Thursday, June 16, 2011

Some clarifications

Wow.  I really wrote that last post poorly, based on how it's been interpreted by several people.  I'm really sorry, and hope that this post will correct any misimpressions I've given. These are mostly addressed to commenter Steve Kaplan, who seems not to know me very well, and seems to have made several assumptions about me and why I am writing this blog.
  • I am very much pro-labor and pro-union (perhaps not pro- some particular unions).  Just because I owned a business and hired people for a while doesn't magically make me "management."  I have spent by far the larger part of my 28 years in the VFX trade as a freelance worker. The entire idea of rigid early-20th Century labor or management roles is an impediment to finding a solution to the industry's current problems.
  • I have exclusively worked as a freelancer or consultant for nearly 2 years, not as an employer.  I have had no employees or subcontractors in that time, other than an IT specialist for a handful of days. I have no intention of starting a new VFX business under the current conditions. I have no interest in promoting the agenda of shop owners over that of workers -- quite the opposite.
  • I have been a labor representative on a negotiating committee for a CBA.  I and my fellow reps had to repeatedly tell the business agents to take a stronger, less-conciliatory stance.  We voted to authorize a strike in the face of pressure from the local to take a bad deal.
  • I spent years on the Executive Board of Local 659, was a founding member of the National Executive Board of Local 600, and proudly sat on Haskell Wexler's subcommittee to help draft 600's constitution and bylaws.
  • I have never, and certainly not in my previous post, advocated misclassification of employees, advocated violation of labor laws, or passed on the costs of an underbid job to my hires. I went into considerable personal debt to not only pay every single one of my workers every cent they billed, but to do the same for my subcontractors and vendors. I have never asked a worker to put in overtime when I didn't put in at least as much myself. I (and my then-partner) have been stiffed by clients to the tune of 6 figures over the past 5 years, and I have never passed that on to anyone working for me.
  • I think a level playing field is essential to the survival of the US VFX business, and have been an outspoken proponent of not only not underbidding or "buying" jobs, but switching to a cost-plus model.  
  • Steve's appalled reaction notwithstanding, it was very much the norm for VFX and mograph/design shops in NYC to pay everyone not on staff as 1099 workers, up until the past 2 or 3 years. Now that the states are hungry for revenue, they are auditing like crazy, and many shops have reacted by requiring their freelance workers to contract with and bill through one or another fly-by-night EOR (Yucor, MBO). A long time ago, I proposed an organizing drive targeting the EORs.  As far as I know, no one has tried to card-check them.  
  • It may also appall Steve to know that the vast majority of freelancers that I hired and worked with preferred and asked for or demanded 1099 instead of W2 status, even if they didn't have a legitimate business entity. Some of those people even went on to file claims for unemployment insurance, citing me as their employer, triggering audits that ultimately resulted in my paying substantial fines (which I did not contest).  This last scenarios has happened to every single VFX/post/mograph/design business owner I know in New York.
  • Unless and until we can bill our clients cost-plus, yes, paying a 20-30% increase in labor costs would prevent any small shop from breaking even, much less making a profit.  I believe this is less of an issue for large shops, for obvious reasons of economies-of-scale, and leverage relative to clients' demands.
  • The money for benefits and legally-mandated OT has to come from somewhere.  It can't come out of existing shall-shop margins, because they're too small right now with current payscales and the much-abused-by-clients firm-bid model.  If small shops quoted rates high enough to make the margin healthy, they'd never win a bid the way things work now. ONLY if the field were level, and everyone were paying the same rates and billing their clients more than we can now, could any small shop owner stand a chance of surviving while also hewing to both the letter and spirit of wage laws.
  • As a freelancer, I now work 40-60 hours/week.  As a shop owner, I worked 50-110 hours/week (without health benefits, and not much of a retirement plan)  Most small shop owners I know work just as hard, and make just as little.  That's one reason they're closing up and going freelance -- at least in NYC.
  • Unless you want a world in which there are only big shops and their time-card employees, in which you can't be a worker this month and a vendor next month -- a world without opportunities for entrepreneurship -- you can't just take the "Goodfellas" approach of "f__k you, pay me."  You have to think about whether you could afford to treat your (perhaps hypothetical) employees the way you want to be treated.  And if you couldn't, then you either have to work for a world in which you could, which may include tempering your own demands, or you need to stop complaining.  Personally, I vote in favor of complaining and working hard for change.
  • The main point of the previous post was simply this: if you want to not be pressured into working when it's unfair, if you want to have more time for your family, if you want to have portable healthcare for everyone in the business (not just yourself!), then you have to be willing to level the whole playing field, not just between the studios and the VFX shops, but between the VFX shops and the workers.  If you want a kid starting out to not have to "pay dues" by working in sweatshop conditions, even if you did, you have to be prepared to organize, fight, and, yes, pay for it.  You'll have a better life.  Your children and colleagues will have better lives. That kid starting out will have a better life. You'll still have a US industry to work in.  But you may have to take home less cash at the end of the year, if you're in, say, the top third or quarter of industry workers.  You'll be making more per hour. You'll be more secure. But you will no longer have the option of saying "screw it, I'm gonna get mine right NOW," and devil take the hindmost.
  • And that would be a very good thing in my opinion.  We all, workers and shop owners alike, need to stop shooting ourselves in the foot (or face) by working too hard for too little, "just this time," or taking advantage of the inequities in the system, "just this time." That's going to take hard work, discipline and sacrifice on all sides.
  • Maybe in feature film tentpole-land, the studios will loosen their claws enough to add to the pool.  If they were long-term smart, they might. But in the commercial world, there's no additional money to be had for our work -- it has to come out of someone's pocket. Maybe the big shops have something in there. The small ones don't.
Sorry.  That turned into a bit of a rant. But, hey, it's a blog, right?  I hope it's clearer where I stand.  We need to hang together, or separately, as the man said.  But we also have to deal with the real world and not create straw-man enemies or raise unrealistic expectations  in order to pander to the widest group while serving only a narrow one -- we've had enough of that for generations to come.  This is not being defeatist. This is about facing and dealing with what is real, not wishful thinking.  Hope and change, yes, always and forever. Fantasy and wish-fulfillment, not on this blog.



Steven Kaplan said...

Good morning etm,

I'm sorry to hear that you were so offended by my response to your post. You are correct when you say that I don't know you well. I have no idea who you are and believe I made my reasons for my thoughts clear in my response. Since I had only your post to go on, my assumptions were made solely based on the that your writing.

I'm glad to hear that you hold a pro-labor and pro-union/organization position. I inferred that you were passionate about the matter from your last post, but wasn't clear on your stance. Having sit on organizing committees and executive boards of the former International Photographers of the Motion Picture Industries, and then a founding member and influence of the International Cinematographers Guild certainly should give you the understanding of my vehemence and reported appalled reaction. I'm honored to be holding a discussion with someone with your pedigree and experience.

"I have never, and certainly not in my previous post, advocated misclassification of employees"
While you didn't come out and say as much, implying that the misclassification of employees is common place and by your tone indicated that since the union would do away with that practice it was another added cost that had to be factored led me to conclude that you accept the practice since its common place. I am not appalled to hear that your former employees insisted on you continuing the practice since it *HAS* become so common place. Artists have become accustom to working that in their tax equations and prefer to pay their own payroll taxes in the attempt to reap the benefits of being classified as a freelance contractor. However, its still illegal and for very good and specific reasons. Therefore, I am neither appalled to hear you experienced it or that it exists. I speak to artists about it all the time.

I agree that payment for OT and portable benefit contributions needs to be paid to the vfx studio through the client. Your points are vaild. However, making the argument that the small shops wouldn't be able to work if they didn't continue drinking poison just doesn't float with me. I understand very well the concerns of a small business owner and the risks they take. However, its their choice to challenge those risks and not the artists toiling in their shops. I, too, was a freelance artist and worked in plenty of those shops .. who asked me to work on flat rates at 80-100 hr weeks with no benefits. Hell, sometimes with no payment since "The client hasn't paid us yet .. we'll get it to you". If the solution is that all small shops need to raise their prices in order to staunch this blood flow, let's figure out how to do that! I've postulated (with much chagrin in response) that having a union contract in a small shop could be a perfect reason to tell the client the bid is higher. "We had to tack on 25% to our U/C charges, our artists voted to have the union represent them and we have H&P costs to make. Its the same work you've received in the past, but now, our artists work faster and better".

continues ..

Steven Kaplan said...

So, no, I don't wish for small shops to disappear. Its where big shops are born. Its an integral part of the business and needs to thrive, just like the big shops do. But, I also still believe that the artists working in those shops should bear equal amounts of operational burden as their ownership stake in the company .. ZERO. Telling me its tough to make ends meet since the competition likes to eat its own entrails doesn't engender much sympathy from me. I agree the system is broken and am doing what I can to effect change to fix it.

In my experience with the vfx industry, hourly wages have never been something of a concern for the artists. Meaning, vfx artists are, generally speaking, not poorly paid. Most of my wage discussions with artists inquiring about organizing centers around the methodology on establishing wage minimums .. where they ask if it would effect the nice pay they're getting. Your hypothesis that wages will decrease due to unionization is a fair one. It would be a natural reaction to the addition of the H&P cost .. pass it to the employee. I just offer the counter to that suggestion .. pass it to the client. We regularly post that if you follow the money trail, the greater percentage of vfx work done for film or television (and even games and commercials) can be traced back to one of the big entertainment conglomerates. We believe they can afford the extra expense.

I agree with your final points whole heartedly. There has to be an understanding that working where the business isn't breaking even as a rule is an anathema to our industry as a whole. It has to be stopped and an understanding of proper and equitable business practices needs to be set. Scott Ross has offered the notion of a Visual Effects Studio Trade Association. I am very excited by that prospect.

I'm also extremely excited at the notion that a visual effects artists will be able to move from commercials, to games, to features to episodics .. from California to New York .. while having a collectively bargained contract to support them and stipulate pension contributions and portable health benefits the entire time. That's what I left the field to see accomplished and what gets me in the door every morning.

Thanks for the opportunity to clarify my position. I apologize if my misunderstandings caused you any stress.

Steve Kaplan

IA4thefuture said...

You might be correct that, initially, the worker's hourly rate may actually be reduced to absorb some of the additional costs of a collective bargaining agreement (such as health coverage, pension, overtime premiums, and obeying the law). But the long-term result will be to level the playing field so we all obey the law, and then the costs can and will be passed along to the customer/studio and incorporated into the film's budget. It won't happen overnight, but it will happen. At least, that's how it's worked for the past fifty years in Hollywood.

etmthree said...

@IA4thefuture -- I agree completely that that will be the long-term effect. My question is: how do we get from here to there without creating a period in which small companies get choked out of business?
If organizing the industry creates even a temporary situation in which smaller companies are put at a significant disadvantage, then I have a problem with it -- as a process, not as a goal.

IA4thefuture said...

in my experience, there is a "self selection" process. workers organize at the most egregious (and profitable) companies. the one's which abuse the 1099, don't pay any overtime, and accord no benefits whatsoever. and, when a majority of workers designate the iatse that only gives us the right to NEGOTIATE the best deal we can, not one that puts anyone out of business. we'll customize the agreements to the size of the respective company. it will take a while to get the entire industry signed up, and even longer to negotiate one standard contract.