Life has been fundamentally changed by the spread of the coronavirus.
As the disease has spread, so too has economic pain. Millions of people are out of work across the Golden State and beyond. Businesses have closed their doors under state and local orders to limit non-essential travel and personal contact; some may never reopen. Local governments are feeling the pinch and are forced to make difficult budget choices. A volatile stock market has rattled investors and pummeled retirement accounts.
HOW WE GOT HERE
A SLASHED WORKFORCE
With shocking speed, COVID-19 has remade the Los Angeles economy. Millions of people are out of work in the region. Hiring freezes, furloughs, salary cuts and layoffs are a real threat for an increasing number of workers.
Who isn’t working anymore?
Twenty-two million Americans filed for jobless benefits in the four weeks following the national declaration of a state of emergency. Experts expect that number will continue to rise. (By comparison, nine million people lost their jobs during the Great Recession.)
Source: U.S. Employment and Training Administration | Data last updated May 21, 2020
The numbers of newly unemployed in California and Los Angeles are equally dire.
*Not seasonally adjusted
Source: California Employment Development Department, U.S. Department of Labor | Data last updated May 21, 2020
Before the pandemic, the unemployment rate in California was below 4%. The rate of people out of work and looking for a job was similarly low in Los Angeles.
NOTES: U.S. and California data is seasonally adjusted; L.A. County data is preliminary and not seasonally adjusted.
The federal government has several different ways to measure unemployment in the U.S. The most commonly reported rate of unemployment is the called the "U-3." It represents the number of people actively seeking a job and is used above.
Source: U.S. Bureau of Labor Statistics, California Employment Development Department | Data last updated May 22, 2020
In early May, Gov. Newsom's administration projected an 18% unemployment rate for the year. Soon after, a new joblessness report freleased by the Labor Department was even more grim. The national unemployment rate had reached 14.7%, a level of devastation not seen since the Great Depression.
Who’s working fewer hours to make ends meet?
Even people who still have their job are feeling the pinch. The number of Americans working part-time for economic reasons, has increased sharply since COVID-19 interrupted daily life. These workers are working part-time because their hours have been cut or they can’t find full-time jobs. The increase in part-time workers has been most prevalent among those working in accommodation and food services and people who are self-employed, according to Bureau of Labor Statistics data.
*Refers to those who worked 1-34 hours during the week for an economic reason such as slack work (suspension of full-time pay status because of lack of orders, materials shortages, etc.) or unfavorable economic conditions, inability to find full-time work or seasonal declines in demand.
Source: U.S. Bureau of Labor Statistics | Data last updated April 13, 2020
Who’s still got a job?
Initially, small businesses, bars, restaurants, entertainment venues, retail stores and movie theaters bore the brunt of the shockwaves the coronavirus sent through the economy. Essential workers, like truck drivers and manufacturing workers, and white collar professionals were mostly unscathed. Now, that’s changing. The data is starting to reflect the downturn for all industries.
Companies are slashing salaries, implementing furloughs and laying off workers to cut costs.
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*Workers age 16 years and older, not seasonally adjusted
Source: U.S. Bureau of Labor Statistics | Data last updated April 13, 2020
Following the Great Recession, California created 3.3 million jobs (accounting for more than 15% of the nation’s employment gains). That progress has practically been erased by the economic slump caused by the pandemic.
The shared pain of the current labor situation can be most acutely observed at the city level, where both high- and low-income areas are feeling the effects of a sinking economy.
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Median Household Income
By comparison, the median household income in Los Angeles County is $64,251.
*Signifies a Census Designated Place, a recognized community that was unincorporated at the time of the 2018 5-Year American Community Survey.
**Not seasonally adjusted
NOTE: Median household incomes adjusted to 2018 dollars.
Source: California Employment Development Department, 2018 5-Year American Community Survey | Data last updated April 28, 2020
A SQUEEZED GOVERNMENT
The coronavirus outbreak and stay-at-home orders have devastated local government budgets. The revenue the city collects from people being out and about - sales tax from retail shopping and restaurants, occupancy tax from hotel stays, parking fees and citations from motorists - has virtually disappeared from city coffers.
Revenue and Expenditures
Use the dropdown menu to search city departments' finances.
NOTE: The city's Office of Finance wasn't included in this breakdown due to incomplete data.
Source: Los Angeles City Controller | Data last updated May 21, 2020
Where is LA feeling the pain?
LAX is one of the world's busiest airports. However, it has seen a drastic decline in commercial airline travelers. On March 28, 2019, the Transportation Security Administration screened more than 110,000 LAX passengers, according to a data analysis by APM Research Lab. This year, on March 28, only about 12,000 passengers were screened, an 89% decrease. Fewer travelers means significant loss in revenue for the city, which owns and operates LAX via Los Angeles World Airports (LAWA also owns and operates the Van Nuys airport). From March 2019 to March 2020, LAWA revenue dropped 35%, or about $177.4 million.
Conventions and Tourism
Several major events have been cancelled because of the pandemic, including the Electronic Entertainment Expo (E3) video game conference in June that annually attracts thousands of gamers, developers and tech companies to the L.A. Convention Center.
The Convention and Tourism Development Department collected $38.8 million in revenue from convention center-related business in 2019, 92% of all department revenue. Last year, May and June were the most lucrative months for convention center revenue; $34.8 million was collected in that time.
A lack of visitors for conventions also means fewer people spending money: no sales tax from retail or dining out, no occupancy taxes from hotel stays. In 2019, 50 million visitors to the region spent more than $18 billion in our economy.
The Los Angeles Department of Transportation (LADOT), not to be confused with Metro, currently runs the DASH (Downtown Area Short Hop) buses, the Commuter Express buses and CityRide service for seniors. In 2019, 32% of LADOT's revenue came from local sales taxes. With most Angelenos quarantining at home, this source of revenue dried up virtually overnight.
Sharing the pain
What does a revenue shortfall this drastic mean for Angelenos? What is the city doing to mitigate pain points for those most at-risk and vulnerable? L.A. city officials now face stark choices about which programs to keep whole and which to cut.
|Tax||Previous Estimate||Revised Estimate||Difference ($)||Difference (%)|
|Property Tax (total)||$2,241,000,000||$2,239,000,000||$2,000,000||-0.1%|
|Utility Users Tax||$657,000,000||$645,000,000||$12,000,000||-1.8%|
|Licenses, Permits, Fees and Fines||$1,194,000,000||$1,140,000,000||$54,000,000||-4.5%|
|Transient Occupancy Tax||$321,000,000||$260,000,000||$61,000,000||-19%|
|Documentary Transfer Tax||$220,000,000||$205,000,000||$15,000,000||-6.8%|
|Parking Occupancy Tax||$123,000,000||$100,000,000||$23,000,000||-18.7%|
|Total General Fund||$6,613,000,000||$6,382,000,000||$231,000,000||-3.5%|
Source: Los Angeles City Controller
L.A. Mayor Eric Garcetti, in his State of The City speech April 19, appealed again to the White House and Congress to appropriate more funding for local governments, saying they should "help bail out America's cities, just as you bailed out the banks." He echoed organizations representing city and county leaders that have requested more financial help from the federal government. "If you want to reopen America, America's cities are where this nation begins," Garcetti said.
Garcetti released his 511-page proposed FY 2020-21 budget the next day. Despite major shortages in revenue streams, some core city departments will be spared under the proposed plan, which would take effect July 1. There will be furloughs for the city’s civilian workforce - excluding sworn members of the LAPD and the LAFD. City workers are expected to forego about 10% of their salaries. However, Garcetti promised to "draw a red line" around community safety, clean streets, housing and meals programs for children and seniors.
This project was developed and researched by Data Editor Dana Amihere, with additional research by Yingjie Wang and reporting by Libby Denkmann and David Wagner. Adriene Hill and Paul Glickman edited.
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