market distortion

Via: Blue Sky Studios

The impetus for this post was on Cartoon Brew a few weeks ago, which in turn was inspired by a book, Intern Nation, that quoted another Cartoon Brew post from a good while before that. It concerns internships, a concept that a lot of college graduates are familiar with in the United States.

Interships have become prevalent throughout many industries, not just animation. On the surface, they offer benefits that parties on both sides can stand to gain from. The intern obviously gets observational experience to put on their resume, and the company gains time as the interns perform non-project-related tasks that would otherwise consume paid employees’ time.

That is in the ideal world, however and there are plenty of stories of interns who were coerced into working long hours, performing actual work and and often for extended periods of time (many months or more).

This post isn’t so much about abuses within intern programmes, rather it is an analysis of how the prevalence of interns within the industry could potentially hurt it in the long run.

The problem is that interns, whether they do productive work or not, contort the economic realities of the industry. If an intern is strictly an intern and simply makes tea or shuffles paper about, then their impact is limited to slivers of time that the company could only reap benefits from in the very long term, read: a year or longer.

Interns involved in production, on the other hand, can dramatically distort costs because as anyone whose taken a managerial accounting class will tell you, what counts as a ‘cost’ is entirely up to management.

Take for instance an animator’s base salary. It’s paid (traditionally) on a per foot basis, i.e. the more animation produced in a given timeframe the more the animator gets paid. Now, when you look at how much it ‘cost’ to produce that animation, most people would factor in the animator’s salary and any materials used. What a lot of people neglect to consider is overhead; things like building rent, heating/cooling, electricity, etc. that were all used in production but can not be directly applied to a particular production.

Where interns distort this when they work on a production is that they create the actual work, but they only account for the costs associated with the overhead and any materials used, they don’t get paid so that cost is not accrued by the studio.

Why does this matter?

Salaries are often the largest single cost category for employers.

If a production uses even two interns on the production, the cost of said production will be proportionately lower than if two animators were hired. Now you might say that this is an isolated case, and so what if it is. However, what if it’s extended to the entire industry? If every studio decided to hire even one or two employees less than necessary per production it doesn’t take a genius to conclude that we’re talking about a lot of people.

“But certain areas wouldn’t be viably able to produce animation without interns”

This may be true, but again, interns distort costs so much, that that is precisely why certain regions cannot produce animation, or rather, cannot appear to produce animation in a profitable manner.

When it comes to the cost of production, the use of interns will naturally result in a lower overall cost, but the problem is that the difference isn’t “saved” as studios might have you believe. Their fixed costs will remain the same whether they hire the additional persons or not because they have to be paid even if no animation is produced at all! The cost to employ an animator is considered a flexible cost that is applied to the production and would (and should)  be ultimately paid for by the client.

The ultimate result of utilising interns for production is that the supply/demand nature of the job market is also distorted. Anyone willing to perform work for free will displace someone who will only work for compensation. This drives the mean salary of animators lower as they are forced to work for less than they would otherwise have. The difference is, again, not “saved” by anyone, it ends up in the economy somehow, the problem is that, ethically, it is sufficiently suspect.

So the crux of the problem is that either the job market is too willing to accept unpaid labour or that the various clients out there are unwilling to pay the amount that they should for a given production.

My suspicion is that it’s a mixture of both, a vicious cycle if you will. With people willing to work for free, studios and networks can use the resulting lower costs to argue that such and such a production is only viable if interns are used. This is patently false.  The cost should be what it ought to be and the client could either take it or leave it. Extracting free labour benefits them in the short term, but harrangs the overall economy and industry in the long term.