Skip to content

A Mixed Outlook – Los Angeles Business Journal


Los Angeles County’s largest employers have hundreds of thousands of Angelenos on their payrolls and drive business to countless numbers of small businesses in the region. (The lists of largest public and private employers begins on page 17 of our print edition.) While overall employment numbers have largely recovered from the Covid era, not all major employers in the county have rebounded to the place they were in the months leading up to the pandemic. 

The past few months have been described as “hot labor summer,” a labor movement that has seen workers across a number of industries go head to head with L.A.’s largest employers for increased wages and improved working conditions. Lack of affordable housing and rapidly rising food and transportation costs in the region are major factors in the demands for higher pay. 

In the past year, Los Angeles County has seen its fair share of protests, strikes and union votes in major industries as varied as entertainment, hospitality, education and health care. The movement has helped increase wages across many industries in Los Angeles County, some businesses are booming, while others are shedding a significant number of workers.

Overall, employers in Los Angeles County added 4,000 civilian jobs to payrolls in July. Employers in the county recorded a total of 4,775,000 jobs on their payrolls. 

Areas of growth

Industries which have experienced strong growth in Los Angeles County coming out of the pandemic include education/health services and professional/business services, according to the 2023 Economic Forecast from the Los Angeles County Economic Development Corp. Educational/health services saw a total job loss of 25,700 jobs between 2019 and 2020, but the sector gained 64,700 jobs in the subsequent two years.

Per the report, job growth in the region will be led by “educational/health services” for the next two years, with the expectation that 25,300 new jobs will be added to the sector. According to California’s Economic Development Department, private education and health services grew 6.9% from July of last year to the same time in this year to a total of 921,200 jobs. 

“Health care is consistently growing even through the pandemic, and a lot of that is just tied to the aging of the population,” said Shannon Sedgewick, director of the Institute for Applied Economics at the county economic development organization. “In terms of hospitals, you have some key players that are increasing their presence in the local market and expanding some of their facilities.”

Leading L.A. private employers in the health care space include Kaiser Permanente, Providence Health & Services and Kaiser Permanente, Providence Health & Services. 

Meanwhile, the professional/business services sector saw a decline of 49,300 jobs between 2019 to 2020, but rebounded with 62,800 jobs between 2020 to last year, according to the EDD. The sector added an additional 9,500 jobs from July of last year to this July. LAEDC reported that it expects the sector to add another 5,700 jobs by next year.

The leisure and hospitality sector shed 153,200 jobs between 2019 and 2020, per the LAEDC, but has largely rebounded as well. In July, it was up 9,800 jobs, or 2%, from Feb. 2020, according to the EDD.   

Long-term changes

Yet several industries shed a large number of jobs in 2020, possibly changing employers’ businesses long term. Manufacturing jobs are down from February 2020 to July of this year, representing 16,900 jobs lost. 

“It’s been going on nationally, not just L.A. County, as far as manufacturing,” said Robert Lee of the Labor Market Information Division at California Employment Development Department. “Manufacturing is pretty large in Southern California, but supply-chain issues come into effect with the two major ports here, the Port of Los Angeles and Port of Long Beach – 40% of the imported goods that come through the United States come through those two ports. When you have supply-chain issues, the ports are affected, manufacturing is also affected.” 

The information sector, which largely includes film, television work and media, lost 20,900 jobs between February 2020 and July of this year, almost 7% of its labor force. The pandemic shut down many productions, and the film and television industry’s current labor strike has hit the business especially hard, with as many as 7,000 jobs lost from May to June, per LAEDC. Top employers in this sector include Walt Disney Co. and NBCUniversal. 

L.A.’s government sector also dropped a significant number of jobs during the pandemic years that have not returned. The sector lost 14,800 jobs between February 2020 and June of this year, but that only represented 2.5% of total jobs in the sector. The leading employers in this area include Los Angeles County, the city of Los Angeles and the state of California. 

Many employers may still face challenges filling open positions. Per the California Department of Finance, almost 300,000 Los Angeles residents have left the region since 2019, and more than half of that number was from the city of Los Angeles. A leading reason for the exodus was affordable housing.

As of July, the county had an adjusted 4.9% % unemployment rate, higher than the 4.3% recorded in July of last year, but much improved over the pandemic-induced shutdown in  2020, when unemployment was more than 19%.

The county’s unemployment rate is still higher than the 4.6% adjusted statewide average for July and the 3.5% adjusted national average for that month. Causes for the county’s higher unemployment numbers include the entertainment-industry shutdown and an influx of 7,000 Los Angeles County residents into the labor force, bringing the total to 5,002,000. 

HEALTH CARE

L.A.’s health care industry remains robust as the population ages and the need to access treatment increases. 

Top employers in the region include Oakland-based Kaiser Permanente, Providence Health & Services, which has multiple Southern California locations, and Cedars-Sinai, headquartered in Beverly Grove. Cedars-Sinai Health System contributed $15.4 billion in economic benefit to Southern California in fiscal year 2021. The health system provided or indirectly contributed to 81,680 jobs for workers, who earned $6.5 billion in salary and benefits during that year, according to an analysis by the Los Angeles County Economic Development Corp.

“Health care is consistently growing; a lot of that is just tied to the aging of the population,” said Shannon Sedgewick, director of the Institute for Applied Economics at the LAEDC.

Growth mode

Many hospitals in the region are expanding. Cedars-Sinai, for example, is working on a nine-story tower in Marina del Rey to replace its existing structure in the neighborhood that was built in the 1970s. The facility will eventually house 160 beds. 

In March, construction began on UCLA Health’s new neuropsychiatric hospital at 5900 Olympic Blvd. that will offer 119 inpatient beds. Harbor-UCLA Medical Center is another $1.7 billion project underway in West Carson. 

“In terms of hospitals, you have some key players that are increasing their presence in the local market and have a lot of activity on the horizon, expanding some of their facilities,” said Sedgewick. “You have some other hospitals that are also looking at building new facilities, partly because of seismic retrofitting making facilities potentially obsolete. They’re choosing to do upgrades or build new facilities.”

While there is increased need for more medical facilities, rising costs have made it more challenging to keep these large employers profitable. In its 2022 financial report, Kaiser Permanente noted that an increase in health care expenses driven by “inflation, high Covid-19 costs, ongoing labor shortages and a rise in care volume” contributed to a loss in total income and other expenses of $3.2 billion last year, compared to a gain of $7.5 billion in 2021. 

“Clinical staff shortages, Covid-19 care and testing, higher costs of goods and services, and deferred care drove Kaiser Permanente’s expenses beyond revenue,” said Greg A. Adams, Kaiser’s chair and chief executive. “Rather than pull back amid financial pressures, we made the decision to continue our long-term and strategic investments in care and service improvements while carefully managing resources.”

Nurse shortages

In terms of hiring, many health care facilities are still having trouble filling nursing roles across the county. According to the Hospital Association of Southern California, nursing vacancy rates among local hospitals is more than 30%. 

In January, employees represented by the California Nurses Association, an affiliate of National Nurses United, held local protests as part of a call for increased staffing. Protest locations included Kaiser Permanente Los Angeles Medical Center in East Hollywood, Westlake’s PIH Health Good Samaritan Hospital, Emanate Health Queen of the Valley Hospital in West Covina and Providence Little Company of Mary Medical Center in Torrance.

Nurses at Burbank’s Providence St. Joseph Medical Center in Burbank picketed the hospital in December 2021, and health care employees at Cedars-Sinai Marina del Rey Hospital held a five-day strike the same month regarding understaffing issues.

At the time of the protests a Kaiser spokesman said its hospital had hired “about 2,700 additional nurses since 2021,” according to the Los Angeles Daily News.  

“We are committed to hiring hundreds more additional nurses through aggressive recruitment and expedited hiring,” the spokesman noted.

Disney Chief Executive Bob Iger

THE MEDIA & ENTERTAINMENT

The media industry is in turmoil as the pandemic and labor strikes upend it, and long-term changes to the business remains unclear. 

Major employers, including Burbank-based Walt Disney Co., Universal City-based NBCUniversal, Burbank-based Warner Bros. Discovery and Culver City-based Sony Pictures Entertainment, weathered the 2020 production shutdown and subsequent increase in Covid production costs, only to become the central players in a major labor strike that began in May.

In addition to studio staff cuts, the current writers’ and actors’ strike has scuttled thousands of jobs that may or may not return, depending on how long the strike lasts.

“Over the last couple of months, the data shows we’ve lost about 7,000 jobs that have just fallen off payroll,” said Shannon Sedgewick, director of the Institute for Applied Economics at the Los Angeles County Economic Development Corp. “We’re looking at a decline in shoot days dipping down into levels that we haven’t seen since the pandemic.” 

Layoffs

The information industry, which includes film and TV, print and online publishing, record production, telecommunications and radio, has shed 20,900 jobs since February 2020, down almost 9%, according to numbers from California’s Economic Development Department. 

Just prior to the strike, Disney initiated layoffs eventually totaling 7,000 workers companywide through several rounds that ended in May. The number represented 3.2% of the company’s total employees. 

Paramount Media Networks and Showtime/MTV Entertainment Studios, which are all under parent company Paramount Global, also laid off 25% of its workforce in May.

Showtime/MTV Entertainment Studios and Paramount Media Networks president Chris McCarthy noted at the time that even though the studio had found “success in streaming, we continue to feel pressure from broader economic headwinds, like many of our peers.” 

Warner Bros. Discovery also laid off a number of executives and staffers, a process which began in June. 

The company described the process as “pockets of refinement,” according to Deadline Hollywood, rather than major layoffs across its cable TV business.

Changing times

The industry is facing a major reckoning – stock prices have dropped sharply in the past two years as the companies have struggled to manage shifts in the business. Disney stock, which hit $197 a share in March 2021, is currently trading around $86 per share. Paramount Global stock also peaked at the same time at $94 per share and is currently trading around $15 per share. 

Competition in the content business from tech companies such as as Apple Inc., Amazon.com Inc. and Netflix Inc. have forced Hollywood’s legacy media companies to make acquisitions and invest heavily in building their own streaming services – and load them with content. It was a strategy that was a boon to the business for a period, but that may now be coming to an end. 

Disney’s staff cuts were part of the entertainment company’s effort to save $5.5 billion, while Warner Bros. Discovery chief executive David Zaslav is looking to trim $3.5 billion from the company’s overhead. 

Last year Comcast Corp., parent company of NBCUniversal, said it intended to trim $1 billion from its balance sheet, while Paramount Global said in November that it was planning for “meaningful and sizable” cost cuts.  

“It’s an iconic industry with roots that have gone back over 100 years,” said Sedgewick. “In terms of what it contributes to our economy, it roughly contributes about 10% of our gross county product on an annual basis.” 

Northrop Grumman’s Global Hawk remote aircraft.

AEROSPACE

The aerospace industry is still going strong in Los Angeles County, currently employing about 60,000 workers directly at an average wage of $136,000, according to data from the Los Angeles County Economic Development Corp. 

“The industry has changed from the yesteryear business of building entire planes; that’s long gone,” said Shannon Sedgewick, director of the Institute for Applied Economics at the Los Angeles County Economic Development Corp. “We see a lot more small manufacturers, defense contractors, a focus on satellites, space vehicles and navigation instruments.” 

Top Los Angeles employers in the sector include Northrop Grumman Corp. and The Boeing Co., both with facilities in El Segundo, and Hawthorne-based Space Exploration Technologies Corp., or SpaceX. 

The industry took a big hit at the start of the pandemic; Boeing stock dropped from $336 a share to $170 from February 2020 to March 2020. It recently traded at about $220 a share. Northrop Grumman took a similar dive from $361 per share to $284 a share in the same month of 2020, but has rebounded to its recent price of more than $420 a share. 

At the beginning of the year, Boeing, which is headquartered in Virginia, said it expected to hire 23,000 workers this year after adding 14,000 workers last year. The company did not comment on how many of those jobs might be located in Los Angeles, but did note they would be in the business units, manufacturing and engineering to meet demand, according to Reuters. 

The aerospace company is also working on advanced satellites at its El Segundo location, with plans to “create a constellation of 11 satellites that will orbit Earth to create a digital network,” according to CBS News. 

SpaceX, which doesn’t trade publicly, currently has a valuation of $150 billion, up from a $46 billion in 2020, according to Fortune.  

In August, NASA awarded SpaceX a new contract worth $1.4 billion for five additional astronaut launches to and from the International Space Station, according to CNN. The two organizations’ partnership will extend to at least 2030 and is currently worth about $5 billion. 

Issues

One issue for the industry is its retiring workforce. According to a McKinsey & Co. report entitled “Navigating the Grey-to-Green Transition in Aerospace and Defense,” a large number of workers in the industry are leaving, and there is concern about replacing them.

“A wave of retirements are on the horizon, reflecting the fact that about a third of industry employees are aged 55 or older,” the report says. “Another powerful factor shaping the (aerospace and defense) jobs market since the Covid-19 pandemic is increased employee willingness to switch.”

The report noted that aerospace and defense companies often pay entry-level software engineers about half as much  as do larger technology employers.

“I wouldn’t be surprised if you start to see a campaign of the industry to increase awareness of them as being a viable career path for local university students,” said Sedgewick. “There’s an instance of their workforce aging out. … There’s still a strong presence here that’s growing, just in different ways.”

EDUCATION

After the pandemic shut down in-person education for almost a year across Los Angeles, class is back in session and the county’s largest school districts have been on a hiring spree. 

According to California’s Economic Development Department, state government educational jobs are up 6% from July of last year to May. 

The county added 2,400 public sector K-12 education jobs from April to May. 

Los Angeles Unified School District, which is the second largest district in the nation and manages the education of nearly 500,000 students, is leading the charge in the region. 

Superintendent Alberto Carvalho took on the role in February of last year and immediately ramped up recruitment for vacant roles amid a national teaching shortage and a new universal transitional kindergarten program that opened up new classrooms to 4-year-olds. 

The school district opened 6,000 new positions in 2021, including roles as teachers, psychiatric social workers and school nurses, according to EdSource, which tracks developments at LAUSD. The school system also reached an agreement in April with striking Service Employees International Union workers, which includes roles such as bus drivers, teachers’ aides and custodians, for a 30% wage increase. 

In the same month, LAUSD also reached an agreement with the United Teachers Los Angeles to increase salaries for teachers and reduce class size. 

“This agreement with UTLA is a necessary step not only to make Los Angeles Unified the district of choice for families, but also the district of choice for teachers and employees,” Carvalho said at the time of the negotiations.

Long Beach Unified School District, another major employer in L.A. County, also approved a new agreement with its teachers union this year. 

Higher ed jobs

According to the EDD, college, universities and professional schools is another job sector that’s set to grow 4% from last year through next year. 

When it comes to private employers, the University of Southern California is one of the largest in the county. It employs more than 23,227 faculty and staff in L.A. County and has seen its fair share of labor pains in the past year.

University workers, including Keck School of Medicine residents, graduate student workers, shuttle drivers and housing workers, have voted in separate instances to unionize in the past year, according to the campus’ student newspaper, The Daily Trojan. 

Los Angeles City College District has taken measures to address the housing insecurity for its workforce. In May, the LACCD adopted a resolution directing staff to move forward with a districtwide housing plan.

“The high cost of living and lack of affordable housing options present the highest barrier for both the student body and the community college’s workforce,” said LACCD Trustee Sara Hernandez. “LACCD recognizes that to maintain competitiveness in a crowded market for talent, the district needs to address and alleviate housing insecurity and affordability among students, staff and faculty.”



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *