“Baywatch” was a staple of low-budget, first-run syndication in the 1990s, as natural to Los Angeles as David Hasselhoff’s chest hair and as defining of the city in that era as the O.J. trial and the Sunset Strip.

By the time it ended its run in 1999, it had become too costly to produce at a profit.

But the show’s red trunks and swimsuits returned to L.A. lifeguard towers in March of this year. Like an endangered pelican reintroduced to its native habitat, the Fox reboot was hailed as a triumph for the industry’s hometown, which is suffering through a long slide in production activity. Gov. Gavin Newsom bragged that the show was back “where it belongs,” at a cost to the state of $21 million.

Soon, however, the producers ran into obstacles. Officials from the county Beaches and Harbors Department and the California Coastal Commission told them they couldn’t park their trucks overnight, light fires or drive on the sand.

“We’re a lifeguard show,” “Baywatch” co-creator Greg Bonann remembers saying. “What do you mean we can’t drive a truck on the beach?”

Suddenly the show was at risk of becoming the wrong kind of symbol: this one, a victim of California’s tangle of regulations. No one in power — not Newsom or L.A. Mayor Karen Bass — wanted to read the headline about “Baywatch” bailing out of Los Angeles. When elected leaders were summoned to the Fox lot to smooth things over, the show held all the leverage. “After a while, you have to sit down with the right people and say, ‘Guys, do we want to have this show here or not?’” Bonann says.

Los Angeles has been the world’s entertainment capital for 100 years and still has an unmatched concentration of talent and infrastructure. But in an age of globalization, with easy international travel and communication, the city is losing its edge.

Everything costs more in L.A., starting with labor, due to the high cost of living and elaborate union agreements. Other states and countries have developed crew bases of their own, are more solicitous of producers’ needs and offer more generous incentives. Producers are also under pressure from the audience to deliver ever more spectacular experiences. Creating a premium product — at a price — often means going overseas.

These trends have been underway for 20 or 30 years. But since the end of the streaming bubble in 2022, America has lost 73,000 production jobs — two-thirds of them in Los Angeles — bringing the issue of foreign competition to a rapid boil.

In the chaotic race for L.A. mayor, the candidates have clashed over who lost Hollywood. At a debate in May, Councilmember Nithya Raman accused Bass of failing to cut red tape. “That’s what happened in ‘Baywatch,’” she said. “The city and county weren’t talking to each other.” Spencer Pratt, the reality star who conceded last week, bemoaned the sorry state of California’s incentive program: “Even Massachusetts has better tax credits than Hollywood.”

The contenders for governor are also battling to show that they can revive the industry with the right package of incentives. Newsom doubled the state program to $750 million in 2025. Everyone seems to agree it should be more — maybe a lot more — and that it should cover above-the-line salaries for actors, writers and producers.

“In my understanding, California’s rebate is one of the least beneficial for anybody who is financing motion pictures and television,” says Charles Roven, co-founder of Atlas Entertainment and producer of “Oppenheimer” and “Wonder Woman.” “It’s capped and it has no above-the-line.”

But the state can do only so much to compete with the 81 countries that have embraced filming as an economic development tool. The U.K. alone spent $2.2 billion on film and TV subsidies in 2024, and national incentives are often stacked on top of local rebates.

California “went into this knife fight without a weapon, and now folks are bringing guns,” says Xavier Becerra, the Democratic gubernatorial candidate who is the favorite to succeed Newsom.

As she runs for reelection, Bass has to walk a fine line between projecting confidence in the city’s ability to retain production and lobbying for more federal help for Hollywood. “I don’t feel like we’re going to lose our industry,” Bass says, noting that studios and networks are still grappling with the business changes wrought by the streaming revolution. “When all of that settles, I feel confident that we can maintain our industry.”

Once a pipe dream, the idea of a federal film subsidy now seems like a real possibility.

“In order to save this industry in America, we need to be competitive with tax credits,” says Sen. Adam Schiff, the California Democrat who is working on introducing an incentive bill in Congress. “We have a lot of our influence around the world as a result of American film and TV. We don’t want to lose that soft power.”

Advocates warn that unless the U.S. responds to foreign subsidies, Hollywood is at risk of becoming Detroit, which has bled jobs as automakers pursued low-wage labor and generous incentives in other states and abroad.

“This is supposed to be the film capital of the world,” said Noelle Stehman, a co-founder of the grassroots group Stay in L.A., at a rally for Raman’s campaign. “It should be the cheapest and easiest place to film. In fact, it is the most cumbersome and the most expensive. That cannot continue. If we don’t do something quickly, this is going to become the next Detroit.”

Mike Miller, vice president of the International Alliance of Theatrical Stage Employees, was raised in Cleveland. He also sees a parallel. “I watched the demise of steel and rubber and automotive manufacturing as I grew up,” he says. “This is identical in many ways. We have an undeclared trade war that our government is standing by and watching happen.”

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For every show like “Baywatch” that shoots in Los Angeles, there’s another reboot that doesn’t. “The Rockford Files,” the 1970s drama about a hard-boiled L.A. detective, will return to NBC next January. It’s still set in L.A., but it’s filming outside Atlanta. “Little House on the Prairie,” another mainstay of the 1970s NBC lineup, was originally filmed in Simi Valley. The version coming to Netflix in July was shot in Winnipeg, Manitoba.

Canada offers a 16% labor credit on top of Manitoba’s 30% incentive — though that was only part of the reason to go there. Produced by CBS, “Little House on the Prairie” also benefits from lower costs, a favorable exchange rate and available soundstages. Though not in America, Winnipeg also was a better fit creatively, with panoramic vistas that resemble the show’s Midwest setting.

When the Michael Landon version was made, L.A. was the obvious choice. But it’s no longer the default. With bigger screens at home, TV looks more and more like film and has the costs to match. Going abroad can make the difference between the show existing and not.

These changes are accelerating. In the 2000s, “Scrubs” filmed for nine years at an abandoned hospital in the San Fernando Valley. The reboot is made in British Columbia, with producers shuttling north to keep tabs on the set. “It is an absolute creative bummer to me that I’m shooting that show in Vancouver,” says creator Bill Lawrence. “It was a shock to my system. I wasn’t prepared for a show that existed, first and foremost, here to be cost prohibitive here.”

The economics can be even harder for features. “Beetlejuice,” released in 1987, was filmed in L.A.; the 2024 sequel was made in the U.K. “The Social Network,” from 2010, was shot in L.A. (and on location in Boston, Baltimore and the U.K.); “The Social Reckoning,” due out in October, was made in Vancouver. “Spaceballs,” from 1988, shot in L.A. “Spaceballs 2” is shooting in Australia. ”The studios want you to make everything for less money,” says Brian Grazer, whose Imagine Entertainment is producing the latter sequel. “You’re forced to go out of the country to make it for less money.”

U.S. states that once poached California’s production jobs are now falling behind as well. Georgia, which grew exponentially in the 2010s, is down nearly 50% from its peak in 2022, despite an uncapped incentive that includes above-the-line costs. “Avengers: Endgame” was made in Atlanta in 2017. The new “Avengers” films are being made in London.

The U.K. incentive not only covers up-front salaries for actors, writers, directors and producers — for those with a U.K. partner, it also covers back-end pay, a deal that is almost unique in the world and hard for studios to pass up. 

“I call it the gift that keeps on giving,” says Roven, who shot two films in the U.K. last year. “If the project that you’re doing actually starts to make money, that rebate percentage is paid back to the company when they pay profit participants.”

Independent filmmakers have to watch every penny, and for them the math is nearly impossible to ignore. Brady Corbet’s 2024 drama “The Brutalist” takes place in Pennsylvania and was filmed in Hungary. His next movie, “The Origin of the World,” is set in California and will be shot in Portugal and South Africa. 

“It’s much cheaper making films elsewhere than it is here,” says producer David Kaplan, whose company, Kaplan Morrison, makes Corbet’s films. “To pull off a film that looks like it costs multiple times what it actually does, you have to go somewhere where you get that financial trade-off.”

Indie producers can make things more cheaply in the U.S. if they shoot nonunion. “Obsession,” the breakout horror hit, was filmed in Los Angeles for just $750,000. But with fewer domestic productions overall, IATSE has been working harder to “flip” the nonunion ones, which drives up the cost.

“The films I grew up making, for $500,000 or $1 million, the unions are really interested in having those be signatory projects,” Kaplan says.

IATSE jurisdiction extends only to North America, part of the reason projects go to Europe. Employers also pay much less for healthcare abroad.

“I love working with unions. They serve a great purpose,” says John Hadity, a production finance consultant. “But there are rules, minimums, all that stuff. Labor doesn’t work that way in other countries. In Europe and the U.K., there’s a lot more flexibility.”

“The Gray House,” the Prime Video series set during the Civil War, was shot in Romania. “If we could have shot it in and around where it took place in Richmond, Virginia, at anywhere close to the same budget, we would have stayed in America,” says producer Lori McCreary, a past president of the Producers Guild of America. “It was two-thirds, or less, the cost.”

 In Romania, she wasn’t required to hire cable pullers and other crew that would be mandated in the U.S. “Those are all very good jobs for Americans that I’m not able to provide when I’m shooting something overseas,” McCreary says. “I would much rather put all of these people to work in America.”

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On May 4, 2025, President Trump threatened to impose a 100% tariff on foreign-made films. Likely both illegal and impossible, this idea was nevertheless taken in Hollywood as an encouraging sign. At least he recognized the problem.

Schiff circulated draft legislation that would create a 15% federal credit for labor costs, roughly equivalent to Canada’s incentive. The Motion Picture Association pushed for 20%, plus 5% bonuses for filming in a disaster area or an enterprise zone. (Due to the fires, all of L.A. County would qualify.) As in other countries, the federal credit would stack on top of state incentives.

Plenty of Democrats are on board, but to get anywhere, the proposal needs bipartisan support. Rep. Brian Jack, a Republican from suburban Atlanta, is said to be willing to cosponsor the bill in the House. But other Republicans appear to be waiting for a thumbs-up from the White House.

“We’ve been working very hard to get an affirmative statement out of the president that he’s open to Congress looking at a federal incentive,” says Scott Karol, who is working on the issue with Jon Voight, one of Trump’s “Hollywood ambassadors.” “We think that will open up the floodgates, and you’ll see a caucus of bipartisan politicians that will come out in support of this.”

Trump has embraced state support for farming, coal mining and advanced manufacturing, and the U.S. subsidizes other industries as well. 

“Hollywood is not asking for special treatment,” Rep. Laura Friedman, D-Burbank, said at a hearing in March. “This is something that is standard in the United States across industries that we have determined that we care about.”

For now, no bill has been introduced. As of June 4, Schiff says his Republican colleagues are waiting on “smoke signals from the White House.” Supporters hope that if Democrats take control of Congress, the push for a federal incentive could be a rare area of cooperation next year. 

“This is good for the economy,” says actor Zachary Levi, who voted for Trump. “This is not a handout. We want to be able to lead the world in telling great stories, and I think the president does too.”

Federal intervention cannot come fast enough in Los Angeles, where the post-peak era has rippled across the local economy. Crews are out of work, but so are white-collar executives and those who work in ancillary businesses.

“I’m down 50%,” says Corri Levelle, CEO of Sandy Rose Floral in North Hollywood, which supplies silk and fresh flowers to film sets. “We’ve had ups and downs in business, but it’s gone on too long. We can’t survive.”

This spring, chef Michael Cimarusti announced the closure of Connie & Ted’s in West Hollywood, one of a wave of restaurants to shut down following the 2023 writers and actors strikes.

“We had a lot of crew folks that were regulars who simply were not able to afford to dine out the way they used to,” Cimarusti says. 

Filming in L.A. has become sort of a cause du jour, like freeing Tibet or avoiding fur. At this year’s TV upfronts in New York, one presenter after another announced that a new show would be filming in L.A., winning applause each time.

ProdPro tallied 81 film and TV projects in California in the first quarter of 2026 — down from the prior year but still a lot more than anywhere else in the U.S. According to FilmLA, the regional permit office, Hollywood remains the world’s largest production hub — even if it sure doesn’t feel like it to the creative community.

Studios will spend what it takes to shoot in Southern California when they’re working with A-list stars who demand top talent and extremely skilled crews. The showbiz farce “The Studio” was sold to Apple with the understanding that it would only work if it was shot in L.A., says James Weaver, president of Seth Rogen’s Point Grey Pictures, which produces the series with Lionsgate.

“The show is really about people yelling and screaming at each other in beautiful places,” he says. “That was an important part of the ethos of the show. Apple knew that when they said they would make it.”

Shooting in L.A. means working on a tighter production schedule. But “The Studio” snagged a $13 million tax credit for Season 2, which eases some of the budget pressure and may help extend its run.

Showrunner Lawrence, who is making ABC’s “Scrubs” revival for Disney in Vancouver, is also producing four shows with Warner Bros. Television in L.A. “I’m very lucky in that I try to shoot everything in Los Angeles,” Lawrence says. “I just think it’s really important to maintain this place as the hub of the television industry.” 

Stars like Harrison Ford on “Shrinking” or Kathy Bates on “Matlock” can demand that a show be made here. And with state incentives, the math can work. California allots nearly $50 million per season to Lawrence’s shows alone.

Still, it’s not as though costs are going down. In the current round of union negotiations, the studios are hiking their health contributions considerably, making the U.S. even less competitive with countries that provide national healthcare. 

It’s very hard to get around that. Miller of IATSE argues that labor shouldn’t be forced into a global race to the bottom. “We can’t turn the entertainment industry into a minimum-wage job with no benefits just so we can compete with Bulgaria,” he says. “Our federal government has to acknowledge that and has to step up.”

Bonann agrees. “It’s not like our labor here in L.A. is overpaid — they’re fairly paid,” he says. “If cost is the only factor, then every single production will eventually leave. You’ll lose something much bigger in the process.”

Despite higher costs, Hollywood still makes movies and TV shows, and Detroit still makes cars, trucks and SUVs — though with fewer people.

“It’s oversold that the auto industry left Michigan,” says James Hohman, director of fiscal policy at the Mackinac Center for Fiscal Policy. “Michigan is the top-producing auto state, and it’s not especially close either.”

That’s because Michigan decided to keep the auto industry, providing billions in subsidies over the last 25 years. The federal government has stepped in, too, seeing auto jobs as vital to the U.S. economy. In that sense, Hollywood isn’t becoming Detroit so much as emulating it.

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Back in the late 1980s, “Baywatch” was birthed in part from Bonann’s personal experience working as a Los Angeles County lifeguard. He remains partial to his hometown, but he’s also a businessman. Over the years, he has lensed “Baywatch”-related projects in Hawaii and Georgia, and he considered doing the reboot in Australia or South Africa. Both had the requisite ingredients — beaches and incentives — and both are cheaper places to shoot. But in the end he chose L.A.

“You have to really want to shoot in L.A.,” he says. “It costs more money, but you have to find a way to make that work. This show belongs here.”

After Bonann’s meetings with public officials earlier this year, the show has faced no parking and permitting issues. The actors can drive on the beach. Without even asking, the show got a 20% discount on its city parking fees.

“I just saw the first cut,” he says. “I cannot imagine having produced an episode of TV this good anywhere else in the world.”