Hundreds of Millions Spent, No Job Gains from Michigan’s Film Incentives

Hundreds of Millions Spent, No Job Gains from Michigan’s Film Incentives
June 4, 2014

A story in MLive on the movie "Batman vs. Superman" being filmed in metro Detroit demonstrates why it is so hard to get rid of programs that are nearly universally seen as economically destructive.

Susan Dorris, Oakland County film commissioner, provided little concrete evidence of any real economic impact the project will have, despite Warner Bros., which made $1.2 billion last year, receiving $35 million in corporate welfare courtesy of Michigan taxpayers.

"I have heard the term 'cast of thousands,' and I don't know if that means it's digitally created or it's actual people employed," she said. "But I do know they will be using a lot of extras."

Reading the article, people get the idea that the film subsidies are a great deal. They are not. 

Costs Swamp Benefits

There is a lot of economic literature on film subsidy programs, and it is nearly unanimous that they are a poor way to spend taxpayer dollars. Conservatives, liberals and everyone in between find the cost to be much greater than the benefit.

It is only by focusing on the benefits — an alleged "hundreds of (temporary) jobs for crew members" and "6,000 (low-paying, temporary) jobs for extras" — and ignoring the costs that makes the program look good. Bear in mind that Michiganders have spent $450 million on film subsidies so far with no real gain in the number of actual film jobs.

MLive also reported that part of the production could take place at the Michigan Motion Pictures Studio in Pontiac. The studio missed three payments on $18 million in bond obligations, and so under a deal made in 2010 by then-Gov. Jennifer Granholm, the payments were covered by the underfunded state and public school employee pension funds.

Narrow Benefits, Widespread Costs

This also is a case of concentrated benefits with diffuse costs and it is hard to justify state taxpayers propping up a film that admits to having an impact only in Oakland and Wayne counties. A select number of carpenters and caterers might see a temporary gain from the production if they are hired to build sets or provide food, but what good does that do all the other carpenters and caterers statewide who are forced to chip in to subsidize metro Detroiters?

Estimates show it costs about $15 to fill a pothole. The $35 million subsidy "Batman vs. Superman" is receiving could fill about 2.3 million potholes. Wouldn't that be a better use of that money?

Used with permission of Mackinac Center for Public Policy.