Report: SoCal Quake Would Rattle Economy

By | July 4, 2011

A new study says a big Southern California earthquake would rattle the region’s economy and its buildings.

The U.S. Bureau of Labor Statistics said a magnitude-7.8 quake in the southern segment of the San Andreas Fault would affect hundreds of thousands of businesses and millions of workers in Kern, Ventura, Los Angeles, Orange, San Bernardino, Riverside and Imperial counties. San Diego County wasn’t included in the study.

The BLS report doesn’t give a figure for the economic damages, but a 2008 federal report estimated losses at well over $200 billion, it said. It noted the seven counties that would be most affected by the earthquake are home to 621,000 business establishments, 6.3 million employees and an annual payroll of $303.3 billion, according to the BLS’ Quarterly Census of Employment and Wages.

Should such an earthquake strike, total exposures in these areas that are in the strong shaking zone include 434,000 employers, more than 4.5 million jobs and annual wages of $206.5 billion. Los Angeles, Orange, San Bernardino and Riverside account for more more than 99 percent of exposures in the shaking zones, the report said. Notably, the earthquake would affect a large number of jobs in health care (522,000), retail trade (504,000), manufacturing (480,000) and educational services (409,000).

“After a disaster, functioning hospitals and medical facilities will be critical,” the BLS report noted, adding that another recent study found structural weaknesses in many California hospitals.

However, the BLS did indicate that the business interruption and loss estimates could be inflated because should such an earthquake occur, “even in the most damaged areas, not all businesses will sustain damage that will soon curtail their activities, and some businesses that lose capability will return to normal operations.”

Nevertheless, the report said earthquake losses could ripple throughout the nation’s economy, because a large percentage of international shipments come through the Los Angeles and Long Beach ports.

“More than 23 percent of the total U.S. value of goods passed through them in 2009, making it the largest U.S. port district,” the report said.

Authorities said a large quake in the region is “highly probable,” and they said it is vital for public officials, employers and residents to “take preventive actions to mitigate the potential losses from an earthquake, and to prepare for the potential disruption to businesses and employees.”

The Associated Press contributed to this article.

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Insurance Journal West July 4, 2011
July 4, 2011
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