Wildfires in Los Angeles Disrupt Employment and Pay, ADP Data Shows

The Palisades and Eaton fires that swept through Los Angeles in January caused significant disruptions to the local labor market, with payroll data from ADP showing a sharp decline in paychecks issued and hours worked. Although the fires directly affected a small portion of Los Angeles County’s total employment, their economic impact extended well beyond the burn zones.

According to ADP payroll data, paycheck issuance in fire-affected ZIP codes dropped 10% in the first week of the fires compared to the same period in 2024. The decline continued in the following weeks, falling 6% from January 12-18 and again by 10% from January 19-25. By January 26, payroll activity had returned to normal levels.

The fires also resulted in a reduction of hours worked. Hourly employees in the Los Angeles-Long Beach-Anaheim region saw their average weekly hours fall 5.1%—or about two hours—between January 5-11 compared to the same period in 2024. The following week, hours worked declined by 2.6%.

Sector-Specific Impacts

• Manufacturing: Hours worked fell 6.7% the week of January 5 compared to the previous year.
• Trade, Transportation, and Utilities: Declined 5.9% the week of January 5 and 8.9% the week of January 12 year-over-year.
• Healthcare and Education: Paycheck issuance dropped 1% in the first week and 10% in the second week of the fires.
• Leisure and Hospitality: Bucked the trend, with hours worked rising 1.4% the week of January 5, increasing to 2.8% and 2.9% in the following weeks, likely due to demand from displaced residents.

Beyond immediate job losses, the fires are expected to have long-term effects on the local economy. Displaced residents seeking housing could exacerbate the region’s already high rental costs, potentially pushing lower-income workers into longer commutes.

“The economic impact of the Palisades and Eaton fires extends beyond the immediate loss of jobs, homes, businesses, and infrastructure,” the ADP report noted. The challenge now is rebuilding in a way that strengthens economic resilience while addressing fire-resistant construction and high-density development.

Despite the disruptions, the Los Angeles economy is expected to recover. However, the fires highlight vulnerabilities even in affluent communities, emphasizing the need for strategic rebuilding efforts to sustain economic stability and protect against future disasters.