Employee Layoffs Mostly at Restaurants, Hotels & Bars

By Ben Wright 
April 1, 2020 

Approximately 737,000 layoffs were reported in California last month through March 25. The vast majority of these layoffs were observed after the statewide “shelter in place” was issued March 19. 

Layoffs were high in the accommodation and food services sector, which is primarily comprised of restaurants, hotels and bars. Through March 25, 426,000 layoffs were reported in this industry. 

Aside from accommodation and food, the largest numbers of layoffs were observed in arts and entertainment, which includes gyms and fitness centers, and in manufacturing and healthcare. 

If you’re surprised to see healthcare layoffs, don’t be. Virtually all of these layoffs were planned in January or February and just happened to coincide with a global pandemic. There’s a good chance some (if not most or even all) of these workers will be recalled to their jobs. 

Why weren’t there more layoffs in the retail sector? It appears that retailers are furloughing their employees without pay, planning to bring them back to work when the pandemic ends. 

Furloughs are not technically layoffs, and furloughed workers won’t show up in our layoff data. They also won’t show up in the official unemployment rate from the Bureau of Labor Statistics. But they will show up in our weekly unemployment tracker, which we believe will provide a more effective indicator of unemployment than the standard government estimates. 

Firms in Southern California, and particularly Los Angeles County, were responsible for a disproportionate share of layoffs in March. Southern California accounts for 55 percent of the statewide labor market, but was characterized by 65 percent of statewide layoffs. Los Angeles County makes up 27 percent of the California job market, but was the epicenter of almost half of all layoffs. 

To date, more than 334,000 layoffs have been planned for April and May in California, but this number is expected to increase in firms hit hard by changing macroeconomic and policy conditions. 

Just two days ago, officials in San Francisco indicated that they may tighten restrictions on the construction industry. According to the statewide shelter in place directive, construction companies have been classified as “essential” businesses, and all construction workers have been exempt from staying at home. 

Soon, construction activity in San Francisco may be limited to infrastructure projects, healthcare facilities, affordable housing projects, and a few other categories, undoubtedly leading to construction layoffs. 

We plan to update our layoff estimates as new information becomes available. 

Reprinted by permission from Mark Schniepp, head of the Goleta-based California Economic Forecast, an economic consulting firm that produces commentary and analysis on the U.S. and California economies. The firm specializes in economic forecasts and economic impact studies, and is available to make timely, compelling, informative and entertaining economic presentations to large or small groups.   

Re-posted by permission April 1, 2020 

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