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The Effect of the Writers Strike on the Economy

By tribor Mar 03, 2008 2380 Words
The Writers Guild of America strike (WGA) is having a vast effect on the economy. The strike is between the Alliance of Motion Picture and Television Producers (AMPTP) and the WGA which is looking for a new contract. Not only are the writers and actors being affected by the strike other people are also being affected. It is a wide spread problem that is having a trickle down effect. The WGA strike is a complex problem including the history, separate sides, the cost of the strike and the effect on the entertainment industry. The 2007–2008 Writers Guild of America strike is a strike by the Writers Guild of America, East and the Writers Guild of America, West that started on November 5, 2007. The WGAE and WGAW are two labor unions representing film, television and radio writers working in the United States. Over 12,000 writers joined the strike. The strike is against the Alliance of Motion Picture and Television Producers a trade organization representing the interests of 397 American film and television producers… The current strike has lasted 10 weeks and 2 days, as of January 16, 2008. The last such strike in 1988 lasted 21 weeks and 6 days, costing the American entertainment industry an estimated $500 million ($870 million in 2007 dollars). (

Because of the large amount of money being lost it can easly be seen how this can affect many lives. It is a drain on our already drained economy. Such a wide spread problem cannot easily be fixed or ignored. Some people have already come up wth different and creative ways to survive during the strike.

This is not the first time a stike has occurred, the last strike was in 1988, which caused much of the same problems. As detailed in Showbuzz, The 1988 strike by the Writers Guild of America did not produce so many fresh jokes. For one thing, the airwaves were filled with reruns. And not too much was funny. The strike lasted 22 weeks, reportedly cost the industry $500 million, and caused hardship for individual strikers. "People lost their houses, they weren't able to send their kids to college," Dick Wolf, executive producer of Law and Order, told the San Francisco Chronicle in 2001, when a similar strike threatened (but didn't materialize.) Some were forced to adjust in creative ways. Fran Drescher and her husband Peter Marc Jacobson (later co-creators of "The Nanny") launched a good business, Loaf & Kisses Gourmet Croutons, which kept going. ( With knowledge of a previous strike it is hard to fathom how Hollywood could be caught off guard again. Perhaps the entertaiment industry should have lerarned from past mistakes with such a large amount of money lost in 22 weeks. To this day some people have not recoved from the 1988 strike. Although the strike of 88' was such a huge hit to the ecomy it gave way to some of the telivison shows and genre we watch today, show buzz writes, To fill the hours with something other than repeats, the networks looked to what was then alternative programming. So-called news magazines such as CBS' "48 Hours" rose to prominence during the strike. And Fox picked up a show called "Cops" from a local station, and put it on its Saturday night lineup, where it remains, 20 seasons later, the longest-running of what is now being called reality television. Some say that the strike helped create this peculiar genre of unscripted shows, which fill much of the primetime schedule and, if there is another strike in 2007, is likely to take up even more. (

With the rise of reality television as a form of entertainment today some good could be seen coming from the 1988 strike as the reality television industry is now a multi million dollar industry adding to the economy. With such shows as Survivor, American Idol and the amazing race are some of the most watched shows on television today. Shows such as 49 hours gave way to similar shows such as 60 minutes, dateline and 20/20. When the strike of 1988 ended the writers did not get all they demeaned for example, a raise in payment for overseas broadcasted reruns. The main aspect of the dispute is whether the writers would be paid for new rising technologies and Medias where their work may be viewed. This is the main aspect of the strike going on today.

Every three years the WGA negotiates for a new contract. After not being able to come to an agreement on their contract with the Alliance of Motion Picture and Television Producers they began their strike. Both sides of this conflict have valid points. One of the main issues is payment shares on DVD residuals as Michael Cieply states, The leaders said, for instance, that it would pay only $250 for a year's reuse of an hourlong program streamed on the Web, in contrast to the $20,000 currently paid for a network rerun. They also said the new proposal did not change the company's proposed payments for downloaded films and shows. (The producers have offered writers the same residual rate they get for DVDs, which works out to 0.36 percent of wholesale revenues, which amounts to pennies per DVD but tens of thousands of dollars on the millions of copies of even modest hits; writers are seeking a rate of 2.5 percent.) The guilds also said the companies refused to grant them union jurisdiction over original content produced for the Internet. Jurisdictional issues have been a little-discussed hot button in the negotiations. Guild leaders have fought to assert their hold over larger swaths of what their letter described as "multinational conglomerates," including units that produce reality television without guild writers, even as company executives have insisted on keeping union authority confined to their traditional movie and television businesses. (/ Many writers in the WGA go though long periods of unemployment which they rely on re-airing of their work as their sole income for that time period. What the WGA is asking for a higher percentage to be paid to the writers .They would also like to raise the percentage that would be received for DVD sales as well as worked broadcasted aver the internet. The AMPTP states that the rising production and marketing cost are the reasons that the current percentage should remain the same as well as be applied to all Medias other then television where their works can be broadcasted. One of the main problems that has come up since 1988 is the rise of the internet. With such services such as Itunes. You tube and IPTV, giving viewers the ability to stream broadcasts of television shows and movies straight to hand held devices such as cell phones and I pods. The WGA contract as it stands now does not include payment percentage for any of these Medias. Many people have varying opinions on this topic. Jm Bell writes These folks aren't asking for much. In fact, they're ultimately asking for fair pay across the board and a $0.04 raise in royalties that they were promised in the early 1980's. You know, 30 years ago… These writers have families. They have homes. They need Health Insurance. 48% of professional writers spend a lot of time unemployed and, lets face it, if something they made is making money, they deserve a piece of it. They're not even asking for much, they just want what they were promised three decades ago and a fair deal on new media. Where is it written that people have to get screwed for the American economy to function. Whatever happened to "a fair day's pay for a fair day's work?" Why are the majority of Multi-National Mega-Conglomerates so bent on the benefit of the few to the detriment of the many? ( Bell's opinion is one of many some who side with WGA and some that side with AMPTP. Not many have come out in support of the AMPTP. Most of the people that are involved with this strike support the WGA. They feel the writers should get what they want and everyone should be back to work The strike is having a negative effect on the economy in many ways. Not just those in the WGA are effected the effects trickles down to even those working as caters. With the lose of the industry estimated by NBC Nightly News at 1 billion dollars. Jack Kyser a Los Angeles County Economic Development Corporation's chief economist comments What we're looking at is an economic impact from the Golden Globes of about $70 to $80 million each time the event is held, and with the cancellation, there are probably a lot of people looking at refund policies, because the production costs were already spent with a lot of people planning on parties… It's a huge impact. We count at least five parties that have been canceled, and that comes to about $2.5 million. And the pain is being spread to a lot of unexpected sectors of the economy. For example, the banquet staff at the hotel: They won't be working that night, won't be earning money in tips. The people that would be working the parties, the same situation. So you've got that impact. ( Most people are not aware of impact the writers strike is having on the economy. As award shows are being canceled and parties are not taking place more and more people are being put out of work. The people who are not working because of the strike are small businesses such as caterers and staff, dress makers who would make knock offs of the most popular dressed worn on the red carpet, limousine drivers and ushers. People had reserved rooms for parties that they had to cancel which meant no one else could rent that room so all the waiters and waitresses that would be working that room had no jobs for that night. The companies that would put ads during shows such as the Golden globes or the Oscars will not be able to advertise to as many people and will loose valuable advertising time and business. ( This is for only a one night event. Richard Berrier writes As thousands of TV and film writers marched along Hollywood Boulevard in the third week of their strike, film officials put a price tag on the potential economic toll of the walkout. Los Angeles' economy will lose more than $20 million a day in direct production spending if the writers strike extends into next month, according to FilmL.A. Inc., the nonprofit group that handles film permits and promotes the industry. Depending on how long it lasts, the strike could end up inflicting more economic pain than the previous writers walkout in 1988, which lasted 22 weeks and cost the entertainment industry an estimated $500 million. That was the equivalent of a little more than $3 million a day. That will translate into a loss of 15,000 jobs and $21.3 million a day in direct spending, according to FilmL.A. The estimate is based on the average number of employees on these shows, and their typical budgets and shooting cycles. (

This will be a big hit to the economy. By taking this money out of people's pockets its money they can not spend which is money that cannot be put back into the economy. Shows that take a shorter time to shoot like sitcoms stop production first which put the people working to produce them out of jobs. Some shows take as many as 300 people to produce them and that's just for one show. When multiple shows run out of matirial to shoot it could put thousands of people out of their jobs untill the strike is over. ( The strike strike has also had an effect on what is being broadcast on television. Brooks Barnes writes Meanwhile, moviegoers would not feel any immediate impact, because studios work a year or more in advance and have been stockpiling scripts to shoot in case writers walk the picket line. ( Some movie sequels could be delayed until 2009 and be pushed into production too soon to get them to the public faster. The quality of the movie could suffer.( Some television will go into reruns when they run out of new episodes. Hosts like Jon Stewart and David Letterman have come back on the air without writers. Most hosts have started paying non writing staff writers out of their own pockets. Reality shows are not affected by the strike. Networks have stockpiled shows so they can still have new episodes during the strike.( A solution to the writers guild of America strike would be for both the Writers Guild of America and the Alliance of Motion Picture and Television Producers should meet for collective bargaining which is negotiation between organized workers and their employer or employers to determine wages, hours, rules, and working conditions. This is a case of a classic labor dispute with far reaching effects. The entertainment industry is heavily organized and unionized and is subject to work stoppages from many organizations. The impact of the stoppages has a ripple effect through the economy from the large businesses that service the industry in Hollywood to the hot dog vendor outside the David Letterman Show. It is difficult to craft simple solutions to such complex problems. One possible solution would be to submit the dispute to binding arbitration or the use of a government mediator. The industry could give in to the union's demands but that would only create a spiraling cost structure. In the end no party to a labor dispute wins, the striking workers lose wages that they may never recoup, the employer loses business it may never recoup. In the end the reasonable solution would be for the parties to work it out.

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