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An Economic Analysis of

Virginia’s Film and Video

Production-Distribution Industry

Prepared for

Virginia Film Office

Virginia Tourism Corporation

Center for Public Policy

at the L. Douglas Wilder School of

Government and Public Affairs

Virginia Commonwealth University

Richmond, Virginia

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TABLE OF CONTENTS

Page Number

Executive Summary... i

Introduction... 1

Previous Research... 2

Analyzing the Industry... 3

Geographic Regions... 3

Defining the Industry ... 4

Center for Public Policy’s Definition of the Industry ... 8

Size and Composition of the Industry... 10

Measuring the Industry... 11

Relative Size of the Industry ... 13

Freelance Employees... 14

Economic Impacts of the Industry... 16

Impact to Virginia ... 18

Impact from the Operations of Industry Firms... 20

Impact from Freelance Employees... 20

Impact from Out-Of-State Production Companies... 21

Impact to Northern Virginia ... 22

Impact from the Operations of Industry Firms... 23

Impact from Freelance Employees... 24

Impact to Hampton Roads ... 25

Impact from the Operations of Industry Firms... 25

Impact from Freelance Employees... 26

Impact to Central Virginia ... 27

Impact from the Operations of Industry Firms... 27

Impact from Freelance Employees... 28

Estimating the Impact of Out-Of-State Productions Made in Virginia... 29

Copyright © 2005

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VCU Center for Public Policy Page i

EXECUTIVE SUMMARY

An Economic Analysis of Virginia’s Film and Video

Production-Distribution Industry

By Mary Nelson, Virginia Film Office

January, 2006

VIRGINIA’S FILM, VIDEO AND NEW MEDIA INDUSTRY

The production of feature films, television shows, documentaries and videos has been an important part of Virginia’s business landscape for decades, creating jobs, revenue and awareness about the Commonwealth. Ever since Elizabeth Taylor and Rock Hudson came to shoot the opening scenes of the feature film Giant in Charlottesville in 1955, Virginia has been a popular state for on-location film production. Many well-known feature films have been shot in the Commonwealth since that time, including What About Bob?, Dave, Dirty Dancing, Sommersby, Navy SEALS, The Jackal, Lassie, G.I. Jane, Hannibal, Gods and Generals, The Contender, Cold Mountain and The New World. Popular television shows such as The West Wing, New Detectives, FBI Files, Line of Fire and the current ABC hit television show, Commander in Chief, all filmed in Virginia. HBO’s

acclaimed film Iron Jawed Angels was among the many made-for-television movies that shot in the state, while several mini-series including Sally Hemings: An American Scandal, A Woman Named Jackie and Tom Clancy’s NetForce were also filmed in the Commonwealth.

The state’s rich historic background has made it extremely popular with documentary filmmakers and Virginia’s convenience to Washington, DC and its many military installations have provided a sizable industry centered around educational, government and military videos. The sophisticated

technology industry in the northern part of the state, coupled with the proximity of National Geographic, BET, The Learning Channel, Discovery Channel, PBS and its local affiliates, have fostered the growth of a strong and flourishing content creation and post production industry in Northern Virginia.

Virginia is an exceptional state for film and video production. The wide variety of scenery and architecture found in the Commonwealth includes oceans, mountains, rural landscapes, scenic valleys, small towns, major cities and a wealth of historic architecture and sites that provide

filmmakers with unlimited possibilities for film locations. A skilled workforce, college and university media training programs and a close proximity to Washington, DC and New York City are also advantages.

THE VCU CENTER FOR PUBLIC POLICY STUDY: RESULTS

In 2005, the VCU Center for Public Policy, under the direction of Dr. Michael Pratt, conducted an economic analysis of Virginia’s film and video industry to determine the annual impact of the industry on Virginia’s economy. Economists at the Center began the process by developing a definition of the industry, which is a particularly challenging task because a sizable portion of the workforce is not associated with a specific company or organization. The study examined data from 2004 and reached the following conclusions regarding the impact that the film and video industry has on Virginia:

Total economic impact: $510 million State tax revenue received $19.8 million Total number of Virginia companies: 259

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VCU Center for Public Policy Page ii Average yearly salary of employees in Virginia companies: $55,000

Number of workers employed in the industry: 5969 Number of additional employees/jobs: 2553

THE VCU STUDY: METHODOLOGY

After an examination of existing literature and research from other organizations regarding the motion picture industry, a definition for the industry was adopted and applied to Virginia. The decision was made to measure the impact that the industry had on the state as a whole, and on the three main regions of the state where the majority of production occurs. These regions are Hampton Roads, Central Virginia, which includes Richmond and surrounding counties and cities, and Northern Virginia.

Conventional methods of measuring the impact of any industry involve the use of NCAIS codes, a classification system by which it is possible to determine the number of companies and their employees that are involved in the industry being studied. However, the majority of those employed by the industry work as freelancers or independent contractors and would not be

included in the NCAIS system. Therefore, it was necessary to develop a method of including them in the study.

Using these parameters, VCU economists arrived at their conclusions by computing the direct, indirect and induced impact of Virginia businesses and their employees as well as the freelance crew members. The results can be found in tables 8 a, b and c in the report. As the report

discusses in more detail, when determining the total impact of any industry, three kinds of impacts are studied. They are:

Direct Impact: Expenditures made by a company for the construction or operation of the business.

Indirect Impact: Expenditures made by other organizations that supply goods or services so that the company can operate.

Induced Impact: Expenditures made by employees of the company based on changes in household incomes as a result of new or increased business.

THE VCU STUDY: SUMMARY

The study showed that there are currently 259 Virginia businesses that report being involved in the business of the creation and distribution of filmed products. These businesses reported a total of 1657 people on their payrolls with an average salary of $55,500, making it the fourth highest paid industry in the state.

The study reports that the number of companies in Virginia dropped from 292 in 2001 to 259 in 2004, a 12% reduction. Likewise, the number of employees dropped from a total of 1999 in 2001 to 1657 in 2004, an 18% reduction. This decline coincides with the period of time in which states have instituted incentive programs, and it can be assumed that part of the reason that the industry has experienced a reduction can be attributed to that fact. In addition, an uncertain economy during this period was probably also a contributing factor.

In order to measure the industry as a whole, it was important to determine the number of freelance employees working in the state. The Screen Actors Guild, the official union representing film and television actors, reported that it has 1157 registered actors living in Virginia. Talent agencies in

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VCU Center for Public Policy Page iii

the three main regions of the state reported approximately 2000 additional actors who were not members of the union but who earned at least part of their living as performers. IATSE, the official union for crew members, reported 250 registered crew members belonging to the union, while it was estimated that 825 non-union crew members also lived and worked in the state, making a total of 4312 additional freelance workers involved in the production of film, video and television

product.

The final portion of the study was an examination of the impact that production originating from outside the state could have on the economy. Economists studied expenditures reported by four major feature films that shot in Virginia. Then, the IMPLAN economic impact model was applied to estimate the direct, indirect and induced effects of these expenditures. The results were that each $10 million of film production spending on location in Virginia would have a total economic impact of $15.3 million, and would support 528 full-time and part-time jobs during the period in which the company was working, including pre-production, production and post-production. The state taxes received would result in tax revenues of $450,000 per $10 million of spending.

THE MCINTIRE SCHOOL OF BUSINESS STUDY: 1995

The VCU study follows an earlier study conducted in 1995 by the McIntire School of Business at the University of Virginia. The McIntire study was an examination of the film and video production industry in Virginia entitled, Achieving Competitive Advantage in Interjurisdictional Competition: The Case of the U.S. Film Production Industry. In this study, numerous recommendations were made on strategies to make the industry more competitive. In its conclusion, the report states:

Currently the state has many physical locations which are very conducive to location filming. However, the lack of adequate studio space, a large and experienced crew base, and the lack of financial incentives for film production, among other factors, are preventing growth in this area.

These concerns have been addressed in the decade since the study was released. The state now has two film studios, New Millennium Studios and New Dominion Pictures, and numerous Virginia universities have established training programs for various aspects of film and television production. The state’s sales and use tax exemption, once at the forefront of programs used to recruit production, was established and has now been adopted by the majority of the states. However, Virginia, once a leader in this area, has fallen behind in recent years because of newer, more aggressive incentive programs designed to stimulate investment adopted by its competitors.

ECONOMIC IMPACT

Until recently, all of these elements have resulted in an industry that has shown strong and steady growth over the years. Since 1980, when records were first kept, the economic impact of the industry has exceeded $2 billion. This impact includes a direct impact of the film projects themselves and also includes indirect impacts that benefit communities where film production occurs. When a project shoots on location, it typically leaves 25% to 35% of its budget behind in the community in which it films. A feature film can easily spend $10 million of its budget in a locality. A recent example of the kind of impact a film shoot can have is Steven Spielberg’s blockbuster film War of the Worlds, which spent $5 million and shot for 5 days in Rockbridge County and Lexington. Documentaries, commercials and video shoots, while having smaller budgets, also spend a significant amount of money hiring local labor and purchasing local goods and services.

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VCU Center for Public Policy Page iv

TOURISM IMPACT

In examining the economic impact of this industry, it is important to consider the effect that filmed entertainment has on tourism. Over the years, many films have brought visitors to the locations where shooting occurs or to areas which are featured in films, documentaries and television shows. In Virginia, the feature film Dirty Dancing has brought visitors to Mountain Lake Resort since it was shot there in 1986, a trend that still continues today. Recent films having Civil War themes include Gods and Generals and Cold Mountain, both of which resulted in significant increases in enquiries about Virginia’s Civil War sites and attractions. Currently, The New World, a film about the founding of Jamestown, is generating interest in Virginia on the eve of the 400th anniversary of that important event in American history. These films, with their multi-million dollar promotional budgets, give Virginia national and international exposure that would be impossible to obtain through conventional advertising and promotional efforts. The increased visitation resulting from films such as these is substantial and can bring millions of dollars in revenue to the state. A COMPETITIVE DISADVANTAGE

Virginia’s film and video industry is at a critical point in its development. For the past decade, the industry nationwide has been in a state of flux, as an increasing amount of production has been leaving the United States for countries offering financial incentives. The most successful country is Canada, which has seen billions of production dollars flow across the border because of the

significant financial incentives offered by the Canadian government as well as by cities and provinces within the country.

In 2001, state legislatures began to see the economic value of following Canada’s lead in investing in the film and video industry through financial incentive programs. To date, 20 states have

enacted significant incentive programs. They are Arizona, Florida, Georgia, Hawaii, Illinois, Louisiana, Maryland, Massachusetts, Mississippi, Missouri, Montana, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, South Carolina and Utah. In

addition, many other states are considering incentive initiatives in their current legislative sessions. States having incentive programs in place are reporting substantial returns on their investments. For example, Illinois production tripled from $25 million to $75 million in one year, New Mexico reported an increase from $8 million to $200 million in two years, while Louisiana, with the most aggressive and far-reaching incentives in the country, experienced industry growth from $20 million to $300 million in two years.

Even more devastating to Virginia is the fact that half of the states having incentive programs are Virginia’s direct competitors for business. In fact, every state along the eastern seaboard and Gulf Coast from New York to Louisiana has enacted legislation aimed at recruiting film and video

production except Virginia and Alabama. This has drastically impacted Virginia’s ability to compete, and has had a detrimental effect on the industry in the state. An estimated $800 million of

production that could potentially have been shot in Virginia, selected other places to film based on financial incentives.

CONCLUSION

The film and video industry is an important one for Virginia. With a total economic impact of more than $500 million yearly, 8500 workers and a high average salary for company employees of $55,000, it makes a significant contribution to the state’s economy. The estimated state tax revenue of the industry is nearly $20 million each year and, of course, that amount would increase with the addition of new business recruited as part of a targeted incentive plan. The potential for increased tourism to Virginia based on film production only increases the value of the industry to Virginia.

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VCU Center for Public Policy Page v The fact that the number of businesses and workers have steadily declined during the same period in which many states have enacted incentive plans to recruit new business, is an alarming trend that must be addressed. The twenty states that have already enacted legislation for investment in the industry are putting Virginia at a clear competitive disadvantage, and the fact that half of these states are among Virginia’s strongest competitors is certainly having a detrimental affect on Virginia’s ability to remain competitive.

A film incentive plan is an investment in Virginia that will bring great benefits to the Commonwealth. Virginia’s proposed plan is a performance-based initiative that will rebate a portion of expenditures made in the state on workers or on goods and services. It is intended to recruit new business, strengthen and expand the existing in-state industry, create jobs and bring new revenue to the Commonwealth.

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INTRODUCTION

This report presents findings from an economic analysis of the Film and Video Production-Distribution Industry within the Commonwealth of Virginia and three of its metropolitan areas. This Industry is comprised of businesses and freelance individuals who are responsible for the production, post-production, and distribution of motion pictures, television shows, videos, documentaries, and commercials. Clearly, the production of films, videos, and television shows provides value to the public by creating sources of entertainment and information. This report will show that the Film and Video Production-Distribution Industry also makes an important economic contribution. In particular, this analysis shows how the industry contributes to the local job and expenditure base of the Commonwealth and its jurisdictions, through local-area expenditures and by generating tax revenues for the areas.

Virginia Commonwealth University’s (VCU) Center for Public Policy conducted this analysis of the Industry on behalf of the Virginia Film Office, a division of the Virginia Tourism Corporation. The project had five primary objectives, as listed below:

1. To develop a definition for the Film and Video Production-Distribution Industry (including commercials, documentaries, films, television,

videos, and post-production) that would allow data to be collected about the Industry;

2.

To estimate the number of firms, number of employees, and average wages paid by businesses that comprise this Industry;

3. To estimate the Industry’s economic impact and tax revenue impact on the Commonwealth of Virginia;

4.

To estimate the Industry’s economic impact and tax revenue impact on three regions within Virginia (Northern Virginia, Hampton Roads, and Central Virginia), where a majority of the Industry employees are located; and

5. To develop a method for using in-state expenditure data, provided to the Virginia Film Office by out-of-state film production companies, to estimate the economic impact generated by film production spending within Virginia.

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The following sections of this report discuss previous industry research that has been conducted for the Virginia Film Office and present definitions that have been used by other states to measure the size and composition of the industry-sector that includes film and video production. This information served as the starting point for the VCU Center for Public Policy’s analysis of the Film and Video Production-Distribution Industry within Virginia. After developing its own definition of the Industry, the Center for Public Policy research staff collected data on the number of firms and the employment level of companies that comprise this Industry, as well as wages paid to its employees. Lastly, the employment and wage data were used to estimate the Industry’s economic impact for the Commonwealth of Virginia.

PREVIOUS RESEARCH

In 1995, Dr. George Overstreet, of the University of Virginia’s McIntire School of Commerce, prepared a report for the Virginia Film Office titled “Achieving Competitive Advantage in Interjurisdictional Competition: The Case of the U.S. Film Production Industry.” This document discusses methods for understanding and approaches for enhancing competitiveness of the film production industry – with a particular link back to Virginia’s indigenous film production industry.

While the University of Virginia report is not intended to be an economic impact analysis, it addresses elements that are still relevant for Virginia’s Film Industry and the current economic impact study, such as the following:

“The film production industry remains highly fragmented and remains very

much a cottage industry … [with] small production and service firms versus the large studios.”1

Data from the present economic analysis of the Film and Video Production-Distribution Industry confirms that Virginia’s Industry remains one where small companies and freelance employees form most of the Industry.

“The inability to quantify their economic impact makes film commissions

susceptible to underfunding….”2

1Overstreet, George. Achieving Competitive Advantage in Interjurisdictional Competition: The Case of the U.S. Film

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The primary reason that the Virginia Film Office contracted with the VCU Center for Public Policy was to conduct an economic impact study of Virginia’s Film and Video Production-Distribution Industry. By quantifying the Industry’s impact to the Commonwealth, the Virginia Film Office hopes to expand support for its programs. If an expanded tax incentive program and additional funding are made available, the Virginia Film Office will be able to attract additional film production to the Commonwealth. The economic activity associated with this new production will bring additional jobs and new tax revenue to Virginia.

When discussing the findings from a focus group with thirteen “key state film commissioners or competitors,” Dr. Overstreet notes the methods used for developing an economic impact for the film production sector by some of the film commissions. These included: “production manager forms / project sheets,” “ballpark figures from production accountant,” “personal contact with companies to judge spending,” and “half the production budget.”3

The research presented in this report will provide the Virginia Film Office with a well-established methodology for the Virginia’s Film and Video Production-Distribution Industry.

ANALYZING THE INDUSTRY

As the initial step in analyzing the industries that comprise Virginia’s Film and Video Production-Distribution Industry, it was necessary to determine the geographic regions for which employment and wage information would be collected. These boundaries could have been identified in multiple ways, including specific cities, counties, multi-county regions, or even the entire state. After establishing the geographic boundaries, the next step in this research was to develop a definition of the Industry that would allow data to be collected about the firms and individuals operating within the Industry and within the geographic areas.

Geographic Regions

The Virginia Film Office chose four geographic regions as the focus for this analysis. These areas were: the Commonwealth of Virginia, Northern Virginia, Hampton Roads, and Central Virginia. The three sub-state regions were chosen because it was felt that most of the operations of the Commonwealth’s Film and Video Production-Distribution

2Ibid. Page 23.

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Industry took place in those sections of Virginia. Each of the four regions is described in more detail below.

1. Commonwealth of Virginia: This area included all of the counties and independent cities that are located in Virginia;

2. Northern Virginia: This region was defined as the Virginia portion of the “Washington-Arlington-Alexandra, District of Columbia-Virginia-Maryland-West Virginia” MSA;

The Northern Virginia region is comprised of the independent cities of Alexandria, Fairfax, Falls Church, Fredericksburg, Manassas, and Manassas Park, as well as the counties of Arlington, Clarke, Fairfax, Fauquier, Loudoun, Prince William,

Spotsylvania, Stafford, and Warren.

3. Hampton Roads: This region was defined as the Virginia portion of the “Virginia Beach-Norfolk-Newport News, Virginia-North Carolina” MSA; The area includes the independent cities of Chesapeake, Hampton, Newport News, Norfolk, Poquoson, Portsmouth, Suffolk, Virginia Beach, Williamsburg, plus the counties of Gloucester, Isle of Wight, James City, Mathews, Surry, and York.

4. Central Virginia: This area was defined to match the official definitions of two of Virginia’s Metropolitan Statistical Areas (MSAs) – the Richmond MSA and the Charlottesville MSA.

The combined region is comprised of the independent cities of Charlottesville, Colonial Heights, Hopewell, Petersburg, and Richmond, as well as the counties of Albemarle, Amelia, Caroline, Charles City, Chesterfield, Cumberland, Dinwiddie, Fluvanna, Goochland, Greene, Hanover, Henrico, King and Queen, King William, Louisa, Nelson, New Kent, Powhatan, Prince George, and Sussex.

After establishing these geographic areas for the analysis, the next step was to develop a definition of the Industry that would allow employment and wage data to be collected for Industry’s firms.

Defining the Industry

While reviewing research from throughout the United States that examined the “Film Industry,” or a related, similarly-named industry group, the Center for Public Policy found that a wide variety of organizations had studied this industry. These groups included regional partnerships, economic development organizations, state and local government agencies, academic institutions, and research firms. Table 1 presents examples of some industry definitions used elsewhere.

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Table 1. Selected Industry Definitions for the “Film Industry” and Related Industries

Geographic

Region Industry Name Definition

Arizona “Film and Video

Industry” NAICS codes 512110, 512120, 512191, and 512199

Austin, Texas

“Visual Media Industry”

Defines the Visual Media Industry as “film and commercial production and film festival tourism.” Industry data are provided, but there is no indication of the way in which data were collected. Does not cite industry codes.

California “Entertainment Industry”

MPAA survey of its California Group members. Data were collected on employment, payroll, vendor expenditures, taxes, and construction products. Primary survey data supplemented with data from other sources

(Association of Independent Commercial Producers, California Film Commission, Entertainment Industry Development Corp., MPAA Research Department, and Trade publication research). Does not cite industry codes.

“Entertainment Industry” NAICS codes 512110, 512120, 512131, 512132, 512191, 512199, 512210, 512220, 512230, 512240, 512290, 515120, 515210, 517410, 517510, 541922, 711130, 711410, and 711510.

Florida “Motion Picture Industry”

SIC codes 7812, 7819, 7822, and 7829

(These SIC codes are roughly equivalent to NAICS codes 512110, 334612, 512191, 512199, 532220, 532490, 541214, 541690, 561310, 711510, 423990, 512120, 512120, 512199, 519120.) Los Angeles County, California

“Film Industry” NAICS codes 512110, 512120, 512191, and 512199

Manitoba,

Canada “Film Industry” Does not cite industry codes.

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Table 1, continued. Selected Industry Definitions for the “Film Industry” and Related Industries

Geographic

Region Industry Name Definition New York

City

“Visual Media Industry”

Refers to the use of SIC codes from an earlier MPAA study. Does not cite industry codes.

Oregon “Film and Video Industry”

Defines the Industry as the sum of three segments:

indigenous film and video industry, out of state productions, and television broadcasting. Data sources cited are U.S. Bureau of Labor Statistics, Census Bureau, film surveys, and the Oregon Department of Employment. Does not cite industry codes.

Seattle, Washington

“Film and Video

Production” NAICS 51211, 51219, 541922 Washington

State “Film & Video Production” NAICS 51211, 51219, 541922 Source: The source for each of these definitions is provided in Appendix A

Some of these definitions, such as the ones for Washington and Florida, were very precise and identified the exact industry groups that would be included as part of the Film Industry (or a related industry group). The Washington definition indicates that its “Film and Video Production” sector includes industries with the NAICS codes 51211, 51219, 541922 (the NAICS coding system will be explained later in this report).

Similarly, the Florida study used industries specifically defined with the Standard Industrial Classification (SIC) system, a precursor to the NAICS coding system. Other definitions, however, tended to be general and did not identify specific limitations for the type of companies that would be considered part of the industry.

Collecting sound statistical data on any industry requires that consideration be given to the data needs of the proposed analysis. An economic impact analysis, which was the main focus of this report, requires data on industry employment and wages. Because of this, it was essential that the Center for Public Policy’s approach to measuring the Film and Video Production-Distribution Industry took into account the availability of these data when developing its definition. A definition that was very general would make it very difficult to obtain data on wages and employment levels,

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since the researcher would not know what specific industries, or firms within those industries, to count. Industry code definitions, in contrast, make it clear what types of firms are included, and which are excluded, from a definition. The lack of consensus on how to define the “Film Industry,” as evidenced by the varying definitions in Table 1, underscores the importance of choosing a definition carefully. The size and composition of the industry can vary greatly, even for the same geographic area, depending on which industry sectors are included.

Focusing on the industry-specific definitions, several of the groups being examined had been developed using classification codes from the North American Industry Classification System (NAICS). This system, which was developed in 1997 through collaboration among the statistical agencies of the United States, Canada, and Mexico, provides the basis for classifying businesses by industry and collecting data on the economic activity in these industries. Under the NAICS system, establishments that use the same or similar processes to produce goods or services are grouped together and assigned a unique classification number – the NAICS code.4 For example, grocery stores and supermarkets, which provide a service to consumers, are classified using the 6-digit NAICS code of 445110. Economic data about the level of employment, wages and salaries, and the number of firms for the grocery store and supermarket sectors are compiled and made available using this NAICS code as a method for identifying the specific sector.5

After considering the research from other areas and having conversations with senior staff members of the Virginia Film Office, the Center for Public Policy chose to create its own NAICS-code definition for Virginia’s Film and Video Production-Distribution Industry. The challenge was to develop a definition that includes all industries exclusively producing output for Virginia’s Film and Video Production-Distribution Industry, but does not overstate the size by adding industries that are only tangentially related. A NAICS definition allowed for the precise identification of the types of companies that would be considered part of the Industry, and it also allowed for measuring the Industry’s employment, wages, and number of firms.

4Development of NAICS. U.S. Census Bureau website. www.census.gov/epcd/www/naicsdev.htm

5 Prior to the implementation of the NAICS system in 1997, the U.S. government used a similar system of codes called

the Standard Industrial Classification (SIC) to report data on various industries. The SIC classification system was originally adopted in 1939 and last refined in 1987. As of 2002, government data are no longer reported using the SIC codes and only the NAICS system is used.

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The Center for Public Policy’s approach began by determining those industries that were wholly engaged in production, post-production, or distribution of filmed product. In addition to these industries and their underlying firms, this analysis includes freelance employees who work for the Industry, but for whom data are not reported in the same way as for the employees of wholly-engaged industries.

Center for Public Policy’s Definition of the Industry

For its analysis, the Center for Public Policy developed a definition of the Film and Video Production-Distribution Industry that included four NAICS codes, each at the six-digit level of detail (see Table 2).

Table 2. Center for Public Policy’s NAICS Code Definition for the Film and Video Production-Distribution Industry

NAICS

Code Industry Description

512110

Motion picture and video production -- This industry comprises establishments primarily engaged in producing, or producing and distributing motion pictures, videos, television programs, or television commercials.”

512120

Motion picture and video distribution -- This industry comprises establishments primarily engaged in acquiring

distribution rights and distributing film and video productions to motion picture theaters, television networks and stations, and exhibitors.”

512191

Teleproduction and other postproduction services – This industry comprises establishments primarily engaged in providing specialized motion picture or video postproduction services, such as editing, film/tape transfers, subtitling, credits, closed captioning, and animation and special effects.”

512199

Other motion picture and video industries – This industry comprises establishments primarily engaged in providing motion picture and video services (except motion picture and video production, distribution, exhibition, and teleproduction and other postproduction services).”

Source: U.S. Census Bureau, 2002 NAICS code descriptions, and VCU Center for Public Policy.

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Within the NAICS system, there exists a group called “Film and Video” establishments. This aggregation includes the industries listed in Table 2 (NAICS codes 512110, 512120, 512191, and 512199) and two others:

1. “Motion Picture Theaters (except drive-ins)”; and 2. “Drive-In Motion Picture Theaters.”

The Center for Public Policy definition does not include these two industry groups since they are only about the viewing of movies and videos. Even if there were no film or video production or distribution companies within Virginia, there would still be movie theaters where films (produced entirely elsewhere) would be shown. By excluding these two industries, the Center for Public Policy definition only includes those firms that exist because film and video production and distribution is present in the Commonwealth. Examples of the type of companies included within the Center for Public Policy definition of the Film and Video Production-Distribution Industry are shown in Table 3.

Table 3. Example Establishments within the Film and Video Production-Distribution Industry NAICS

Code Establishments

512110

Motion Picture and Video Production: Motion picture studios producing motion pictures; Video production; TV show production; TV commercial production; Animated cartoon production; Instructional video production; and Music video production.

512120

Motion Picture and Video Distribution: Motion picture film distributors; Video film distribution; Film libraries that offer commercial distribution; Television show syndicators; Tape distribution for television; and Animated cartoon distribution.

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Table 3, continued. Example Establishments within the Film and Video Production-Distribution Industry

512191

Postproduction Services and Other Motion Picture and Video Industries: Motion picture or video editing services; Motion picture production special effects, post-production; Closed captioning of taped material; Film or video transfer services; Motion picture sound dubbing services; and Post-production special effects for motion picture production.

512199

Other Motion Picture and Video Industries: Booking agencies for motion picture or video productions; Stock footage film libraries; Motion picture film processing laboratories; and Reproduction of motion pictures for theatrical distribution.

Source: U.S. Census Bureau, 2002 NAICS code descriptions.

SIZE AND COMPOSITION OF THE INDUSTRY

As explained earlier, an economic impact analysis of Virginia’s Film and Video Production-Distribution Industry (or for any industry or group of industries) requires data on the level of employment within the Industry and the wages paid to its employees. Using the Center for Public Policy’s NAICS-based definition, employment and wage data were collected for the four geographic regions of interest for this study. These data were obtained from the “Quarterly Census of Employment and Wages” (QCEW) reports.6

QCEW information is collected and reported by the labor commission of each state – for the Commonwealth, the source is the Virginia Employment Commission. The QCEW data provide a count of the number of employees and wages for virtually every non-agricultural firm in the United States.7 However, it is important to note that measures presented in the QCEW data are only for private-sector firms and include neither freelance employees nor any employees not covered by unemployment insurance. This

6 Formerly called “Covered Employment and Wage” data or “ES-202” data, information from the Quarterly Census of Employment and Wages provides employment levels, wages paid, and number of firms within each industry of Virginia. QCEW data are published with a two-quarter (six-month) time lag.

7 Bureau of Labor Statistics. Report titled People are Asking. BLS website (www.bls.gov/cew/peoplebox.htm#1). QCEW data covers roughly 97 percent of all non-farm employment in the United States. Covered employment data includes all jobs that are covered by unemployment insurance.

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fact is the reason why the Center for Public Policy definition needed to be expanded to include freelance industry workers.

For Virginia’s Film and Video Production-Distribution Industry, the number of freelance individuals is sizable. By combining data from the QCEW reports with information about the number of freelance workers in the Industry, the Center for Public Policy was able to include both groups in the economic impact analysis.

Measuring the Industry

To measure the size and composition of the Film and Video Production-Distribution Industry, the Center for Public Policy began by using two datasets from the same source. QCEW data for 2004 (annual) and for the 4th Quarter 2004 were obtained from the Virginia Employment Commission. Annual 2004 QCEW data revealed the number of firms, number of employees, and average wages paid to workers in the industries that comprised the Center for Public Policy’s Industry definition. However, non-disclosure restrictions would not allow annual data to be released for certain sectors of our Industry definition for the metropolitan areas of Northern Virginia, Hampton Roads, and Central Virginia.

As a supplement to the annual 2004 data, the Center for Public Policy annualized quarterly data from the 4th Quarter of 2004 to estimate annual values for the missing sectors. Using annualized, quarterly data provided a “best estimate” for the missing annual values and it allowed the Center for Public Policy to bypass non-disclosure restrictions for these data.

After the Center for Public Policy obtained QCEW data for each of the industry sectors within its NAICS code definition of the Industry, the data were aggregated and estimates of the size and composition of the Industry’s firms within Virginia and the three metropolitan regions were made (see Table 4). It is important to note that these data only represent information from QCEW sources and does not yet include freelance workers in the Industry. Those employees will be addressed later in the report.

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2004 data for each of the four geographic regions being studied are presented below:

Virginia: QCEW data reported that there were 1,657 people working at 259 establishments in the Film and Video Production-Distribution Industry. These employees earned an estimated average annual wage of $55,500.

Northern Virginia: This region was the largest of the three sub-state

areas being considered, in terms of the number of firms, the number of employees, and average annual income. This area of the state was estimated to have Industry employment of 877 individuals who were working at 137 firms during 2004. These firms paid an average annual wage of $70,500.

Hampton Roads: This area of Virginia was the second largest in terms of the number of employees. QCEW data indicate that there were 549

individuals working at 33 firms in Hampton Roads. Workers in the Film and Video Production-Distribution Industry within this region earned an average annual salary of $42,500.

Central Virginia: The smallest of the metro regions being analyzed (in terms of the number of employees), Central Virginia’s Film and Video

Production-Distribution Industry had an estimated 123 workers, employed at 45 establishments making an average annual salary of $47,000.

Table 4. QCEW Data for Film and Video Production-Distribution Establishments in Virginia and Three Metropolitan Regions

Locality Employment Level Establishments Number of Average Wages & Salaries per Employee

Virginia* 1,657 259 $55,500

Northern Virginia** 877 137 $70,500

Hampton Roads** 549 33 $42,500

Central Virginia** 123 45 $47,000

* The Virginia total is not equal to the sum of the three jurisdictions listed. There are other regions of Virginia that have employees and firms within this Industry. Those other regions are not presented here.

** Data for Northern Virginia, Hampton Roads, and Central Virginia were obtained by annualizing 4th Quarter 2004 data for the jurisdictions and the NAICS codes of interest.

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Relative Size of the Industry

It is also important to understand the relative size of Virginia’s Film and Video Production-Distribution Industry, as compared with all industries in the Commonwealth and measured using QCEW data. For 2004, the Film and Video Production-Distribution Industry accounted for about 0.05 percent of the Commonwealth’s total employment

(3,495,107) and 0.12 percent of its total establishments (219,253).8 While these

levels do not represent one of Virginia’s largest production sectors in terms of the number of employees or quantity of firms, the Film and Video Production Distribution

Industry did have wages that were well-above the annual average for all industries

($55,500 average for the Industry versus a statewide, all-industry average of $40,500).

As an additional point of comparison, Table 5 provides historical information about

Virginia’s Film and Video Production-Distribution Industry, for 2001 through 2004. This

table shows that the size of the Industry in Virginia, whether measured in terms of number of employees or number of firms, has been decreasing each year. At least part of this decrease would be due to the “runaway film production” that is taking place as movies and video productions are shifting from the United States to Canada and other countries. In addition, there has been an increase in film incentives offered by various states, particularly those states that are direct film and video competition with

Virginia.9 These incentives may have caused production work to move from Virginia to

other states.

82004 Annual QCEW data, Virginia Employment Commission. 9 Incentive data provided by the Virginia Film Office.

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Table 5. Virginia’s Film and Video Production-Distribution Industry, 2001 through 2004 Year Number of Employees Number of Firms Estimated Average Wages & Salaries

per Employee (Current dollars)

Estimated Average Wages & Salaries

per Employee (2004 Dollars) 2001 1,999 292 $45,000 $48,150 2002 1,915 281 $49,000 $51,450 2003 1,792 264 $47,500 $48,925 2004 1,657 259 $55,500 $55,500

Source: Virginia Employment Commission, Annual QCEW data, 2001, 2002, 2003, and 2004. Inflation adjustment performed using data from the Consumer Price Index for All Urban Consumers (CPI-U).

Freelance Employees

In addition to the employees who are represented in the QCEW data, information provided by the Virginia Film Office allowed the Center for Public Policy to address freelance (self-employed) individuals working in the Industry. Actors working in the film and video industry are the most important group of freelance individuals added to the Industry definition. Table 6a presents data for Freelance Actors working in Virginia’s Film and Video Production-Distribution Industry. Table 6b presents data for Freelance Crew.

Table 6a. Freelance Actors

Film and Video Production-Distribution Industry Virginia and Three Metropolitan Regions

Category Locality Employment Level Actors: Union

(Screen Actors Guild) Statewide 1,157

Northern Virginia 636*

Hampton Roads 185*

Central Virginia 301*

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Table 6a, continued. Freelance Actors Film and Video Production-Distribution Industry

Virginia and Three Metropolitan Regions Actors: Non-Union (IATSE) Statewide 2,080 ** Northern Virginia 1,330 Hampton Roads 350 Central Virginia 400

* For the Union Actors, it is assumed that Northern Virginia accounts for 55 percent of the statewide total, Hampton Roads for 16 percent, and Central Virginia for 26 percent. The

Statewide employment total does not equal to the sum of the values for the individual regions due to rounding and because data for other regions of Virginia are not presented separately. (The Virginia Film Office estimates that other regions account for about 3 percent of the statewide total.)

** For Non-Union Actors, it is assumed that the sum of data for the three regions is equal to the Statewide total.

Source: Virginia Film Office.

Table 6b. Freelance Crew

Film and Video Production-Distribution Industry Virginia and Three Metropolitan Regions

Category Locality Employment Level

Crew: Union Statewide 250

Northern Virginia 138*

Hampton Roads 40*

Central Virginia 65*

Crew: Non-Union Statewide 825 Northern Virginia 454*

Hampton Roads 132*

Central Virginia 215*

* For both Union and Non-Union Crew, it is assumed that Northern Virginia accounts for 55 percent of the statewide totals, Hampton Roads for 16 percent, and Central Virginia for 26 percent. The Statewide employment totals do not equal to the sum of the values for the individual regions due to rounding and because data for other regions of Virginia are not presented separately. (The Virginia Film Office estimates that other regions account for about 3 percent of the statewide total.)

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By combining these freelance employees with the measure of employment from QCEW data, we estimate that the Film and Video Production-Distribution Industry within Virginia has 5,969 employees. As shown in Table 7, the Northern Virginia region has an estimated 3,435 employees in this Industry, Hampton Roads has 1256 employees, and Central Virginia has 1104 employees.

Table 7. Total Industry Employment QCEW Data and Other Employment Data for Virginia and Three of its Metropolitan Regions

Locality Employment QCEW Employment Freelance Employment Total

Virginia* 1,657 4,312 5,969

Northern Virginia 877 2,558 3,435

Hampton Roads 549 707 1,256

Central Virginia 123 981 1,104

* The Statewide employment totals do not equal to the sum of the values for the individual regions due to rounding and because data for other regions of Virginia are not presented separately. (Other regions account for about 3 percent of the statewide total.)

Source: Virginia Film Office.

ECONOMIC IMPACTS OF THE INDUSTRY

After obtaining employment and wage data for the component industries of the Film and Video Production-Distribution Industry, the Center for Public Policy developed economic impact models for the four geographic study areas and applied these data in order to estimate the Industry’s economic impact. The IMPLANProTM computer model

was used in preparing these estimates.10 IMPLAN is an input-output economic modeling system that allows a user to examine the relationships between the components of an economy – recognizing that market transactions made by one sector will have an economic impact on other sectors.

10 IMPLAN (Impact Analysis for Planning) was developed in 1979 by the United States Department of Agriculture, Forest Service in cooperation with the Federal Emergency Management Agency and the United States Department of the Interior, Bureau of Land Management. The IMPLAN program originally required a mainframe computer system, but has progressed into a program that runs on a standard microcomputer. The IMPLANPro software was created in 1996 and is maintained and updated by the Minnesota IMPLAN Group, Inc.

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Using this model, the first step was to define the economic region of analysis (i.e., Virginia) and have the model generate the economic linkages between the industry sectors in that region. Data available for use with IMPLAN allow the researcher to construct an economic region with as many as 509 industry sectors for any area of the United States, with the county-level being the smallest region of analysis available.

The first regional economic impact model developed for this project was for the Commonwealth of Virginia and included all of Virginia’s employment for the Film and

Video Production-Distribution Industry. The estimated annual employment and wage

data for the component sectors were used as the source data for these IMPLAN models. All of the economic impact estimates presented in this report are in 2004 dollars.

The total economic impact of any industry, or group of industries, is comprised of three components: direct, indirect, and induced economic effects. The direct effects are the expenditures made by companies for construction and operation of their sites. Indirect effects result from expenditures made by businesses that supply products and services to the main industries being analyzed. When supplier firms receive orders, they must use inventory or purchase additional inputs to produce their products or services. The economic activity generated by these purchases also contributes to the overall economic impact, in terms of jobs and additional output for the region. The final component of economic impact is the induced effects associated with changes in household expenditures. As companies increase their outputs because of the new business activity that is being created, they will hire new employees or pay existing employees to work longer hours. When household incomes increase, employees will spend more money in the area, generating an even greater economic benefit for the region.

To determine the direct economic impact on the economic region being studied (e.g., Virginia), expenditures must be adjusted to exclude all expenditures that do not stay in the local economy. These include the cost of goods sold that are not produced in the region and the final purchases of consumers that are made at establishments outside of the region. As part of the modeling, IMPLAN estimates these leakages of purchases to areas outside of the local economy as well as the margin earned on sales to account for the cost of goods sold.

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Data generated by an IMPLAN economic model includes estimates of the direct, indirect, and induced impacts for each of the following elements:

Employment – the number of total jobs, including both full-time and part-time employees;

Economic Impact - the economic impact generated in the region;

Value Added – in addition to personal income, this includes income

from rents, dividends, profits, royalties, interest, and indirect business taxes paid by companies; and 11

Labor Income – this includes wages and salaries paid, including

benefits for employees of firms. It also includes payments received as income by freelance employees.

The “Valued Added” component from IMPLAN can be interpreted as the industry’s contribution to a state’s Gross State Product (GSP), i.e., the value of all final goods and services produced within the borders of a state.12 The GSP is the state-level version of the Gross Domestic Product (GDP) of the United States.

Impact to Virginia

The economic impact from Virginia’s Film and Video Production-Distribution Industry

is comprised of the economic activity generated by the following three components:

1. In-state expenditures (goods, services, and payroll) made by the businesses in Virginia’s Film and Video Production-Distribution Industry;

2. In-state expenditures made by freelance employees working in this Industry; and

3. In-state expenditures made by out-of-state companies that are producing movies, television shows, and other productions within Virginia.

Table 8a presents the combined economic impact to Virginia from these three components. Tables 8b, 8c, and 8d provide the details of the total impact, citing the individual impacts for each component, respectively.

11Olson, Doug and Scott Lindall. “IMPLAN Professional Software, Analysis, and Data Guide.” Minnesota IMPLAN Group,

Inc. 1996.

12 Friedenberg, Howard and Richard Beemiller. “Comprehensive Revision of Gross State Product by Industry, 1977 –

94.” Survey of Current Business. June 1997. From the Bureau of Economic Analysis website:

www.bea.doc.gov/bea/ar/0697rea.pdf. In this publication, the Gross State Product is defined as “the sum of the costs incurred (such as compensation of employees, net interest, and indirect business taxes) and the profits earned in production.”

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As shown in Table 8a, there were an estimated 5,969 jobs (“direct employment”) within Virginia’s Film and Video Production-Distribution Industry during 2004. The economic activity associated with this level of employment supported 2,553 additional jobs in other sectors of the economy and generated a total economic impact to Virginia of $510 million.

This economic impact included $364 million of Value Added for Virginia. Because value added is equal to the Industry’s estimated contribution to Gross State Product, expenditures made by firms in this industry and by freelance employees contributed

about 0.11 percent of the Commonwealth’s total Gross State Product for 2004.13

Beyond these economic contributions, the Industry’s operations expenditures in 2004 were responsible for $300 million of Labor Income and generated almost $20 million in state tax revenue for the Commonwealth.

Table 8a. Total Economic Impact to Virginia (Dollar Values in 2004 Dollars)

Type of Impact Impact Direct Additional Impact ImpactTotal

Employment 5,969 2,553 8,522 Economic Impact $274.3 million $236.0 million $510.3 million

Value Added $225.2 million $138.5 million $363.7 million

Labor Income $212.7 million $86.9 million $299.6 million

State Tax Revenue $19.8 million

Sources: VCU Center for Public Policy estimates developed using IMPLANPro. Annual QCEW data obtained from the Virginia Employment Commission. Inflation adjustments made using the “Consumer Price Index for All Urban Consumers” (CPI-U) from the U.S. Bureau of Labor Statistics.

Impact from the Operations of Industry Firms: As the firms in this Industry make purchases for goods, services, and labor, the spending will generate economic impact for the Commonwealth. Table 8b shows that the Industry employed 1,657 employees, directly. The economic activity generated by these firms supported an additional 1,319 workers in related businesses. The operations expenditures of the Industry generated an economic impact of $302 million for Virginia, contributed

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$201 million in Value Added, and added $162 million of Labor Income. This economic activity also generated an estimated $11 million in state tax revenues.

Table 8b. Economic Impact to Virginia from the Operations of Industry Firms

(Dollar Values in 2004 Dollars)

Type of Impact Direct

Impact Additional Impact Total Impact Employment 1,657 1,319 2,976 Economic Impact $175.8 million $125.7 million $301.5 million

Value Added $126.7 million $74.4 million $201.1 million

Labor Income $114.2 million $48.1 million $162.3 million

State Tax Revenue $10.6 million

Sources: VCU Center for Public Policy estimates developed using IMPLANPro. Annual QCEW data obtained from the Virginia Employment Commission. Inflation adjustments made using the “Consumer Price Index for All Urban Consumers” (CPI-U) from the U.S. Bureau of Labor Statistics.

Impact from Freelance Employees: Freelance employees of the Film and Video

Production-Distribution Industry will spend their incomes by making purchases

within the Commonwealth and elsewhere. The economic impact of the freelance employees is presented in Table 8c. This table shows that the economic activity generated by the 4,312 freelance employees supports 971 additional jobs in other sectors of Virginia’s economy. The economic impact of this level of employment was $189 million per year. This activity resulted in $151 million of Value Added, $130 million of Labor Income, and almost $9 million of state tax revenues.

13Bureau of Economic Analysis. Gross State Product data for Virginia, in 2004, was $329.332 billion. October 26,

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Table 8c. Economic Impact to Virginia from the Industry’s Freelance Employees

(Dollar Values in 2004 Dollars)

Type of Impact Impact Direct Additional Impact Impact Total

Employment 4,312 971 5,283 Economic Impact $98.5* million $90.9 million $189.4 million

Value Added $98.5* million $52.3 million $150.8 million

Labor Income $98.5* million $31.3 million $129.8 million

State Tax Revenue million$8.7

* The contribution made by these freelance employees to “Value Added” and “Economic Impact” is the Labor Income that they receive (i.e., the fees charged for their services).

Sources: VCU Center for Public Policy estimates developed using IMPLANPro. Annual QCEW data obtained from the Virginia Employment Commission. Inflation adjustments made using the “Consumer Price Index for All Urban Consumers” (CPI-U) from the U.S. Bureau of Labor Statistics.

Impact from Out-Of-State Production Companies: Table 8d shows the economic and employment impact that occurs within Virginia, as a result of in-state spending by out-of-state production companies. Data provide by the Virginia Film Office indicated that $25.3 million was spent within Virginia during 2004, by production companies located outside of Virginia. Approximately $14.2 million (56 percent) of this amount was for non-payroll expenditures; it is that value of

spending for which the economic impact was generated.14 Table 8d reports the

economic activity generated by the non-payroll, in-state spending made by these firms. An estimated 263 jobs were supported by these expenditures, along with $19 million of economic impact, $12 million of value added, $8 million of labor income, and about $500,000 of state tax revenues.

14 The data presented in Tables 8b and 8c already represent the impact that comes from payroll to company

employees (working at Industry firms) and Freelance Employees who would be working on projects from the out-of-state companies. To avoid double counting the impact of those employees, the payroll figure has been removed from the $25.3 of total expenditures. It is estimated that 44 percent of this amount goes to payroll. The economic impact is estimated on $14.2 million of expenditures (the remaining 56 percent).

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Table 8d. Economic Impact to Virginia from In-State Spending by Out-Of-State Production Firms

(Dollar Values in 2004 Dollars)

Type of Impact Impact Direct Additional Impact Impact Total

Employment 0 263 263 Economic Impact million $0 $19.4 million $19.4 million

Value Added million$0 $11.8 million $11.8 million

Labor Income million$0 million$7.5 million$7.5

State Tax Revenue million$0.5

Sources: VCU Center for Public Policy estimates developed using IMPLANPro. Annual QCEW data obtained from the Virginia Employment Commission. Inflation adjustments made using the “Consumer Price Index for All Urban Consumers” (CPI-U) from the U.S. Bureau of Labor Statistics.

Impact to Northern Virginia

The economic impact from the Film and Video Production-Distribution Industry in Northern Virginia is a combination of the operations of Industry firms in that region and the expenditures made by the area’s freelance employees. Table 9a shows the combined economic impact to Northern Virginia from these components. The Industry employed 3,435 individuals during 2004 in Northern Virginia. In addition, 952 jobs in related sectors were supported by the economic activity of this Industry. The total economic impact to Northern Virginia was estimated at $258 million, which supported $204 million of Value Added, $173 million of Labor Income, and $11 million of state tax revenues.

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Table 9a. Total Economic Impact to Northern Virginia

(Dollar Values in 2004 Dollars)

Type of Impact Impact Direct Additional Impact ImpactTotal

Employment 3,435 952 4,387 Economic Impact $161.5 million $96.7 million $258.2 million

Value Added $143.0 million $61.3 million $204.3 million

Labor Income $134.3 million $38.4 million $172.7 million

State Tax Revenue $11.1 million

Sources: VCU Center for Public Policy estimates developed using IMPLANPro. Annual QCEW data obtained from the Virginia Employment Commission. Inflation adjustments made using the “Consumer Price Index for All Urban Consumers” (CPI-U) from the U.S. Bureau of Labor Statistics.

Impact from the Operations of Industry Firms: During 2004, there were

877 employees working at Industry firms within Northern Virginia. As shown in Table 9b, this level of employment supported an additional 560 regional jobs. The operations expenditures of firms in this Industry were estimated to have had an economic impact of $161 million, including $122 million of Value Added and $101 million of Labor Income. The Industry in Northern Virginia was responsible for generating an estimated $6 million of state tax revenues for the Commonwealth.

Table 9b. Impact to Northern Virginia from the Operations of Industry Firms

(Dollar Values in 2004 Dollars)

Type of Impact Direct

Impact Additional Impact Total Impact Employment 877 560 1,437 Economic Impact $103.9 million $57.4 million $161.3 million

Value Added $85.4 million $36.9 million $122.3 million

Labor Income $76.7 million $23.8 million $100.5 million

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State Tax Revenue million$6.4

Sources: VCU Center for Public Policy estimates developed using IMPLANPro. Annual QCEW data obtained from the Virginia Employment Commission. Inflation adjustments made using the “Consumer Price Index for All Urban Consumers” (CPI-U) from the U.S. Bureau of Labor Statistics.

Impact from Freelance Employees: Table 9c shows the economic effects that

resulted from in-region spending by freelance employees of this Industry. The total economic impact to the region was estimated to be $97 million. This level of economic activity supported a total of 2,950 jobs (including the 2,558 freelance employees and 392 jobs in related sectors), generated $82 million of Value Added, and was responsible for $72 million of Labor Income. This economic activity also generated $5 million of state tax revenues for Virginia.

Table 9c. Impact to Northern Virginia from the Industry’s Freelance Employees

(Dollar Values in 2004 Dollars)

Type of Impact Impact Direct Additional Impact ImpactTotal

Employment 2,558 392 2,950

Economic Impact $57.6* million $39.3 million $96.9 million

Value Added $57.6* million $24.4 million $82.0 million

Labor Income $57.6* million $14.6 million $72.2 million

State Tax Revenue million$4.7

* The contributions to Value Added and Economic Impact from these freelance employees is simply the Labor Income that they receive (i.e., the fees charged for their services.

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Impact to Hampton Roads

The total economic impact from the presence of the Film and Video

Production-Distribution Industry in the Hampton Roads region comes from operations expenditures

(including payroll) by firms in the industry and payroll to freelance employees. Table 10a shows the total economic impact of this Industry on the Hampton Roads region. In 2004, the Industry generated $124 million of economic impact, supporting 1,852 jobs, $78 million of Value Added, and $65 million of Labor Income. The Hampton Roads portion of this Industry generated, directly and indirectly, $4 million of state tax revenue for Virginia.

Table 10a. Total Impact to Hampton Roads (Dollar Values in 2004 Dollars)

Type of Impact Impact Direct Additional Impact ImpactTotal

Employment 1,256 596 1,852

Economic Impact $72.0 million $52.0 million $124.0 million

Value Added $48.8 million $29.5 million $78.3 million

Labor Income $45.1 million $19.4 million $64.5 million

State Tax Revenue million$4.3

Impact from the Operations of Industry Firms: Employment in Hampton

Roads’ Film and Video Production-Distribution Industry was estimated at 549 for

2004. As shown in Table 10b, the economic activity resulting from this level of employment was estimated to generate 435 additional jobs in the region (for a total of 984 jobs). This activity also provided an estimated $94 million of economic impact, created $55 million to the Gross State Product of Virginia, supported $44 million of labor income, and generated $3 million in state tax revenue for Virginia.

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