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Friday, Feb 23, 2024

December Job Losses Cap Worst Year in Decades for LA County

Los Angeles County’s jobs report for December provided a grim capstone for the region’s worst year for jobs in more than eight decades.

In December, employers in the county shed a net 24,000 jobs as a relentless surge in Covid hospitalizations prompted renewed shutdowns of restaurants and other public-facing businesses, according to figures released by the state Employment Development Department.

The drop, led by a plunge of 30,000 in payrolls at restaurants and bars, put an end to four months of job gains in L.A. County.

The losses helped nudge the county’s unemployment rate up in December to 11% from a revised 10.9% in November, halting six straight months of declines in the unemployment rate since the May peak of 21.1%.

For all of 2020, the job loss figures were of historic proportions, with county employers shedding a net 419,000 jobs — a drop of 9%.

By comparison, the trough of the Great Recession in 2009, county employers shed a net 218,000 jobs, a loss of 5.2%. That decline had been the largest since the Great Depression in the late 1930s — until 2020 came along.

The question for 2021: Can L.A. County’s job machine get back on track?
Local economists say the answer largely relies on one word: vaccinations. The more Angelenos get vaccinated, the sooner the scourge of Covid can be broken and businesses can fully reopen.

“Vaccines will be the best stimulus for the county’s economy,” said Sung Won Sohn, professor of finance and economics at Loyola Marymount University in Westchester. “Once the vaccines are widely distributed, service jobs will rebound quickly.”

How quickly that will happen, of course, is the key question confronting all levels of government, from Washington to local city halls, as hiccups and bottlenecks have slowed the pace of vaccinations during the initial rollout.

“Increasing the speed at which vaccines are administered would help the economic recovery dramatically,” said Shannon Sedgwick, director of the Institute for Applied Economics at the Los Angeles County Economic Development Corp.

“An effective vaccine helps to slow the spread of the virus, which translates into two things: It decreases Covid-19 hospitalizations, giving our overloaded hospitals a break, and a lower number of cases translates into fewer and less restrictive health orders, giving our economy a chance to recover,” she added.

Anticipating delays

Sohn warned that effective widespread vaccination distribution could take longer than many people expect.

“I expect continuing hiccups and delays on the way to herd immunity,” he said. “It will take more time than you think to get the herd immunity.”

As for last week’s lifting of bans on outside dining, personal care salons and select other businesses, while it’s a development that local economists welcome, they caution that this easing of restrictions could prove temporary if Covid cases and hospitalizations surge again.

“What we’re seeing now is an easing of the harshest restrictions,” said Taner Osman, research manager at Westchester-based Beacon Economics.

But Osman and other local economists noted that many restrictions remain in place. And the widespread presence of Covid-19 in the community is still holding many people back from more normal economic behavior. Only vaccinations, they say, can break this cycle.

“A vaccine helps alleviate fear associated with contracting the virus, which means people are more likely to resume pre-Covid consumption,” Sedgwick said.

Another key question for 2021 and possibly beyond: Can the hardest hit sectors of the local economy completely recover?

Now that final 2020 numbers are in, the extent of job losses in some of these sectors has become apparent.

Food and drinking establishments in L.A. County, for example, have only regained about a third of the 185,000 jobs lost in the spring lockdown, according to figures compiled by the LAEDC.

Other sectors have been hammered even harder. The motion picture and sound recording industries have regained just one-sixth of the 57,400 jobs they lost in March and April. And the accommodation industry — which includes hotels and motels — has regained just 4% of the 22,000 jobs it lost.

Overall, about 44.5% of the 716,000 payroll jobs in L.A. County that were lost in March and April have returned, according to the state Employment Development Department.

That, LMU’s Sohn said, is a lot lower than the national average of 55.5%.

Economists differ on the extent and timing for regaining all these lost jobs.

“It’s possible that not all these jobs will come back for quite some time,” economist Sohn said. “Service employment in the county in particular may stabilize at a lower level than before.”

Signs of hope

The LAEDC’s Sedgwick, speaking in particular about the job losses in the film/sound recording sector, was more upbeat.

“It’s true that the shockwaves in content production are going to change the landscape, but here in L.A. there are so many projects waiting to restart and new content ready to produce, we will probably enter a golden age in L.A.’s digital media and entertainment industry starting later this year,” Sedgwick said. “So, we are optimistic about L.A.’s employment trends in digital media and entertainment.”

But Sedgwick said the LAEDC is concerned about the ability of some parts of the service sector, such as accommodation, to regain all the lost jobs.

“What we are worried about is that more of the business closures and job losses in this industry will become permanent,” she said.

To avoid this, she said, government grant and loan programs could prove crucial, providing cash to help tide businesses over until vaccinations can pry open the hard-hit travel/tourism sector.

Beacon’s Osman pointed out that amid the overall gloom of the December jobs report, there were some bright spots.

“I note that the overall figure of 24,000 net jobs lost in December is exceeded by the 37,000 net jobs lost in the leisure/hospitality sector,” Osman said. “That indicates that on the whole, the rest of the economy was growing in December.”

The professional/business services sector added nearly 9,000 jobs in the month of December, the logistics/warehousing sector gained nearly 6,000 jobs, and retail stores gained about 3,000 jobs.

“These are encouraging signs,” Osman said.

Howard Fine
Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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