Los Angeles: The Uneven Path to Recovery

August 25, 2020
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Author: Jonathan Blair

The pandemic struck Los Angeles’s labor market especially hard. The market has made significant progress in its recovery in recent months, but key businesses are struggling to rebound.

The pandemic has negatively impacted many of L.A.'s biggest industries.

The most recent data available shows that Los Angeles County, which is also defined as the Los Angeles-Long Beach-Glendale, CA Metropolitan Division, has an unemployment rate of 17.5% versus the state’s seasonally adjusted unemployment rate of 13.3%. Both of those figures are well above the national benchmark of 10.2%.

Pandemic Continues to Impact Specific Sectors

Leisure and Hospitality, Information, and Other Services continue to see the largest employment impact in the area due to the ongoing pandemic. These industries include the iconic attractions the area offers, including vibrant arts, entertainment, and dining, among others. The overall employment level is 89.0% of the pre-pandemic employment, despite ranking in the top 10 markets for job gain from May to July. The market’s sheer size, though, helps with that ranking.

Based on an analysis by LaborIQ® by ThinkWhy, the Motion Picture and Sound Recording Industries subsector has been the most impacted employment base in the U.S. since the pandemic began. This subsector’s national employment total was cut from 456,000 jobs in February to 213,000 in July. It now has less than half of the jobs it had in February.

Box Office Sales also have evaporated during the pandemic. Some activity has resumed with major releases being offered as in-home rentals, but others have been postponed. By August 21, 2019, box office sales topped $7 billion on a year-to-date basis, while comparable August 2020 sales hovered just over $1.8 billion, according to Box Office Mojo.

Motion Picture and Sound Recording Industries YoY Employment Growth, L.A. County
Motion Picture and Sound Recordings chart
Source: U.S. Bureau of Labor Statistics

That brings the focus to Los Angeles, known for its production of movies and music. Of the nation’s current jobs in Motion Pictures and Sound Recording, more than 40.0% are in Los Angeles County. Compared to a year ago, the subsector declined 24.0% in July, which is still better than the national average of 51.0% for Motion Pictures and Sound Recording. However, the decline affects other businesses that rely on its economic contributions.

The pandemic’s impact to travel is also weighing on the area. California is a prime location for domestic travel, but Los Angeles is key to international travel as a connecting point and destination. Traffic to LAX was down 87.0% in June, according to traffic comparison data from Los Angeles World Airports. For Los Angeles County, Transit and Ground Passenger Transportation was down 19.1% from the prior year in July, and Air Transportation dropped 11.4%. Macro trends for both leisure and business travel will impact this sector’s growth as businesses opt for virtual meetings and consumers hesitate to resume traveling.

Some Industries See A Silver Lining

The area’s employment market is not without its bright spots. Demand is high for goods provided by business in General Merchandise and Grocery stores, and the growth in online and home grocery delivery services has increased Courier and Messengers services, up 16.0%. Data Processing, Hosting and Related Services grew year over year by 9.8%. Scientific Research and Development is up 6.4% from a year ago.

Employment & Labor Market Outlook

Though the Los Angeles area has a higher rate of unemployment compared to the rest of California, the impact to businesses depends on the industry and the type of workers needed. Here are some things to keep in mind as businesses seek to hire and regain the revenue lost to the pandemic.

  • The local Los Angeles economy is dependent on Leisure and Hospitality, international travel, and the Motion Picture and Sound Recording Industries. COVID-19 prevention measures have limited these industries’ growth, which impacts many associated businesses.
  • Recruiters working for organizations in online retail and home delivery will likely see an increase in hiring, as these organizations have seen growth, as consumers spend most of their time at home.
  • ThinkWhy expects the overall Los Angeles economy to begin to see positive job growth in 2021, but it will likely take until 2023 or later to fully recover all jobs. Employers from other locations may seek out talent located in Los Angeles for either relocation or remote work if the recovery lags other major metropolitan areas.

ThinkWhy continuously monitors and forecasts labor data at all levels, measuring impact to MSAs, industries, occupations, businesses and salaries across the U.S.