Labor market impacts of destructive California wildfires

Wildfires have immediate impacts on people and local infrastructure but also have broader and longer-term impacts, including health, water, and local economies. Although the impacts of even large destructive wildfires seem minor on the aggregate local labor markets, their complex dynamics are much more pronounced at the sector level.

Large wildfires had a slight negative immediate impact on overall employment, which quickly recovered in the following months. These overall findings are generally consistent with some previous studies on the employment effects of natural disasters, such as earthquakes, tornados, hurricanes, and wildfires, which also found negative short-term employment growth. Large wildfires, however, had a much higher impact on employment in particular industries. In the 2003 to 2021 period, construction employment saw growth of up to 10 percent in the first 18 months following a large wildfire. Professional and business services also saw employment growth of up to 5 percent in the same period. Understanding and predicting labor market changes after a natural disaster such as a destructive wildfire helps local businesses and governments plan for the changing needs of a local economy.