Labor market risks of a magnitude 7.2 earthquake in the San Francisco Bay area: an update and extension

Based on USGS data, figure 3 depicts the dispersion of shaking intensity of business establishments into geographic zones. Dark orange and red areas designate those business locations with severe shaking and moderate-to-heavy damage (MMI VIII or greater). Business locations colored by light orange represent MMI VII intensity (very strong shaking areas with moderate damage).

Total exposures for the nine counties in the San Francisco Bay area that are in the very strong shaking zone (MMI VII) and destructive shaking zone (MMI VIII or higher) include 118,165 establishments, 1.75 million jobs, and quarterly wages of $71.95 billion. For reference, the previous article in 2016 used 6 counties (dropping Napa, Sonoma, and Solano counties) and found that a magnitude 6.8 earthquake would impact 101,300 establishments, 1.54 million jobs, and quarterly wages of $37.5 billion. As a result of using a more powerful earthquake scenario and including more counties in the analysis, the number of establishments, jobs, and wages at risk are greater by 17 percent, 14 percent, and 92 percent, respectively. In the wide area circumscribed by both zones, the business, employment, and earnings exposures would fall primarily on Alameda County.

Using first-quarter 2022 QCEW employment and wage data (of which employment is an average of the 3 monthly numbers compiled), Alameda County accounted for 20 percent of all employed in the 9 counties examined and 14 percent of all wages. First-quarter 2022 employment and wage data, by county, are summarized in table 1; projected economic impacts from the earthquake to businesses are summed in table 2.

As seen in table 2, an earthquake originating from the San Andreas Fault line would result in a much higher percentage of establishments and workers experiencing extreme damage when compared with an earthquake originating from the Hayward Fault.

In the case of a 7.2 magnitude earthquake originating from the Hayward Fault, 36.9 percent of establishments are predicted to experience at least moderate damage. By contrast, if a 7.2 magnitude earthquake were to originate from the San Andreas Fault instead, 57.2 percent of establishments are expected to have at least moderate damage (a 55-percent increase).

Moreover, if the earthquake were to originate from the Hayward Fault, those businesses that are expected to experience at least moderate damage would account for 54.1 percent of wages in the area and 44.7 of employment. If a 7.2 magnitude earthquake were to originate in the San Andreas Fault, those businesses expected to experience at least moderate damage would account for 75.5 percent of wages and 61 percent of employment. This means that establishments that are expected to experience at least moderate damage from a 7.2 magnitude earthquake originating from the San Andreas Fault, would account for 38.5 percent more jobs and 39.6 percent more of wages than establishments expected to receive at least moderate damage from a 7.2 magnitude Hayward earthquake.

Even though some employees may work for establishments that are in areas expected to experience at least moderate-to-heavy damage, some of these workers may not actually report to the locations experiencing the damage. As a result, many remote workers could be counted as working in establishments affected by moderate-to-heavy damage, causing the analysis to overstate the economic impacts of the earthquake. By extension, given that the San Andreas earthquake is expected to affect large businesses (more likely to have remote workers) more than an earthquake originating from the Hayward Fault, it is possible that the real difference in economic damage between the two quakes could be overestimated here.