California’s Inland Empire is known as America’s warehouse capital. It’s where many of the cargoes unloaded in the ports of Long Beach and Los Angeles are brought for sorting and shipping. Its economy is seen as a bellwether for America, and unemployment is rising. Augusta Saraiva and Amanda Albright report in Bloomberg:
Southern California’s Inland Empire, the warehousing mecca that’s home to Amazon.com Inc. and Walmart Inc. facilities, is showing signs of trouble.
Just last year, the region was hiring workers faster than California and the rest of the US — emerging as a top beneficiary from the supply-chain turmoil that clogged warehouses and led to record imports through North America’s largest port complex near Los Angeles.
Now, the gush of cargo that once flowed through the 27,000-square-mile area, stretching from east Los Angeles to the Nevada and Arizona borders, has dwindled to almost three-year lows and jobs are harder to come by.
It’s an ominous sign for California, already reeling from the tech collapse and a banking crisis, and a glimpse into what may lie ahead for the rest of the US as it stares down a potential recession.
California, the world’s fifth-biggest economy, projects that a mild recession is possible, giving way to concerns that the pain would hit the Inland Empire’s blue-collar workforce especially hard.
“When the party ends, then you know the drop will be even faster,” said Johannes Moenius, an economist at the local University of Redlands. “The more warehouses we have today or tomorrow, the steeper the fall.”
Data out Tuesday showed US supply-chain activity fell to the lowest in at least 6 ½ years in March, with low transport prices for goods driving the decline in the Logistics Managers’ Index. Also, Walmart is planning job cuts at five e-commerce fulfillment centers that will affect more than 2,000 positions across the country, according to regulatory filings, though impacted employees may find other roles at the company.
The Inland Empire, an epicenter of California’s 2008 housing crisis, occupies a strategic location just east of the twin hubs of Los Angeles and Long Beach, which collectively handle about $500 billion in goods annually.
With a population of almost 5 million, it delivered a remarkable increase in transportation and warehousing jobs during the pandemic, peaking at 215,000 last year and marking a 40% surge from February 2020.
But recent data suggest a changing economic landscape, with the region’s San Bernardino and Riverside counties registering an unemployment rate of 4.4% in January — the highest in almost a year — as the trade, transport, and utilities sector hit the brakes on hiring. Meanwhile, the industry’s average hourly pay of about $20 falls about $8 short of the nationwide rate for all occupations.
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