creation. According to the report, 98 percent of the $6 billion in annual production spending in California goes directly to resident "below-the-line" crew members. This equates to approximately $1.9 billion per year in local wages. The reason for this success is two-fold: a century of built-in infrastructure and a subsidy program specifically designed to prioritize in-state spending and local hiring.
For example, when "Jumanji" was awarded $44 million in California tax credits, it resulted in the hiring of 538 crew members, the vast majority of whom were California residents. The production is expected to spend over $161 million in wages and payments to local vendors. Unlike other states, California does not need to fly in department heads; the world’s most experienced cinematographers, editors, and production designers already live in Los Angeles.
However, even California is feeling the pressure. Data from the Bureau of Labor Statistics shows that the number of film and TV workers in the state dropped from 141,000 in 2021 to 121,000 in 2024. Total wages fell from $19.2 billion to $17.5 billion in that same span, with Los Angeles County alone losing 15,000 entertainment jobs. This decline has prompted Governor Gavin Newsom and industry advocates to push for even higher subsidies to prevent the "Detroit-ification" of the film industry—a reference to the collapse of the U.S. automotive hub.
The Economic Debate: A Race to the Bottom?
The fundamental question facing lawmakers is whether these subsidies represent a sound investment or a transfer of public wealth to profitable corporations. Findings from California’s legislative analyst last year offered a nuanced perspective. While there is little evidence that expanding tax credits benefits the state’s economy as a whole, the analyst suggested that such increases might be necessary simply to maintain the state’s current share of the market.
This highlights the "prisoner’s dilemma" of film incentives: if one state cuts its subsidies, productions immediately move to the next highest bidder. This creates a cycle where governments are forced to pay more and more just to keep the jobs they already have, with no net gain in global economic activity.
Actor and executive producer Noah Wyle, known for his roles in "ER" and "The Pitt," testified at a congressional hearing last month, emphasizing the human element of this struggle. "It is vital to the strength of industry and city to support these incentives," Wyle stated. "It’s an investment in the city’s most precious commodity and asset. It’s an investment in its people."
Global Competition and the British Advantage
While U.S. states fight amongst themselves, international hubs like the United Kingdom, British Columbia, and New York have successfully built ecosystems that mirror California’s "stickiness." The U.K. boasts a 98 percent local hire rate, New York sits at 95 percent, and British Columbia at 93 percent. These regions have moved beyond mere financial incentives, investing in decades of workforce training and permanent studio infrastructure.
The U.K., in particular, has become a formidable rival to Hollywood. By offering a combination of competitive tax credits, a highly skilled English-speaking workforce, and significantly lower labor costs—driven in part by the absence of U.S.-style health insurance burdens for employers—London has effectively siphoned off the massive "tentpole" productions that once anchored the Georgia and California economies.
Broader Impact and the Path Forward
The Kalison Studios report serves as a warning for states like Oklahoma that are currently in their "film moment." Without a concerted effort to transition from "hosting" productions to "growing" a local industry, the economic benefits will remain lopsided.
To achieve a sustainable film economy, analysts suggest that states must:
- Prioritize Workforce Development: Incentives should be tied to the percentage of local residents hired, particularly in senior roles.
- Invest in Education: Partnering with local universities and vocational schools to create a pipeline of skilled technicians.
- Focus on Infrastructure: Encouraging the construction of permanent facilities that can be used year-round, rather than just for one-off shoots.
- Evaluate ROI Rigorously: Moving beyond "gross spending" figures to look at net tax revenue and local wage retention.
As the entertainment industry continues to consolidate and cost-correct, the era of "easy money" via film subsidies may be coming to an end. For states to truly benefit from the magic of the movies, they must ensure that when the cameras stop rolling and the stars fly home, the prosperity remains behind for the people who live there.
