Mayor Slay Overestimates Economic Impact of Up in the Air

In this KMOX article from yesterday, Saint Louis Mayor Francis Slay comments about Missouri’s film tax credit program:

They (filmmakers) spent a lot of money, had about a $50-$60 million dollar economic impact on the St. Louis area.

Hold on — $50–$60 million? Where is he getting this figure? Allow me to crunch some numbers and demonstrate that an impact of this magnitude is unrealistic.

In the comment section of my recent post about film tax credits in Missouri, Econdiva provided an estimate that the producers of Up in the Air spent “just shy of $12 million” in the state. I will grant her estimate for the sake of argument, because she worked on the film and is more likely to know this information.

For an economic multiplier, I’ll reference a fiscal note from Louisiana regarding the estimated economic and fiscal impacts of film and video tax incentives (emphasis added):

[T]he current statewide economic multipliers, supplied by the Bureau of Economic Analysis of the U.S. Department of Commerce, for the motion picture and sound recording industries estimate that each dollar of expenditures in those industries generates about 40¢ of earnings throughout the entire economy (a final demand earnings multiplier of 0.3982).

Using this figure, an expenditure of $12 million for Up in the Air would generate only $4.8 million for Missouri’s economy.

Even if Mayor Slay used the January 2009 prediction of $30 million in the Saint Louis Business Journal, the amount generated for the state’s economy would only be $12 million.

Both numbers fall pretty far short of $50–$60 million. This is just wishful thinking.