Mark Schniepp: Santa Barbara Layoffs not as Bad as Los Angeles

By Mark Schniepp 
May 27, 2020 

The change in the rate of unemployment between April 2019 and April 2020 offers us a consistent comparison of how workers were impacted across California by the pandemic. 

Clearly, Los Angeles County was hit the hardest. Not only did it record one of the higher unemployment rates among regions in the state (20 percent), the change from last year was the highest, close to 16 percentage points higher. 

Why Los Angeles County? While it has a large technology sector, it also has the largest entertainment sector in California including film, TV, sound, video, the Dodgers, the Lakers, the Clippers, Universal Studios, Magic Mountain, Hollywood, Santa Monica, the Getty Center, museums, beaches, all of which were shut down or closed. 

It has the ports of Los Angeles and Long Beach, which were significantly idled by the lack of incoming cargoes from China and elsewhere. It has the second-largest airport in the nation with more than 80 million passengers annually. Domestic and International passengers were off 96 percent in April. 

The biggest changes in the rate of unemployment occurred in the coastal counties or the counties that disproportionately serve visitors, or are home to workers in the tourism industries. 

Napa, Sonoma, Santa Cruz, Monterey, San Diego and Orange are in the group with the largest increases in unemployment. However, oddly, San Francisco and Santa Barbara did not join this group. Why not? 

Fewer residents of San Francisco are out of work than neighboring counties. This does not imply the county’s plight was any less severe than other Bay Area communities. Because it is largely hospitality and leisure services, it is likely worse.

However, most workers in the City don’t live there. They live elsewhere, including the East Bay or further away in Sonoma or Solano Counties. And, it’s where you live, not work, that affects regional unemployment. Certainly enough, rates were relatively higher in those counties. 

In Santa Barbara, the largest employers are Vandenberg Air Force Base, UCSB, Santa Barbara City College, Raytheon, Procore and county government. These institutions or enterprises were not impacted much with layoffs.

Other tech companies are also able to keep workers on payrolls by having them work from home. So, many of the tech heavy regions show lower unemployment rates including Santa Clara and Marin (Marin’s tech residents largely work in San Francisco) with the lowest rates of unemployment in the state during April. 

The increase in unemployment over year ago levels provides us with some indication of which regions may struggle more to recover from the recession because they have suffered more from permanent layoffs today. Permanent layoffs will be harder to replace as the economy rebounds because a share of those laid off workers will not have a workplace to return to. Many businesses will have failed during the shutdown or during the restart because of capacity limitations on customers and the ability to generate enough revenue to remain viable. 

So, for now, it appears that the counties that have the least carnage because of the pandemic are Marin, Santa Clara, Santa Barbara and the Inland Empire. The latter is likely because of its large logistics industry which includes Amazon fulfillment centers and other online warehousing. 

Counties such as Fresno, Madera, Kern, Tulare and Kings Counties are neither tourism destinations nor technology hubs, but they are farming counties — an industry that was able to remain largely employed over the last two months. 

Re-posted by permission May 29, 2020. 

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