With key industries like film, sports and tourism still suffering, L.A.’s employment recovery will be slow going.

With key industries like film, sports and tourism still suffering, L.A.’s employment recovery will be slow going.

Los Angeles County’s jobs report for November showed a continued bounce back from spring’s pandemic-induced lockdown, along with a dose of seasonal hiring.

The county’s unemployment rate fell to 11% in November from a revised 12% in October, according to a household survey by the state Employment Development Department. 

A separate payroll survey from the EDD showed the county gained roughly 30,000 payroll jobs for the month, mostly due to seasonal hiring gains in retail and logistics.

But that’s the end of the good news, at least according to local economists.

That’s because the timing of the surveys — which were conducted during the second week of November — came just as renewed restrictions on business activity were announced as coronavirus cases and hospitalizations surged to record levels.
The impact from these restrictions and business closures will likely show up in the December figures.

“Some of the pain being felt in L.A. County may be present in this report, but there is a lag time,” said Taner Osman, research manager at Westchester-based Beacon Economics. “The December figures will probably more fully reflect the latest round of business closures following this latest surge and the government response to it.”

Reasons for the decline

What’s more, the drop in the unemployment rate in November was not caused by more L.A. County residents finding work. Rather, it was the result of a shrinking labor force. EDD figures show the county’s labor force recorded a decline of 94,000 in November to 4.97 million residents.

“The lower jobless rate is because people are dropping out of the labor force at a worrisome rate,” said Sung Won Sohn, professor of finance and economics at Loyola Marymount University in Westchester.

Sohn said three factors could be behind the reduced labor force. One is that people are leaving the workforce to care for sick relatives or children stuck at home because most school campuses remain closed due to the pandemic. The other two factors are more typical during economic downturns: workers becoming discouraged and giving up looking for jobs or using their downtime to return to school to learn new skills.

Beacon’s Osman cautioned against reading too much into a one-month drop in the labor force. He noted that in October, the labor force increased by 133,000 people. “These numbers can be quite volatile,” he said.

Of greater importance, Osman said, is the longer-term trend in the labor force. The November figure is about 200,000 less than the level in February before the spring lockdown hit. 

Or, to put it another way, the county’s labor force participation rate — the number of people actively taking part in the labor force as a percentage of the eligible working age population — was 61.7% in November, down from its most recent peak of 64.3% in February.

In most recent years, the county’s gain of 29,800 payroll jobs in November would be considered a sign of healthy seasonal hiring in a robust economy. But this year, not so much. That’s because it was a much smaller gain than the 79,000 jobs added in the month of October. And it leaves the county still down about 375,000 jobs from the February peak of 4.63 million.

If the county were to continue gaining 30,000 jobs per month, it would take a full year to come back to that February peak. But all the economists reached for this story agree that, with the current surge in coronavirus cases and a renewed clampdown on restaurants and other retail businesses, the monthly job gains will be much smaller — and L.A. might even slip into job losses for the next couple months at least.

“Covid is proving to be a massive economic force putting workers on the sidelines and many more out of work due to layoffs in the name of public safety,” said David Smith, professor of economics at Pepperdine University’s Graziadio Business School in Malibu. “The picture for the near term is negative.”

Construction drops off

One of the sectors that had held up relatively well during the pandemic was construction. A hot residential market and continued work on massive infrastructure projects had combined to offset the drop in the commercial and retail sectors.

But in November, the construction sector shed 3,300 jobs for a drop of 1.1%, its largest drop since the pandemic began.

Some of this drop may be seasonal, according to Shannon Sedgwick, director of the Institute for Applied Economics at the downtown-based Los Angeles County Economic Development Corp. Many cities have placed restrictions on construction during the holidays, leading to a seasonal slowdown in activity, she said.

But this year, other factors stemming from the Covid pandemic have come into play. For starters, the virus has struck at many construction sites, slowing work and requiring new protocols, both of which drive up costs.

“This has likely resulted in fewer posted construction jobs,” Pepperdine’s Smith said.
Also, several large construction projects have wrapped up in the last 90 days, including the $5 billion SoFi Stadium project in Inglewood and the $1.5 billion Gerald Desmond Replacement Bridge project at the Port of Long Beach. Each of those projects had several hundred construction workers in a sector that often employs people on a project-by-project basis.

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