RegionalReport

SUMMARY 11-02 June 2011 U.S. BUREAU OF LABOR STATISTICS

The ShakeOut Scenario

is a program developed 

by the U.S. Geological 

Survey (USGS) to examine the 

implications of a magnitude 

7.8 earthquake in southern 

California and to help people 

and organizations become better 

prepared before the next big 

earthquake. According to USGS, 

the most likely source of a large 

earthquake in California is the 

southern segment of the San 

Andreas Fault, which runs through 

the heavily populated counties 

of Los Angeles, Riverside, and 

San Bernardino.1

 The southern 

section of the San Andreas Fault 

has not ruptured for more than 

300 years, although evidence 

indicates that a large earthquake 

has occurred on the fault every 150 

years, on average. The ShakeOut 

Scenario simulated a magnitude 

7.8 earthquake on the southern 

San Andreas Fault, and the 

program’s scientists determined 

this hypothetical earthquake would 

create very strong to severe shaking 

and cause moderate to heavy 

damage across seven southern 

California counties. 

The 7 southern California counties 

that would be most affected by the 

earthquake are home to 621,000 

business establishments, 6.3 

million employees, and an annual 

payroll of $303.3 billion, according 

to data from the Quarterly Census 

of Employment and Wages 

(QCEW) published by the U.S. 

Bureau of Labor Statistics (BLS). 

The inset of map 1 delineates the 

shaking intensities that could occur 

as the result of a magnitude 7.8 

earthquake on the southern San 

Andreas Fault, as measured by 

the Modified Mercalli Intensity 

Regional Report June 2011 1

Labor market risks of a magnitude

7.8 earthquake in southern California

Authors: 

Richard Holden,

Regional Commissioner,

San Francisco

Amar Mann,

Supervisory Economist,

San Francisco 

Regional Office 

Tian Luo,

Economist,

San Francisco

Regional Office
Methodology

Two datasets were merged to prepare for the analysis: a geographic 

2 Regional Report June 2011

Map1: Employers in Shaking Intensity Zones for a hypothetical magnitude 7.8 Earthquake on

the southern San Andreas Fault

Modified Mercalli Intensity Scale

IV or less: Light shaking, no damage

V: Moderate shaking, very light damage

VI: Strong shaking, light damage

VII: Very strong shaking, moderate damage

VIII or greater: Severe shaking, moderate/heavy damage

Epicenter

Fault

San Luis Obispo

Bakersfield

Santa Barbara

Oxnard

Los Angeles

Santa Ana

San Bernardino

Riverside

San Diego

San Bernardino

San Luis Obispo

Santa Barbara

San Diego

Kern

Imperial

VenturaLos Angeles

Shaking Zone

Business Establishments in Shaking Zone

Note: The cluster of all colors on the main map denote density of establishments; the colors of the clusters denote intensity of shaking zone.

Source: U.S. Bureau of Labor Statistics, Quarterly Census of Earnings and Wages (QCEW) program geocoded data

About the Modified Mercalli Intensity Scale

Seismic intensity is a measure of the effects of an earthquake at 

different sites. Intensity differs from magnitude in that the effects 

of any one earthquake vary greatly from place to place, so there 

may be many intensity values measured from one earthquake. 

Each earthquake, on the other hand, should have just one 

magnitude (often measured by the moment magnitude scale or by 

the Richter scale). The Modified Mercalli Intensity (MMI) scale 

is commonly used to gauge the severity of earthquake effects. 

Intensity ratings are expressed as Roman numerals between I at 

the least destructive and XII at the most destructive. At MMIVII, while damage may be slight in specially designed structures, 

there is often considerable damage and partial collapse even in 

substantial ordinary buildings.

(MMI) scale. When employment 

and wages data from the QCEW 

are spatially integrated with the 

shaking intensity zones provided 

by the ShakeOut Scenario, we 

are able to tabulate the potential 

business and labor market risks 

from a major earthquake, as 

shown in the larger part of map 

1. Our analysis includes both the 

exposure across the seven southern 

California counties and the impact 

on industry groupings. 2

In this report, we analyze and map 

QCEW data to assess the potential 

business and economic losses if 

a 7.8 magnitude earthquake were 

to occur in southern California. 

This report may be used to inform 

individuals, schools, businesses, 

organizations, communities, and 

governments about the effects 

of a major earthquake in their 

communities.

Orange Riverside
Thus, gauging economic impact 

by projected MMI levels may 

overstate the business interruption 

or losses that will occur. 

However, direct damage to a 

region’s businesses understates the 

interactional effects on customers 

or suppliers inside and outside the 

damaged areas. Some businesses 

cluster in regions to be near their 

customers and suppliers. If this 

relationship is interrupted by an 

earthquake, both customers and 

suppliers could be severely affected 

or even put out of business. The 

expected loss of life and damage 

to infrastructure and utilities 

may also interrupt the flow of 

goods and services in southern 

California and the United States as 

a whole because the area is a vital 

transportation hub for shipments by 

air, water, rail, and truck.

The earthquake in the ShakeOut 

Scenario would have broad 

impacts beyond the labor market, 

creating greater losses inside and 

outside the region than can be 

estimated using only MMI scales 

and damage zones. USGS has 

estimated the economic losses of 

the ShakeOut Scenario earthquake 

to be approximately $213 billion,4

when accounting for the direct 

and indirect earthquake impacts.5

In addition, as mentioned earlier, 

businesses that were not geocoded 

in the QCEW database were 

excluded from this analysis, so the 

results presented here represent a 

lower bound estimate of the at-risk 

labor market.

Analysis

The southern segment of the 

San Andreas Fault runs directly 

through the heavily populated 

Los Angeles, Riverside, and San 

Bernardino counties. These are 

3 of the 4 most exposed counties 

in the region in terms of potential 

damage from earthquakes 

occurring on the fault. These 

counties comprise a population 

of 17 million inhabitants over a 

32,000 square mile area, with most 

of the population and businesses 

located in Los Angeles and Orange 

Counties and the western parts 

of San Bernardino and Riverside 

Counties. (See table 1.)

Total exposures in the 7 counties 

in southern California that are 

in the very strong shaking zone 

(MMI VII) and destructive shaking 

zone (MMI VIII or higher) 

include 434,000 employers, over 

4.5 million jobs, and annual 

wages of $206.5 billion. In the 

wide area circumscribed by both 

zones, the business, employment, 

and earnings exposures would 

fall primarily upon the counties 

of Los Angeles, Orange, San 

Bernardino, and Riverside, with 

Los Angeles County having the 

most exposures and Riverside 

County having the least. These 

four counties account for more 

than 99 percent of all exposures in 

the shaking zones. More than half 

of the employment and earnings 

exposure in the destructive 

shaking zone (MMI VIII or 

higher) would fall in Los Angeles 

County alone. Approximately 3 of 

every 5 businesses affected in the 

destructive shaking zone are also in 

Los Angeles County.

As shown in table 2, the percentage 

of each county’s economic base 

that is considered to be at risk 

during an earthquake varies greatly. 

Although about 70 percent of 

all businesses, employment, and 

wages across the 7-county area 

are exposed, 4 of the 7 counties 

in the scenario are estimated to 

have business and labor-market 

Regional Report June 2011 3

file with shaking intensities from 

the USGS and an establishmentlevel micro dataset containing employment and wages from QCEW. 

The geographic file of intensities, 

which uses MMI scale measurements, gauges the effects of an 

earthquake at various distances 

from the fault rupture. The MMI 

scale ranges from I (not felt) to XII 

(total damage).3

 The analysis in 

this report will focus on those areas 

with estimated shaking intensities of VII and higher on the MMI 

scale, that is, areas of very strong 

shaking and moderate damage to 

areas with severe shaking and moderate to heavy damage.

The QCEW microdata contain 

geocoded establishment data, 

including the employment and 

wages associated with individual 

business firms as of the first quarter 

of 2010. Approximately 92 percent 

of all businesses, employment, 

and wages in the microdata 

were geographically coded and 

used in this report, therefore 

the results of the presented 

analysis understate the actual 

labor market risks. This dataset 

is then overlaid by the USGS 

shaking intensity file to tabulate 

the exposures to establishments 

and the employment and wages 

attributed to those firms.

Limitations of the analysis

Our analysis of business exposures 

that are attributable to earthquakes 

has certain limitations. The MMI 

values describe damage levels 

ranging from predominately 

light damage to widespread 

heavy damage. Even in the most 

damaged areas, not all businesses 

will sustain damage that will soon 

curtail their activities and some 

businesses that lose capability 

will return to normal operations. 
exposures of 72 percent or more. 

The county with the greatest 

exposure as a percent of its total 

businesses, employment, and 

wages is San Bernardino, with 

96 percent of its businesses, 

employees, and wages located in 

the very strong or severe shaking 

zones in the modeled earthquake. 

Riverside County is at risk for the 

next greatest exposure, with 75 

percent of all businesses in the very 

strong or severe shaking zones. Los 

Angeles and Orange counties both 

have 73 percent of their businesses, 

employees, and wages located in 

the very strong to severe shaking 

zones. Imperial County overlies 

a portion of the southern San 

Andreas Fault, but has relatively 

little exposure in the scenario 

analyzed here, as the earthquake’s 

waves are expected to radiate 

towards the northwest, away from 

Imperial County. 

Just as the exposure to various 

counties ranges widely, the 

exposures for southern California 

industries vary across the board. 

The earthquake would affect a 

large number of jobs in health care 

(522,000), retail trade (504,000), 

manufacturing (480,000), and 

educational services (409,000). 

(See table 3.) After a disaster, 

functioning hospitals and medical 

facilities will be critical. The 

shaking zone map tabulations 

show that 72 percent of health 

care workers are located in the 

shaking zones that are expected to 

experience the most damage. In 

addition to this geographic hazard, 

a recent study found structural 

weaknesses in many hospitals 

in California, particularly in the 

southern part of the state.6

 With the 

exception of the agriculture and 

mining industries, every industry 

within the seven-county area could 

have more than half of their total 

employment located in the very 

strong to severe shaking zones. The 

potential economic consequences 

to employers and workers in 

southern California are widespread 

and are likely to have an effect 

on the state economy and, in turn, 

the national economy because of 

the far-reaching economic ties 

between firms and industries in 

California and beyond. This strong 

relationship between the southern 

California economy and the rest of 

the world is demonstrated by the 

large percentage of international 

shipments that come through the 

Los Angeles and Long Beach 

4 Regional Report June 2011

Table 2. Percent of total businesses, employment, and wages exposed 

to a destructive shaking zone (MMI-VII+), first quarter of 2010

County Business

establishments Employment Wages

Imperial 6 4 4

Kern 8 9 9

Los Angeles 73 74 69

Orange 73 77 74

Riverside 75 79 79

San Bernardino 96 96 97

Ventura 6 6 4

TOTAL 70 71 68

Source: U.S. Bureau of Labor Statistics, Quarterly Census of Earnings and Wages (QCEW) 

program.

Table 1. Potential exposure from a magnitude 7.8 earthquake along the southern San Andreas Fault, 7 

 southern California counties, first quarter of 2010

County

Located in very strong shaking zone

(MMI VII)

Located in destructive shaking zone

(MMI VIII+)

Proportion of 

Total

Affected

Employment Business 

establishments Employment Annual wages (in millions)

Business 

establishments Employment Annual wages (in millions)

Imperial 230 1,200 $40 140 800 $20 0.0

Kern 900 14,300 510 480 7,000 290 .5

Los Angeles 98,290 922,000 53,420 188,750 1,692,700 69,670 57.6

Orange 13,600 153,100 8,230 54,570 812,300 39,340 21.3

Riverside 9,050 106,700 4,020 23,570 299,000 11,280 8.9

San Bernardino 560 5,100 220 42,620 507,300 19,030 11.3

Ventura 970 11,000 350 360 3,900 120 .3

TOTAL 123,600 1,213,400 66,780 310,480 3,323,100 139,760

Note: May not sum to total due to rounding. Due to unavailability of geocoded fields for approximately 8 percent of the dataset, figures 

presented in this table for establishment, employment, and wages are a lower bound for potential exposures from a MMI-VII+ shaking.

Source: U.S. Bureau of Labor Statistics, Quarterly Census of Earnings and Wages (QCEW) program.
Regional Report June 2011 5

Table 3. Potential industry exposure to destructive shaking (MMI-VII+), first quarter of 2010

Industry Business 

establishments Employment Annual wages (in millions)

Percent of total 

exposed

employment

Percent of

industry

employment

Health care and social 

assistance 29,000 521,900 23,740 12 72

Retail trade 32,120 503,700 14,060 11 71

Manufacturing 18,150 479,600 23,560 11 77

Educational services 6,960 408,600 20,120 9 71

Accommodation and food 

services 21,210 370,100 6,480 8 66

Administrative and waste 

services 12,630 306,500 9,100 7 76

Wholesale trade 23,280 257,800 13,550 6 79

Other services, except public 

administration 179,400 255,300 6,120 6 72

Professional and technical 

services 29,380 233,400 16,480 5 61

Public Administration 1,230 201,200 13,160 4 83

Transportation and warehousing 6,840 190,500 8,420 4 74

Construction 19,200 177,000 8,740 4 75

Finance and insurance 12,860 155,700 12,850 3 68

Information 5,540 152,600 12,760 3 68

Arts, entertainment, and 

recreation 5,560 102,800 3,940 2 74

Real estate and rental and 

leasing 12,120 77,600 3,400 2 64

Management of companies and 

enterprises 1,220 63,600 5,020 1 76

Utilities 460 36,000 3,570 1 81

Agriculture, forestry, fishing and 

hunting 1,040 23,100 530 1 27

Unclassified 15,750 16,300 560 0 68

Mining, quarrying, and oil and 

gas extraction 150 3,400 380 0 23

TOTAL 434,080 4,536,500 206,540 100 71

Note: Figures may not sum to total due to rounding. Due to unavailability of geocoded fields for approximately 8 percent 

of the dataset, figures presented in this table for establishment, employment, and wages are a lower bound for potential 

exposures from a MMI-VII+ shaking.

Source: U.S. Bureau of Labor Statistics, Quarterly Census of Earnings and Wages (QCEW) program.

ports—more than 23 percent of the 

total U.S. value of goods passed 

through them in 2009, making it 

the largest U.S. port district.7

Conclusion

With this report, we do not claim 

to make a specific earthquake 

prediction of expected losses. 

However, we are able to estimate 

the exposure to the labor market 

in the event of a “highly probable” 

earthquake scenario in which 

the southern segment of the San 

Andreas Fault ruptures, generating 

a magnitude 7.8 earthquake. 8 

By using geocoded employment 

data and shape files generated 

by earthquake shake modeling, 

this analysis concludes that a 

magnitude 7.8 earthquake on the 

southern San Andreas Fault could 

have wide-ranging effects on 

businesses, jobs, and payrolls in the 

southern California area. 

The earthquake scenario used to 

estimate the exposures modeled 

here may never happen. Major and 

devastating earthquakes on the San 

Andreas Fault are widely believed 

to be inevitable and, by geologic 

standards, extremely common, but 

they may not occur as projected in 

the ShakeOut Scenario. Evidence 
Notes

1 An earlier Regional Report presented data on the labor market risks of a hypothetical earthquake along the Hayward Fault in Alameda County California. See “Labor 

market risks of a magnitude 6.9 earthquake in Alameda County,” http://www.bls.gov/opub/regional_reports/200709_alameda.pdf.

2 Exposure refers to potential labor-market losses and risks. Exposure is how much of the area’s employment and earnings base is in the severe shaking zone.

3 United States Geological Survey, “Magnitude/Intensity Comparison,” http://earthquake.usgs.gov/learn/topics/mag_vs_int.php. 

4 Lucile M. Jones, et al., “The ShakeOut Scenario,” USGS Open File Report 2008-115 (U.S. Department of the Interior, U.S. Geological Survey, 2008), pg. 10, http:/ 

pubs.usgs.gov/of/2008/1150/of2008-1150.pdf.

5 Although USGS did estimate economic losses (along with casualties and injuries), they did not estimate the labor market risks in terms of jobs and wages as this 

study has done.

6 According to a recent report, state and hospital officials have found significant structural weaknesses in more than 20 hospital buildings throughout California. More 

than a dozen of the seismic targets are located in southern California. See Erin Richard, “California Hospitals Deemed Seismically Unstable,” NBC Los Angeles, Nov. 

5, 2010, http://www.nbclosangeles.com/news/local-beat/California-Hopsitals-Deemed-Seismically-Unstable-106795938.html?wwparam=1290126554.

7 Ronald D. White, “Ports of L.A. and Long Beach post 18% growth in container traffic,” Los Angeles Times, November 16, 2010, http://articles.latimes.com/2010/

nov/16/business/la-fi-ports-20101116. 

See also “U.S. Waterborne Foreign Trade by U.S. Customs Districts,” (U.S. Department of Transportation, Maritime Administration, August 20, 2010), 

http://www.marad.dot.gov/library_landing_page/data_and_statistics/Data_and_Statistics.htm.

8 Suzanne Perry, et al., “The ShakeOut Earthquake Scenario—A Story That Southern Californians Are Writing,” Circular 1324, (U.S. Department of the Interior, U.S. 

Geological Survey, 2008), p. 2, http://pubs.usgs.gov/circ/1324/c1324.pdf.

6 Regional Report June 2011

suggests that the next damaging 

earthquake could easily be on one 

of the many other faults that riddle 

the Los Angeles basin, permanently 

changing the lives and livelihoods 

of residents and local businesses. 

The results of this regional report 

should serve as a reminder to 

public officials, employers, and 

residents of the vital importance 

of taking preventive actions to 

mitigate the potential losses from 

an earthquake, and to prepare 

for the potential disruption to 

businesses and employees.

Data presented here are for all 

workers covered by state and 

federal unemployment insurance 

programs. For additional 

information, contact Richard 

Holden, Regional Commissioner, 

U.S. Bureau of Labor Statistics. 

Email: holden.richard@bls.

gov. Telephone: 415-625-2245. 

Coauthors of this report were Amar 

Mann, Supervisory Economist, 

U.S. Bureau of Labor Statistics, 

and Tian Luo, Economist, U.S. 

Bureau of Labor Statistics. 

Information in this report will 

be made available to sensoryimpaired individuals upon request. 

Voice phone: (202) 691-5200; 

Federal Relay Service: 1-800-

877-8339. This summary report is 

in the public domain and may be 

reproduced without permission.

U.S. Bureau of Labor Statistics

National Office

Postal Square Building, Rm. 2850

2 Massachusetts Avenue, NE 

Washington, DC 20212-0001

U.S. Bureau of Labor Statistics

San Francisco Regional Office

90 7th Street, Suite 14-100

San Francisco, CA 94103