Feb. 12 (Bloomberg) -- Iron Man Tony Stark’s penthouse in the hit film “The Avengers” looks like it’s in Manhattan. In fact, the scenes of Robert Downey Jr. and Gwyneth Paltrow were shot on an Albuquerque sound stage, staffed by 500 extras, grips, camera operators and sound engineers working on the film.
While the industry’s richest stars converge on Hollywood for the Academy Awards on Feb. 24, many players are nestled in places like New Mexico, Utah and Hawaii, beneficiaries of state subsidies that attract studios and create filmmaking jobs. New Mexico, not California or New York, is the largest employer of actors as a share of total employment, with more than 15 per 10,000 workers, according to U.S. Bureau of Labor Statistics data compiled by Bloomberg.
Jobs for performers, technicians, camera operators and editors in the state rose to 1,400 in 2011, when “The Avengers” was shot, from 180 in 2002. Historically New Mexico has been among the most generous with givebacks. It is ranked seventh among U.S. states and territories by Film Production Capital, a New Orleans firm that brokers film tax credits.
“It’s all incentives,” said Joseph Chianese, senior vice president at Entertainment Partners, a Burbank, California company that provides payroll services for film companies. “Production is very expensive.”
Subsidies boost pay as well as employment. Hawaii’s $30 average hourly wage for actors topped New York’s $26 and California’s $25, according to the data.
Production subsidies take many forms. In New Mexico, the state reimburses filmmakers for as much as 25 percent of qualifying expenditures. California provides credits that let producers reduce their sales and income taxes based on local spending. Some states allow the tax credits to be sold to third parties.
In all, 39 states and the District of Columbia had some form of giveback for production. Actors in those states earned an average of $17.53 an hour, 21 percent more than those without subsidies, according to the BLS data.
Film and TV employment was almost 70 percent higher, as a percent of the total number of people employed, in states with incentives than in those without, the data show.
Critics say the rebates and credits are like stadium subsidies, giveaways to the rich that pit local governments against each other in a race to offer larger perks and divert funds from needed public services.
In California, a coalition of labor groups including actors, directors and stage hands convinced the legislature to extend the state’s $100-million-a-year credit over opposition from teachers and public employees who said the state shouldn’t be giving away money when it’s cutting workers.
Politicians would be better off lowering tax rates for all local businesses, said Scott Drenkard, an economist with the Washington-based Tax Foundation, a non-partisan group that analyzes tax policy.
“The main reason these subsidies stick around is films are high-profile, they’re sexy and they are a nice way to showcase the state,” Drenkard said.
New Mexico had an annual average of 1,186 people working as actors between 2001 and 2011, out of a total of 767,000 employed. As a share of total workers, that’s higher than California and New York, which filled many more jobs in the profession at 21,716 and 11,958, respectively.
Movies filmed in New Mexico include the best picture Oscar winner for 2007, “No Country for Old Men,” and Walt Disney Co.’s “The Lone Ranger,” due to hit theaters July 3.
In addition to rebates, New Mexico’s incentives include loans and reimbursement for wages in certain trades, such as set decorators and casting directors.
Governor Susana Martinez, a Republican trying to close a budget deficit after taking office in 2011, proposed reducing the percentage of film costs given out. Instead the legislature capped total incentives at $50 million a year.
The program generated 143,046 days of employment for local workers last year, down from 197,474 days in 2010. Since New Mexico began offering the tax incentives in 2002, three production studios have opened there, according Nick Maniatis, director of the state’s film office.
Hawaii offers income tax credits of as much as 20 percent of local expenditures, according to its state film office. Among the recent films shot there, Universal Pictures’ “Battleship” and Twentieth Century Fox’s “The Descendants,” which won a best adapted screenplay Oscar last year.
Some states manage to create high-paying entertainment jobs without giving away tax dollars.
Nevada, with iconic locations in Las Vegas, ranked second behind Hawaii in average pay for actors at $27 an hour. The state was first in the percentage of workers employed as audio and visual equipment technicians, probably because of Las Vegas’s leading role in trade shows and conventions, according to John Hanson, business agent for the International Alliance of Theatrical Stage Employees in the city. Nevada doesn’t have a film incentive program.
In addition to wages for film crews, states seek an economic boost from movie-related travel. The Virginia Tourism Corp., which promotes sightseeing in the state, produced a map of locations either used in the film “Lincoln” or frequented by the cast and crew of the Steven Spielberg-directed picture.
Tamra Talmadge-Anderson, public relations director for the agency, said it’s too early to assess the boost Virginia’s tourism industry got from the film, which was released Nov. 16.
Among the tie-ins, the Dixie Restaurant in Petersburg offers a menu item called the Spielberger.
“We’ve never had an opportunity like this before,” Talmadge-Anderson said. “It’s a marketers dream.”
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