Sacramento to La La Land: Drop dead

We start today with a bit of history. Over the last four decades, industry after industry has fled California. Between the end of World War II and the late 1980s, Southern California was the heart and soul of the U.S. aerospace industry. Nearly a million people worked in aerospace-related and adjacent jobs statewide at its peak — a huge portion in Los Angeles, Orange and San Diego counties. Companies including Northrop, Lockheed, Rockwell, Hughes and Douglas had massive operations across the region, building everything from the Space Shuttle and B-2 bomber to commercial airliners and satellites.

Starting in the late 1980s, California’s leadership let them walk. Today, employment in the state’s aerospace industry is barely a quarter of its 1980s peak. With the exception of Lockheed Martin and Northrup Grumman in Palmdale and SpaceX in Hawthorne, most manufacturing has moved to lower cost states. While the state remains a hub of aerospace research and development, traditional factory jobs are all but gone.

Not so long ago: A Boeing C-17 Globemaster II military cargo plane under construction at the company’s Long Beach plant, c. 2010.

Equally difficult to imagine is California’s once thriving automobile manufacturing industry. The state hosted major auto plants for GM, Ford, and Toyota, notably the NUMMI plant in Fremont and GM’s Van Nuys assembly plant. California was also home to a dense ecosystem of thousands of parts suppliers and machine shops. 

The state let them go, too. By the early 2010s all major assembly plants had closed, with NUMMI shuttering in 2010 (albeit later resurrected by Tesla). Supply chains and auto and parts production migrated to the Midwest, South, Canada and Mexico. Today, Tesla’s Fremont plant is the rare exception.

Other industries that abandoned the Golden State include shipbuilding, machinery and industrial tool manufacturing, oil refining and petrochemical production and electronics and computer hardware manufacturing.

Gone, gone, gone and gone.

It happened in a head-spinningly short period of time, between the early 1990s and the early 2010s. While outside forces certainly played a role — particularly the end of the Cold War, the passage of NAFTA and the rapid acceleration of globalization — the fact remains that California’s political class never mustered a coherent set of policies to keep those industries, and the millions of good paying middle class jobs they supported, in state.

Sacramento often prioritized regulation over retention — for example, pursuing strong labor and environmental goals without parallel industry-support policies. It didn’t help that state leaders also outright demonized certain sectors, particularly the oil industry, heavy manufacturing and auto production, as environmental bugaboos. They increasingly put their thumb on the economic scales, doling out generous subsidies to favored industries and penalizing disfavored ones. Their positively suicidal approach to energy production is a prime example.

At the same time, deliberate public policy decisions sent the costs of taxes, land prices, energy, workers’ compensation and environmental compliance through the roof. Other states took notice, and took advantage. By the 1990s, defense contractors and manufacturers could save 20–40% by shifting production to places like Arizona, Texas, Georgia, or the Carolinas. After NAFTA they started moving to Canada and Mexico as well.

California’s industrial collapse was not inevitable. Other high cost states have found ways to reinvigorate their manufacturing base, such as Connecticut. California state leaders simply chose other priorities.

The latest domino to fall

You would think, having presided over three decades of hemorrhaging good paying middle class jobs, that California’s political class would have learned their lesson. You would be wrong.

There are really only two major legacy industries left, tech and entertainment. While the former is an economic dynamo, it doesn’t exactly support many of those middle class jobs, the kind that people with high school diplomas, trade certificates or associate’s degrees could get. For all its glitz and glam, Hollywood arguably is the state’s last true blue collar industry. Between movie and television production, streaming, music and live entertainment Hollywood supports nearly a million jobs.

As much of modern California history is the story of the automobile, the airplane and the space rocket, none of those industries were ever as core to the state’s identity as La La Land. Since the first filmmakers set up shop in the wide open playas and canyons of West Los Angeles in the 1920s, Hollywood has defined California both for itself and for the world. It is as essential as the palm tree (admittedly a non-native species) and the Golden Gate Bridge.

And we’re letting it go.

In the legislative session that recessed on August 15, Sacramento lawmakers passed Assembly Bill 1138 (AB 1138) which expands the state’s subsidies for film and television production from $300 million to $750 million. This was considered cause for celebration.

It’s a pittance. Consider that the County of Los Angeles spends more than $9 billion to run a bus system virtually no one uses. States including New Mexico, Texas, Louisiana, Georgia, New York and New Jersey offer equal or greater incentives, with more flexibility, and have been doing so for years. The first four of those states are less expensive places to do business in the first place. Meanwhile, the domestic entertainment industry faces increasing international competition, particularly from China.

It’s long past time for lawmakers to learn from the mistakes of the past. California’s 2025-26 budget is $321.1 billion. It beggars belief that the state could only muster 0.2% of that taxpayer bounty on one of the state’s essential industries, at a time when it’s withering on the vine. Consider: Despite the fact that the state’s population grew by just 629,000 people between 2015 and 2025 – just 1.6% – the state’s budget nearly doubled, from $167.6 billion in 2015 to this year’s $321.1 billion (also, let that stupefying fact sink in a moment).

There is still time — but the clock is ticking. Between 2014 and 2024 employment in the entertainment industry dropped by nearly 10%. That may not sound catastrophic, but losses are accelerating. In the five years between 2019 and 2024 California lost approximately 18,500 entertainment-industry jobs and about $4.5 billion in revenue. Hang out in most any L.A. area coffee shop these days and you’ll inevitably overhear stories of entertainment professionals out of work or underemployed.

In the next legislative session Sacramento needs to put real muscle into reviving and expanding the industry. AB 1138 should be just the start. Lawmakers should explore other ways to help, including state limits on local regulation of filming, tax incentives for companies that build and maintain the industry’s infrastructure and ways to grow the industry outside its traditional L.A. home to areas that are more affordable, like the Antelope and Owens Valleys.

With the right long term support Hollywood and the broader California entertainment sector can emerge from this perilous time stronger than ever. Get on it, Sacramento.