Los Angeles wildfires devastate local economy as rebuilding sparks construction job surge

LOS ANGELES — The Eaton and Palisades wildfires in January 2025 have triggered a localized economic crisis, with job losses soaring as high as 26% in the hardest-hit areas of Los Angeles County.

While overall employment across the county remained stable, a quarterly economic update shows the Eaton area suffered a 19% drop in jobs. The Palisades area fared even worse, reporting a 26% decline.

County officials said the economic damage is concentrated in consumer-facing industries, including food services, retail, and the arts. Tourism also remains weak in the zones most impacted by the fires.

Despite the immediate losses, reconstruction efforts are expected to generate between 141,000 and 209,000 "job-years" over the coming years. Approximately 85% of those roles will be direct positions within the construction industry.

As of mid-January, authorities have issued more than 2,800 permits for repairs and new construction. The housing market is seeing an uneven impact, with rents rising steadily in neighborhoods bordering the Palisades fire perimeter.

The reported figure of 209,000 "job-years" requires careful scrutiny. This metric represents the total volume of labor demand over a specific duration rather than the creation of 209,000 new, permanent positions. In reality, it reflects a transient surge concentrated almost entirely within a single vertical: the construction sector, which accounts for 85% of total demand.

This data underscores a deeply bifurcated economic recovery. While the construction industry is seeing a windfall driven by insurance payouts and disaster relief funds, the local service sectors—including retail, hospitality, and the arts—face a much more precarious path to stabilization. These industries, which suffered the most significant initial job losses, are struggling to regain footing as their customer bases remain displaced and commercial infrastructure lies in ruins.

The resulting imbalance points toward a widening labor mismatch. While demand for skilled trades and manual labor has skyrocketed, service-sector workers find themselves sidelined, lacking the specialized training required to pivot into reconstruction roles.

Furthermore, the report highlights classic post-disaster economic distortions. Surging rents in peripheral areas signal acute housing scarcity and mass displacement, placing immense pressure on low- and middle-income households. Ultimately, the reconstruction process is fostering a dual-track economy: a booming, aid-fueled construction engine operating alongside a local service economy that remains in a fight for survival.

The economic fallout from the Los Angeles County wildfires is expected to have a direct impact on the Vietnamese-American community. Our small businesses—particularly the phở restaurants and nail salons that serve as the backbone of our local economy—are concentrated in the service sectors most vulnerable to these disasters. On the other hand, the upcoming rebuilding phase may create new opportunities for Vietnamese contractors and laborers in the construction industry. A major concern remains the potential for rising rents in neighboring areas, which could place an additional burden on Vietnamese families already living in the region.