The entertainment industry is one of the largest engines of the American economy, employing more than 2.5 million people and paying almost $200 billion in wages. In fact, its importance is not limited to just the domestic American market, as it has enduring global appeal and serves as a vehicle for carrying American products, culture, and services to other national markets as well.
However, over the last couple of months, the industry has been in almost total shutdown due to a strike by the Writers Guild of America over workers’ rights, which began on May 2 and still shows no signs of slowing down. The strike has caused an almost total shutdown of all scripted TV shows and movies in the USA, attracting widespread attention and support from other unions and countries.
Beyond the impact on Hollywood, the strike also foreshadows several recent market trends that will have an enormous impact on the world economy in the near future. These trends include the recent inflation surge, growing inequality, the destruction of the global middle class, new technological paradigms of doing business, and the impact of generative AI. A closer look at these trends through the lens of the strike could help forecast what the economic issues of the future will be.
The American entertainment industry is in turmoil.
The American television and film industry is in a state of serious disruption, and the WGA strike is unlikely to help matters. Amid the impact of streaming services and the ensuing ‘streaming wars,’ the way content is consumed has been changed forever, and the ground realities of the industry do not yet affect these changes.
Issues like residuals from streaming are a hot-button issue in the dispute, reflecting the changing realities where the majority of content globally is now consumed on-demand via streaming instead of through more traditional mediums like television channels or cinema theatres. However, most of the new income has been monopolised by studios and producers using loopholes in previous agreements, loopholes which the writers now seek to close.
The entertainment industry is not the only one to have shifted to a whole new paradigm in recent years, and sectors like urban services, communications, retail, and finance are in similar situations. In these sectors, too, most of the productivity gains have been syphoned by large players, leaving individual workers relatively worse off. With the advent of lights-off manufacturing and 3D printing, manufacturing might be heading the same way as well, and new legal paradigms will have to emerge to reflect the new economic realities. The WGA strike might serve as an important indicator of what that may look like.
Inflation and falling living standards
One of the core issues in the strike is simply the writers’ deteriorating living standards. In the wake of an unprecedented inflation surge and global economic disruptions, the standard of living of lower-class and middle-class employees has either stagnated or fallen, while the 1% and megacorporations have multiplied their wealth. This growing divide is now at historically high levels and is only projected to grow further, with some economists predicting the ‘end’ of the middle class.
Demands like increased minimum wages, mandatory staffing and duration of employment, and pension and health funds, showcase the faltering standards of living of low-level employees. While studios and top producers have seen revenues and profits soar, the people at the bottom are struggling to ensure housing, healthcare, and other basics of life.
Predatory practices such as union-busting, non-compete clauses, probation terms, overwork of staff, and temporary ‘gig’ contracts are among a myriad of ways employers are now using to maximise profits at the expense of workers. Nor are these practices unique to the entertainment industry but widespread throughout the whole global economy these days.
In the wake of plummeting living standards worldwide, the WGA strike could be a forerunner of similar collective action by workers to ensure fair bargaining and a minimum quality of life. This is borne out by data that shows that interest in unionisation and strike action is at an unprecedented high throughout the developed world, most notably in America.
The first casualty of AI?
The fears of the writers are not just limited to the impact of streaming and inflation, however. There is a very real chance that film and television writers could be the first casualties of generative AI programs like ChatGPT. The nature of screenplay writers’ jobs makes them especially vulnerable to automation, and the guild seeks to forestall that through legally binding guarantees.
One of the core demands of the WGA has been the banning of the use of AI programs to write and create shows – they should only be used as research tools, proofreaders, and a tool rather than as a replacement for writers. This has come in the wake of a recent trend among showrunners to generate scripts via AI and then employ writers at a fraction of the cost to rewrite and ‘clean up’ the AI-generated content.
This illustrates an important yet overlooked danger of AI: while many worry about losing their jobs due to generative AI, the real danger is that employers use the threat of AI to force down wages and turn skilled, engaging jobs into menial, unskilled labour. While still technically employed, one might see wages, job satisfaction, and benefits go down drastically through the unfettered implementation of AI.
AI is undeniably on the rise and will permeate nearly every service sector in the near future. However, the nature of its implementation is still a matter of serious debate, and how it is used could mean the difference between an age of unprecedented prosperity and mass unemployment.
The last time the WGA went on strike was 2007-2008 when issues like residuals, internet media, and animation were raised. Remembering that this was before the unprecedented boom in animation media and streaming we see today, as well as during the Great Recession, it becomes obvious that the WGA’s demands serve as a rare window into the economy of the near future.
The casual nature of employment, international integration, and power imbalance between studios and writers mean that the WGA is uniquely sensitive to new trends in the global entertainment industry, and any issues raised today, as well as the responses to them, will both serve as a wind vane for future trends, as well as impact the nature of the industry’s future as well. A durable agreement balancing producer’s interests with writer’s fears over AI and streaming could serve as a landmark for entertainers, freelancers, and service workers the world over.