4 million Southern California jobs may be at risk because of coronavirus, report finds

Southern California faces a dire economic outlook over the next two years, with high unemployment rates expected to linger through 2021 and many more jobs at risk than unemployment data may suggest, according to two new reports.

Consultants at McKinsey & Co., who have been exploring the repercussions of the COVID-19 pandemic on jobs and economies globally, conducted an analysis this week focused on Los Angeles, Orange and San Diego counties. They looked at how social-distancing requirements and reduced demand are likely to affect workers across 800 different occupations and dozens of industries.

The results were staggering.

In Los Angeles County, McKinsey classified 1.8 million jobs as “vulnerable,� describing not only workers who have lost their jobs but also those at risk of being placed on unpaid leave, having their hours or wages cut or otherwise seeing their incomes reduced. That would be 40% of all jobs in the county, where officials estimate that around 1 million residents have filed for unemployment.

“The jobs at risk are larger than the current number of people reported as having claimed unemployment benefits,� said Tim Ward, managing partner of McKinsey’s Southern California office.

Add in several other counties, and close to 4 million jobs are vulnerable across the region, the consulting firm’s analysis found.
Depending on how effectively the coronavirus is contained, the jobs at risk in Los Angeles, Orange and San Diego counties could account for nearly 50% of food services employment, 41% of arts and entertainment jobs and 17% of retail employment. The worst effects could be felt in the Latino community, where McKinsey determined that 46% of all jobs are vulnerable to COVID-19.

The Southern California Assn. of Governments concluded in a report last week that the economic pain is just beginning.

The government planning agency projected an annual unemployment rate of nearly 20% this year for the six-county region that includes Los Angeles, Imperial, Orange, Riverside, San Bernardino and Ventura counties. Perhaps even more worryingly, SCAG’s analysis projected that Southern California’s unemployment rate would still exceed 12% next year.

The agency projected that Imperial County, where residents already experience some of the state’s highest poverty levels, will see unemployment of 26% in 2021, up from 18% last year. Los Angeles County, by contrast, is pegged for a 12% jobless rate in 2021.

“Even with some uncertainty over how all of this will play out, our analysis suggests that the pandemic’s economic impacts will be severe and long lasting. Understanding this now, and identifying which sectors will be hardest hit, allows us to better plan for the recovery,� SCAG president Bill Jahn, a Big Bear Lake city council member, said in a news release accompanying the report.

Restaurants and clothing stores are likely to suffer some of the biggest economic hits, with sales in those industries through the end of 2021 down as much as 65% and 57%, respectively, compared to 2019, SCAG’s analysis concluded. Government revenues across the six counties are also expected to plummet, with taxable sales falling as much as $264 billion during 2020 and 2021.