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Effects Of Inflation On The So Cal Labor Market

In big cities like Los Angeles, Riverside, and San Bernardino, you can't talk about inflation without talking about unemployment. The two concepts go hand-in-hand, as they are two of the most closely studied facets of an economic system.

There are a few things business owners, entrepreneurs, and employees should know about the effects of inflation on the So Cal labor market, and how it will impact the economy in the years to come, especially as it recovers from Covid related losses.

Inflation Labor Force | Great Hire Staffing Agency Los Angeles

Southern California Labor Stats

According to the OC Register:

● L.A. County jobs fell 12% over 12 months due to some of the nation’s strictest lockdown rules.

● Orange County, an area that survives on tourism, is down 11%.

● The Inland Empire only lost 6% of its workers because it is an active logistics industry.

● Hotel operators added 5,800 workers to its current 46,000 — but that’s still almost 51,000 fewer jobs from February 2020.

● Online shopping throughout the pandemic meant transportation/warehouse jobs were essential. Southern California increased its 408,800 logistics jobs to 28,200 in only a year. This is a 7% growth.

Inflation, Supply, and Demand

Traditionally, when an area is experiencing a high unemployment rate, it means that there are significantly more people looking for jobs than there are jobs available. For business owners and companies, this means they don't have to entice workers with higher-paying jobs because people are willing to take the jobs as they are. During this time, we see very little increase in wages.

On the flip side, when unemployment is low, The supply and demand model is in Reverse. It's the businesses that demand more labor and more work, and there is a lower supply of available workers. In this case, employers have to entice and incentivize new workers by raising their pay. This leads to wage inflation.

The Impacts Of Wage Inflation

The health of the economy is another factor that goes into wage inflation. If the economy is thriving, and more people are spending money, then businesses are profiting and have the ability to pay their workers more. Since salaries and payroll take up a significant portion of a business's expenses, raising wages often leads to raising the prices of the businesses and services that they offer. When prices of products and services increase, consumers have to pay more, which means they have to make more, and the cycle continues.

Inflation In Southern California

When we apply these ideas to Southern California's labor market, we see many of the same patterns. According to economists, inflation rates in Southern California are now above what they were a year ago. Covid required many Los Angeles businesses to seriously reevaluate their expenses, which included cutting down on their labor force, reducing the number of hours they were open, and changing the way they provided products and services.

Inflation Effects On Hospitality | Staffing Agency Riverside County

Inflation Impacts On The Hardest Hit Industries

The leisure and hospitality industries were the hardest hit during Covid, mainly due to restrictions and social distancing guidelines in places like restaurants, hotels, and are lines. However, these industries will start to regain pricing power now that people are traveling more and starting to spend more. This boost in activity will expand production and goods and services, which also means a higher demand for workers. The problem is, many of the workers in these hardest-hit industries have left the industry completely And aren't willing to go back to the same type of work for the same amount of pay. So now even though the demand for places like restaurants, retail shops, and hotels is increasing, many companies are shutting down or struggling to remain open because they don't have enough labor workers to meet the demand. (

This is a pattern that repeats over and over across various industries in Southern California, making it difficult for small and medium-sized businesses to hire the workers they need to stay afloat.

How Los Angeles Businesses Are Coping With Inflation

Now, as consumers feel better about resuming some source of normalcy and resuming their previous spending habits, we see inflation rise again. Everything from groceries and gas to utility bills, clothing, rent, medical care, and school fees are more expensive now that people are spending money again. These businesses require more workers to keep up with the influx of consumerism, which means they have more people to pay and expenses to consider.

One way many Los Angeles and San Bernardino County employers are keeping an eye on expenses is by working with temp agencies. This allows them to hire and recruit the workers that they need without spending all the money required for a full onboarding process. Working with a temp agency helps employers cut costs on hiring and training.

During a time of high inflation, small and medium-sized businesses have to get creative when it comes to cutting costs and dealing with higher prices. Hiring temporary or seasonal workers can be a cost-effective way to meet increasing demand without the commitment of hiring a full-time employee.

If you're concerned about hiring and recruiting during inflation, check out the different ways working with a Los Angeles temp agency could help your business thrive during this time.

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