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.

etmthree

might unions be *good* for VFX/animation companies?

Naturally enough, when we talk about organizing VFX and animation workers, we focus on the benefits that would (we hope) accrue to the workers. It seems as though most of us assume that these benefits would come directly out of the pockets of the VFX business owners, who are already struggling.

What if they didn't?

We've been hearing and reading a lot about the VFX companies' woes, which boil down to inadequate compensation for the services they provide, given their operating costs. Adding the cost of union labor to their balance sheets would have to hurt their already-narrow margins.

What if it didn't?

Let's look at live-action production.

First, compare the overall business health of union-signatory major film studios with non-signatories. Ignoring the fictions of studio bookkeeping, I think it's fair to say that the signatories are generally better-off, as businesses. Look at their physical plants, their longevity, their executive compensation, their benefits packages for non-craft employees, their production slates, their assets. I'm pretty sure that the signatories all rank higher in all of these categories.

Now make the same comparison in commercial production companies -- you find the same pattern. There are some non-signatory company *owners* who make more money than they might if their staffs were organized, but I would argue that their businesses are less-healthy -- that these are fundamentally greedy people out for a short-term dollar, uninterested in building value in the business itself.

What's going on here? Shouldn't the companies burdened with union and guild agreements be suffering more than the others?

What if organized labor and collective bargaining actually *benefit* businesses as much as employees?

Now, correlation doesn't necessarily indicate causation. Even if this is a causal relationship, maybe it runs the other way -- perhaps only healthy businesses can afford to hire union labor. But that doesn't seem likely -- I think there are very few, if any, examples of non-signatory companies becoming really rich and healthy, and subsequently deciding to become signatories. What would motivate them to do so, especially if organized labor is universally burdensome to management -- wouldn't a strong company find it easier to just ignore it?

What would the mechanism be then? How does signing a bunch of union bargaining agreements make a production company or a film studio healthier, when everything else stays the same?

I think the answer is simple and subtle: it imposes standards. Standards of fairness. Standards of costs. Standards of work rules. Standards of, indirectly but perhaps most importantly, fiscal responsibility. Collective bargaining agreements are not negotiated company by company -- they are industry-wide (at least within a given local's jurisdiction). This creates exactly what VFX shop owners continually cry out for: a level playing field.

Standards make it impossible for a signatory to shoot itself in the foot by saying "we'll do this one project for half what it should cost" -- for whatever reason (We're building our reel, it's just this once, they'll bring us the next one at full price, it'll be so cool, etc.) But what about the non-signatory (or out-of-state or overseas) competitor who *will* say that? How do we keep the job from running away? Again, the same way as the live-action production industry: reciprocal agreements with other locals, guilds, and unions.

If one of the majors let its SAG agreement lapse, and tried to hire non-union actors, not only would any SAG talent refuse to work and picket the studio, its DGA, WGA, IA, IBEW, and Teamster workers would honor the SAG picket line. If a signatory live-action commercial production company tried to hire non-union camera crew, the grip and electric and carpentry locals would honor Local 600's picket line.

The reciprocal honoring of picket lines means that if a studio violates one of its bargaining agreements, it effectively loses *all* of its labor. This in turn escalates the issue -- the studio could, in principle, run away completely, but that would move it out of the labor market it most wants to be in. The size and competence of the local workforce is a powerful motivation for the majors to stay in L.A. -- although we are seeing more and more runaway production as alternative pools of talent deepen, which is worrisome.

If feature VFX houses were organized, especially through an existing powerful union like the IA or DGA, reciprocity would make it possible to, um, encourage the major studios to take their work only to union shops. Those shops in turn would not be willing to bid the job irresponsibly or unethically, as their own bargaining agreements would impose standards that would make that behavior too risky. For example, if a bargaining agreement strictly compelled a shop to pay overtime, it would be strongly discouraged from deliberately bidding a job with too few staff or too short a schedule. So, in addition to ensuring workers' fair treatment, the agreements help ensure rational, more profitable behavior from shop owners and managers.

Now, what about the small shops, the upstarts, all of us trying to break into the business or make our own way? There is no doubt that restrictive and exclusive union membership and eligibility rules stifled innovation and growth in VFX and commercial production for a very long time. Some craft locals continue to work in this unenlightened manner. For VFX organization to work, this simply cannot continue. If, and it's a big if, the IA or IBEW can, in their entirety, move out of their mid-20th-century mindset and make it easy and desirable for people to join the unionized workforce, this can work.

In this scenario, a small group of artists wanting to create a new company to do VFX work might, as they often do today, seek subcontracts from larger shops. Assuming those shops and their studio clients were organized, it would be necessary to make it easy for this new entity to work as a signatory as well, and easy for its employees to join the labor organization. Easy, but not free. Realistically, there will be some costs associated with this, a barrier to entry -- which in my view is a good thing. It has become too easy for anyone to buy a few workstations and start soliciting work without any real understanding of what makes a business work well (goodness knows that's what I've done!). Those of us who want to run companies need to do our homework better than has been usual. If you make it possible for any fool to not only start a business but compete in the marketplace, and further, encourage self-destructive behavior like underbidding and working impossible hours, then, well, you get a market of fools -- and those who prey upon them.

This has gotten too long. If you read this far, thanks!

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