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

Magnitude 7.2 earthquakes originating from either the Hayward or San Andreas Faults, as mapped by USGS intensity models, would likely produce a devastating shock to the bay area’s economy. In the San Francisco Bay area, the number of workers has grown 8.9 percent since 2014. Similarly, the potential losses from a large earthquake on the Hayward Fault have increased for affected counties since our previous estimate in 2007. Nevertheless, because the San Andreas Fault runs directly through the San Francisco Peninsula, an earthquake originating from the San Andreas Fault has the potential to surpass the total economic damages and spread of economic damage wrought by a similar magnitude earthquake originating in the Hayward Fault.

A significant proportion of the workforce in the nine most affected counties would be directly exposed to the shaking effects of a magnitude 7.2 East Bay or Peninsular earthquake. The direct effects would likely vary by business and location and would also be accompanied by secondary effects (for example, disruptions to infrastructure, such as transportation and public utilities). First response efforts to a 7.2 magnitude earthquake may be hampered by the extent of the damage to the healthcare and social assistance sectors. In addition, this level of exposure to strong or severe shaking could adversely affect every stage of recovery. For example, longer-term recovery may also be delayed due to the impacts on manufacturing and retail.

The potential economic consequences to employers and workers in the San Francisco Bay area could be widespread and would likely have an effect on the state economy. In turn, because of the far-reaching economic ties between firms and industries in California and the national economy, the latter could also be hampered. By using MMI values with geocoded establishment data to identify establishments, jobs, and wages most vulnerable to such an earthquake, this article helps quantify the economic effects that could result from a 7.2 magnitude earthquake in the bay area.