14% of L.A. Workforce at Risk of Unemployment

Low-income jobs generally can’t be done from home and are therefore the most at risk for unemployment during social distancing. In Los Angeles, 14% of workers are at risk for unemployment due to the current economic upset, according to a report from the Apartment List. As a result, the city is ranked eighth of the 50 largest metros in the nation for the size of its workforce that can’t work remotely.

“The L.A. area has a diverse economy, but its entertainment and tourism industries are massive and—for the most part—considered ‘non-essential’ by government standards,” Rob Warnock, research associate at Apartment List, tells GlobeSt.com. “Furthermore, they are industries that don’t lend themselves well to working from home, so many of these workers are considered high-risk. The percentage cited in our report is likely a conservative estimate of who is actually feeling pressure; the food industry in L.A. is huge and even though restaurants are ‘essential,’ we know they are struggling and already laying off large numbers of workers”

This significant segment of the Los Angeles workforce could have a significant impact on the local economy. “The fallout could be extreme economic hardship for workers who already sit towards the lower end of the income distribution. This is why governments at multiple levels are trying to help people bridge the gap, with direct payments and rent moratoriums,” Warnock says. Los Angeles isn’t the only market expected to see a hard hit. Las Vegas, Miami and Orlando are also expected to see a significant hit to their local economies. “We expect metros with large tourism and entertainment sectors—Las Vegas, Miami, and Orlando being others – to be hit hardest by the quarantine economy,” says Warnock. “The situation in L.A. is further complicated by the large concentration of immigrant and undocumented workers for whom it may be more complicated to access the government services that so many are turning to.”

In addition, this prong of the workforce could have a domino effect that impacts higher paying jobs. “If what we’re seeing today is the precursor to a more widespread recession – as many economists are predicting—then people at all segments of the income distribution will be affected,” says Warnock.

The recovery out of this situation is difficult to predict, and largely depends on when people get back to work. “Personally I think it depends on how long the public health portion of the crisis carries on. If tomorrow suddenly everyone got the green light to go back to work, health consequences notwithstanding, I think many businesses would be able to bounce back,” says Warnock. If we shelter-in-place for the long haul, businesses that employ a lot of “high-risk” workers may be forced to close. The economic recovery may be much slower if the pandemic ends and there are significantly fewer jobs for this sector of the workforce to come back to.”