David R. Henderson  

Incentives on Set

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As I said in an earlier post, my friend Robert Anthony Peters "gets" economics. It has helped him in various situations as an actor.

(Parenthetically, one thing I had not been aware of is how low actors' pay can be in theater. It is not unusual for an actor, even in a lead role in a play, to get $500 for the run. The run includes not just the two or three weeks of performances but also the one or two months of rehearsals, often in another city. This post, however, is about an experience he had in movie acting.)

The Screen Actors Guild (SAG) has local offices around the country. (Since this happened, SAG has merged with the American Federation of Television and Radio Artists (AFTRA)). The production company in the case I'm about to tell wanted Robert for a lead role. Near the location where the movie was to be shot, the local SAG, knowing that the SAG wage rates might sink the project, let it be known informally that it would look the other way if the union members agreed to lower pay. It pointed out that, however, if that happened, SAG would be unable legally to enforce any of the standard SAG terms, so the actors were on their own. One of the important SAG terms is on overtime pay.

In the negotiations before the actors agreed to be in the film, the producer asked the actors if they were willing to work overtime without overtime pay. A typical day was 8 or 10 hours (Robert doesn't remember which in this case) and actors were paid a day rate. So if you worked overtime, you were paid zero for that extra time. Robert was aware that that gave the production company very little incentive to care about having the actors on set for more than the standard day. So he didn't agree to no overtime pay. That's where his understanding of incentives was useful. They hassled him about it too, but he stuck to his guns. However, a boy and girl friend acting pair did agree to no overtime pay. Every day when Robert showed up for work at his call time, the boy and girl friend had already been called to set. Every day, when he had been released, the boy and girl friend remained for an extra hour or two.

Incentives matter.

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COMMENTS (2 to date)
Pierre writes:

This reminds me of a time talking to an acquaintance of mine. He was also an actor. At the time he was pretty thrilled to have a good role on a television series, but it was his first such role and he was pretty worried about the negative effects of belonging to ACTRA (Canadian actors union similar to SAG). He had concerns about his membership, and the pay "guarantee" that came with it, having a negative impact on his ability to do the work he'd been doing before his television role. He understood that one good role is no guarantee of another, and he understood that most of his acting opportunities could very well be the kind of small jobs that can't pay ACTRA rates. Since ACTRA membership is very guild-like - you apply for an apprentice membership first, and then earn "credits" towards full membership - joining up for specific gigs is not really an option.

guthrie writes:

Referring to your parenthetical, $500 is the rate for Union-affiliated actors working with 'established' companies and venues ('established' meaning those having contracts with the theater Union, Equity). It is incredibly common for the rate of actors performing in theater here in LA--as a lead or otherwise--to earn $0.

There is more theater produced in Los Angeles than any other North American city. Part of the reason for this is the fact that theaters with fewer than 99 seats are able to operate without an Equity contract. This allows small theaters to proliferate. It also allows them to operate outside of Union mandates.

Even with the 99-seat provision, theater space is at a premium (this scarcity is driven by several factors apart from municipally-enforced Union demands). Combine this with a surplus of thespians in pursuit of a career, and you have a perfect storm of Ricardian subsistence wages.

The resulting trade-off for an LA based actor is that, for a price, just about anyone can put up a theater production to showcase themselves. On the other hand, it's very easy (and a common story) to slug out show after show without any monetary compensation whatsoever--to say nothing of insurance, benefits, or guarantees.

Regarding incentives, it's interesting to me that the story of your friend Anthony 'negotiating' with the production company and 'sticking to his guns' regardless of the hassling he received would seem to be an argument against Union involvement in the 'Acting' market, while the story of the boyfriend and girlfriend would seem to argue for Union (or some kind of) intervention.

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