Slight Job Loss From Quake Is Predicted

A multibillion-dollar infusion of government earthquake relief and private insurance funds will fuel a temporary employment surge in the Los Angeles area, but the construction boomlet will soon wither, giving way to a small long-term job loss, according to a report Wednesday to the state Seismic Safety Commission.

In the most detailed analysis yet of the effects of the devastating Northridge earthquake on employment rates, researchers with UCLA’s Business Forecasting Project estimated a loss of 29,300 jobs in Los Angeles County and 35,700 in the state during the first quarter of this year as a result of the Jan. 17 disaster.

By the third quarter, reconstruction financed by about $14.4 billion in federal and state assistance and insurance payments will reverse the employment losses, creating 36,000 more jobs in Los Angeles County and 45,500 more in the state than would exist had the 6.8-magnitude quake not occurred, according to the UCLA report.

By the end of 1996, however, “the stimulative effects of the earthquake will disappear,” and Los Angeles County will have 12,600 fewer jobs, and the state 18,500 fewer, than if there had been no quake, the forecast said.

The report said the quake by itself will not prompt business owners to shun Southern California. But while the quake “mainly reminds those making location decisions of seismic risks that were well known before, it still reinforces negative images of other disasters,” including wildfires, riots and floods, analysts told the seismic safety panel at its meeting in Burbank.

Even so, the long-term job losses are small when measured against the state’s roughly 12 million workers and the huge cutbacks already felt in defense and aerospace employment, said Larry J. Kimbell, director of the Business Forecasting Project.

Kimbell noted that the state in recent years has lost about 150,000 defense jobs, and is expected to lose another 80,000--”10 times any permanent loss we would expect from the earthquake.”

Noting that Southern California is already in its worst recession since the Great Depression--and that property values suffered their greatest decline since the 1920s even before the earthquake--Kimbell described quake-related job losses as “a small-scale event.”

Economically, “we’ve already had our 8.3,” remarked his colleague Nancy Bolton, a senior demographer with the Business Forecasting Project, referring to predictions of the Big One, a quake of that magnitude occurring some day on the San Andreas Fault.

Under questioning from members of the seismic safety panel, Kimbell acknowledged that such a giant quake would have profound economic effects. Whereas the Northridge quake will absorb about $1.9 billion in state relief funds, cleanup from the Big One could consume “half of the state budget--$25 billion,” Kimbell said.