The Palisades and Eaton fires that ravaged Los Angeles in January have caused significant disruptions in the local labor market. Recent payroll data indicates a notable decline in paychecks issued and hours worked throughout the affected areas. While the fires had a direct impact on a limited portion of Los Angeles County’s total employment, their economic repercussions reached far beyond the immediate burn zones.
Data shows that paycheck issuance in the fire-impacted ZIP codes plummeted by 10% during the first week of the fires compared to the same period in 2024. This downward trend persisted, with declines of 6% from January 12-18 and another 10% from January 19-25. By January 26, payroll activity returned to pre-fire levels.
The fires also led to a significant reduction in hours worked. Hourly employees in the Los Angeles-Long Beach-Anaheim region experienced an average drop of 5.1% in weekly hours—approximately two hours—between January 5-11, compared to the same timeframe in 2024. The subsequent week saw a further decline of 2.6% in hours worked.
Sector-Specific Impacts
- Manufacturing: Hours worked decreased by 6.7% during the week of January 5 compared to the previous year.
- Trade, Transportation, and Utilities: Experienced a drop of 5.9% during the week of January 5 and 8.9% in the following week.
- Healthcare and Education: Paycheck issuance dropped by 1% in the first week and 10% in the second week of the fires.
- Leisure and Hospitality: Contrarily saw hours worked rise by 1.4% the week of January 5, increasing to 2.8% and 2.9% in subsequent weeks, likely due to demand from displaced residents.
Beyond the immediate job losses, the fires are anticipated to have enduring effects on the local economy. Displaced residents searching for housing may further strain the region’s already high rental prices, potentially leading lower-income workers to endure longer commutes.
The economic ramifications of the Palisades and Eaton fires extend beyond the immediate devastation of jobs, homes, and infrastructure. The current challenge lies in rebuilding to enhance economic resilience, with a focus on fire-resistant construction and high-density development.
Despite the disruptions, forecasts suggest that the Los Angeles economy will recover. Nevertheless, these fires have exposed vulnerabilities even within affluent communities, underscoring the urgency for strategic rebuilding efforts necessary to maintain economic stability and safeguard against future disasters.
