California banks. No credit for you!!!
California banks. No credit for you!!!
I don't get it. Cali is such an expensive place to live. The movie industry is based there and even during the Great Depression the movie industry was the one business that stayed afloat.









and to make things even more interesting for the California movie industry ...



Oh, not only the movie biz. Retailers and other businesses might take a heavy hit as well.
Our socialist state government (led by our Republican governor) is now proposing increasing the state sales tax by another 1.5% which, if implemented, is approaching or slightly beyond (depending upon the county you live in) 10%! On top of which, the state legislature wants to increase the car tax (i.e., registration fees), which were at one time, higher, back to the original levels. Plus, the idea of a 5% increase for everyone who pays state income taxes, no matter your tax bracket, is being floated.
The last time we had a large increase in the sales tax, of I believe, 1.25%, another Republican governor, Pete Wilson, was in office. And California in so doing, managed to prolong a very nasty economic downturn within the state while most of the rest of the U.S. was rapidly recovering from a severe economic downturn!





again not wanting to go too far in this direction in Dollar Den, but the California movie industry is no longer the only game in town. High California taxes and high SAG unionized pay scales has made movie production in California very expensive. And some of the studios which have already gotten into financial trouble are now owned by foreign investors (i.e. MGM - Sony) who have no particular loyalty to the USA or California.The movie industry is based there and even during the Great Depression the movie industry was the one business that stayed afloat.
As a result, many recent movie productions have been 'outsourced' to reduce production cost. Most notable among 'outsourcing' locations are Canadian provinces, where the studio not only saves money on pay scales but receives a subsidy from Canadian taxpayers to boot. Of course, a studio employing extras actors in Vancouver at CDN$200 a day ( = US$165) means that a Hollywood extras actor receives $0 a day instead of $300 a day ... and is late making his car payment to Downey Bank !
The same trend is taking place in another California 'bedrock' business ... tech companies. While the headquarters, R&D, creative design / programming etc. remain in California, increasingly these companies are relocating their 'less important' functions such as customer service, simple programming etc. to other US states / India etc. Again this translates into $25 an hour California jobs lost in favor of $18 an hour Texas jobs or $3 an hour jobs being added in India. And again it will be those now unemployed $25 an hour California workers who are late making their car payments to Downey Bank.
With both examples, a common thread applies. While California industries have been viewed as 'high profit margin' businesses, this is less and less the case. Part of the reason is rising costs of doing business in California (i.e. taxes, energy costs, prevailing wage rates etc.) compared to other US states. Another part is related to the fact that, in almost any 'creative' company, 20% of the people do the 'creating' while 80% of the people simply do 'work'. Management of such companies is well aware that while the 20% of 'creative' people must be kept happy (i.e. high pay rates, California sunshine), the remaining 80% are now pretty easy to replace / outsource etc. And those 80% represent at least half of the company's total labor costs (between paychecks and health benefits and retirement benefits and other mandated costs like unemployment and comp insurance). As explained above, as California companies continue to cut / outsource / relocate 'lower level' work, a whole bunch of 'middle class' Californians are directly affected. This in turn trickles up to the California banks, retailers, and other businesses serving this 'middle class'.
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Last edited by Melonie; 11-27-2008 at 05:40 AM.
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