Southern California faces dire economic prospects over the next two years, with high unemployment expected to last until 2021 and more jobs at risk than unemployment data, according to two new reports.
Consultant at McKinsey & Co., who has explore the impact of the COVID-19 pandemic on employment and the global economy, doing a analysis this week focus on Los Angeles, Orange and San Diego County. They see how social distance requirements and demand reduction tend to affect workers in 800 different jobs and dozens of industries.
The results are surprising.
In Los Angeles County, McKinsey classified 1.8 million jobs as “vulnerable,” describing not only workers who lost their jobs but also those at risk of being placed on unpaid leave, having their hours or wages deducted or seeing their income reduced. That would be 40% of all jobs in the county, where officials estimate that around 1 million residents have applied for unemployment.
“Jobs at risk are greater than the number of people currently reported claiming unemployment benefits,” said Tim Ward, partner manager of the Southern California office of McKinsey.
Add in several other countries, and nearly 4 million vulnerable jobs across the region, an analysis of consulting firms found.
Depending on how effectively the corona virus is contained, risky work in Los Angeles, Orange and San Diego County can cover nearly 50% of jobs in food service, 41% of jobs in arts and entertainment, and 17% of jobs in retail . The worst effects can be felt in the Latino community, where McKinsey determined that 46% of all jobs are vulnerable to COVID-19.
Southern California Assn. The government concluded in a report last week that economic pain had just begun.
The government planning agency projects an annual unemployment rate of almost 20% this year for the six-county region that includes Los Angeles, Imperial, Orange, Riverside, San Bernardino, and Ventura. Perhaps even more alarming, the SCAG analysis projects that the Southern California unemployment rate will still exceed 12% next year.
The agency projects that Imperial County, where residents already experience some of the state’s highest poverty rates, will see 26% unemployment in 2021, up from 18% last year. Los Angeles County, in contrast, is pegged to a 12% unemployment rate in 2021.
“Even with uncertainty about how all this will work, our analysis shows that the economic impact of the pandemic will be severe and long-lasting. Understanding this now, and identifying which sector will be hardest hit, enables us to plan for recovery better, “SCAG President Bill Jahn, a member of the Big Bear Lake city council, said in a news release accompanying report.
Restaurants and clothing stores are likely to experience some of the biggest economic beatings, with sales in these industries by the end of 2021 falling by 65% and 57%, respectively, compared to 2019, the SCAG analysis concluded. Government revenues in the six countries are also expected to plummet, with taxable sales falling as much as $ 264 billion during 2020 and 2021.
