Marketplace - The cost of wildfires

Episode Date: January 8, 2025

Several major wildfires are raging in and around Los Angeles today. In this episode, we explain why the cost of fighting these blazes has ballooned. We’ll also hear about what makes urban wildfires particularly dangerous and destructive. Plus: More Americans work multiple jobs, an uptick in return-to-office orders signals shifting employer-worker relations and long-term bond yields rise as the future grows murkier.

This is the new normal for wildfires, a season that lasts year round. From American public media, this is Marketplace. In Washington, D.C., I'm Amy Scott in for Kai Rizdal. It's Wednesday, January 8th. Good to have you with us. The news out of Southern California today is grim. Multiple fires are raging in the Los Angeles area, driven by powerful winds. At least two people have died, more than a thousand homes and buildings have burned, and tens of thousands of people have evacuated. Fighting these wildfires takes a lot of resources

and money, and climate change has made them more frequent and more intense. Just consider the fact that we're talking about this in January, so much for fire season. Marketplace's Kaylee Wells has more now on how that's complicating the response. When a fire sparks in L.A. County, Battalion Chief David Acuna with California's firefighting agency aptly named CAL FIRE, says usually the local fire departments handle it. But when they have incidents that get out of hand, we'll come in and provide our incident management team. Which helps the local firefighters with logistics and communication.

On top of those teams, CAL FIRE runs a massive website with up-to-date fire info. So we have information on evacuation warnings and orders, which is updated moment by moment. As well as shelter locations, disaster relief info, wildfire acreage, and containment numbers. It's a lot of work. Environmental economist Judson Boomhauer with UC San Diego says urban fires like the ones burning in LA County can get even more expensive. A really important driver of how much we spend fighting any given fire is just the amount of property in the path of the fire. That matters, Boomhauer says, because it's not like a flood. Firefighters can aim to steer the fire's direction away from property.

You know, that ability to at least sometimes affect the path of the disaster makes fires different and it's also one of the things that adds this sort of hidden category of costs because those response efforts are really valuable but they're also really expensive. And they've gotten more expensive. In the past 10 years, Cal Fire's budget has more than doubled to $3.7 billion. Staffing also grew 80 percent. Sabrina Ashton is not surprised. She is a lawyer on the board for the Pacific region of the American Red Cross. We have been responding over the past decade to twice as many extreme weather events. So the fires aren't just more expensive, but more frequent too. Traditionally, Southern California's fire season happened in the fall. And now it's just all year round we need to be on guard and on watch. Plus, Ashton says, the state's fire expenses don't stop at firefighting.

There's also the costs of treating and managing the health impacts of smoke inhalation and all the reconstruction that has to happen after the smoke clears. I'm Kaylee Wells for Marketplace. Kind of a mixed day on Wall Street today. One thing traders were looking at, the minutes from the latest Fed meeting last month. Most participants saw a higher risk of inflation coming because in part of quote, the likely effects of potential changes in trade and immigration policy, we'll have the market details when we do the numbers. As Kaylee said, part of what has made the fires in Southern California so destructive is that they're happening in urban areas where flames can easily spread

between closely built structures. That's a scenario the Insurance Institute for Business and Home Safety has studied in its efforts to make the built environment more resilient to natural disasters. Roy Wright is the Institute's CEO and also a former official at FEMA. He joins me now. Welcome to the program. Good to join you. So Roy, you and I first met a few years ago when you were actually testing some fire safety measures in buildings. And here we have an example of an urban fire with buildings close together.

Can you talk about, you know, what you've learned about how that contributes to the spread of wildfires? When you joined us, we went and looked at what it looks like when the fire moves from structure to structure. And that's the exact phenomenon that we were watching. And we know that what's closest to the building matters because when embers pick up and fly and they land, they're looking for something to ignite. You land on a sidewalk, you're going to fizzle out. You land in a hedge or a tree or a bush. You're likely going to ignite and often when those are right next to buildings, you can fully envelop it. Once it's

fully enveloped, it is casting off embers that again might fly a half mile away, but they're also putting direct heat and fire on the structures next door. How does the urban nature of these fires complicate the effort to both fight them and also evacuate people? There is no question that the more people you have concentrated in an area, the harder it is to make evacuations succeed quickly, as well as how much more fuel there is to keep propagating, advancing that fire. If you're in a more rural area, you know, there could be 30 feet, a

hundred feet, even 500 feet to the next home. But when we get into these urban areas, it's structure to structure to structure to structure. And the fire is just going to move through the entire block unless the firefighters are able to get to you. So a lot of folks outside of California are watching this and probably thinking about, could it happen here? Do you expect these kinds of urban wildfires to increase due to climate change? Simply yes. We are seeing this. We saw this in Lahaina of Hawaii. We've watched this outside of Denver. We've seen this in New Mexico in Oregon

Throughout the West but not just there frankly. We've seen these in Gatlinburg, Tennessee the nature of very dry land high hot winds that combination That combination just puts fire on an accelerator to move through a community. What have you learned about what homeowners can do and what communities can do to prepare for and mitigate the effects of this kind of wildfire? We cannot eliminate wildfire. Ignitions are going to happen and fire has been part of an ecosystem for thousands of years. We can narrow its impact.

We can make homes more survivable. It plays really two sides of an equation. Have you created a defensible space and ensured that when embers land, your building cannot ignite. That's about your fences, that's about your bushes. The second piece that is frankly even harder is you have to take actions across the entire neighborhood because even if you did everything perfectly, if your neighbor didn't, they can be the source

of ignition that begins the cascade. You've got to make sure that that is cleared. And we've got to find a way so that when embers do invade a community, they don't have a way to propagate in advance. We should talk about insurance. Your institute is funded by the insurance industry. Am I right? We are.

Yeah. And many people in California and elsewhere have been struggling to get affordable homeowners insurance because of the increase of hazards like this and the increased cost of replacement. How vulnerable does that leave folks in the areas that are burning? You know, I think there are always be regulatory actions in the immediate aftermath of a fire. To protect consumers as they should. California's been making actions to address their marketplace.

Commissioner Lara has taken some very important actions in recent months. But frankly, no regulatory action is going to change the extreme wildfire risk. The only way to do that is to change the profile of our neighborhoods. And now we have to have that kind of risk insurance meet the reduction of risk. And honestly, what's going to make your home more survivable will also give you an enduring path to home insurability. Roy Wright is CEO of the Insurance Institute for Business and Home Safety. Thank you so much for your time.

Absolutely. Turning to the broader economy now, if you've been paying attention to the bond market over the past month or so, you've noticed the yields on longer term government debt, 10, 20, 30 year treasuries have been rising. They went up sharply in the past week. That's the bond market sending a message. And as Marketplace's Sabri Beneshor reports, it has something to do with what the Fed was talking about in those minutes. The bond market is in many ways a crystal ball of the economic future because if you think about it, a 30-year bond has to look good for 30 years. So when yields on these investments change, it means the future is changing or at least investors' vision of the future is changing.

Some of that is good change. Economic growth has just been stronger than anticipated and we've seen just a lot of resilience in the economy. Kathy Jones is chief fixed income strategist at the Schwab Center for Financial Research. Schwab is a marketplace underwriter. The data have come in week by week showing the economy of today and by extension tomorrow are looking stronger. Bond yields have adjusted upward to reflect that future. But that's about where the positives

in the crystal ball end. Secondly, inflation has been a little bit stickier, hasn't come down as much as hoped for. Inflation is an investment killer. There would be no point in investing in bonds if inflation ate up all your gains. So bonds have to account for future inflation. That is another reason that yields have moved upwards.

But the biggest reason bond yields have been rising recently is just general nervousness about the future for which there is a word in the bond market. The term premium. Steve Leipley is global co-head of iShares fixed income ETFs for BlackRock. Term premium is the extra money you need to be getting if you're gonna go to the trouble of locking up your money for decades in a

10 or 30 year bond. You deserve some additional compensation for taking the additional risk of holding long-term bonds. That risk has gone up. The market is uncertain about the future? Marvin Lowe is senior global macro strategist at State Street Global Markets. Inflation looks less stable and so does policy. Mass deportations, full tariffs across the board, universal tariffs. This type of discussion does impact really where prices, wages and potential volatility around that inflation might shake out. The crystal ball of the bond market has gotten cloudier.

In New York, I'm Sabri Benishor for Marketplace. Coming up... Because there's always a bill for something. They just don't stop, do they? But first, let's do the numbers. The Dow Jones Industrial Average gained 106 points, a quarter percent, to finish at 42,635. The Nasdaq lost 10 points, almost one tenth percent, to close at 19,478. The S&P 500 found nine points, two tenths percent, to end at 5918. Goodyear Tire & Rubber, that's the company's full name, is planning to sell its Dunlop tire brand to a Japanese company, Sumito Rubber Industries, in a roughly $700 million deal.

Goodyear deflated 1.25%. Competitor Titan International shrank 0.3%. You're listening is Marketplace. I'm Amy Scott. Sabri talked about inflation concerns earlier in the show. One product people are paying less for these days is gasoline. The U.S. Energy Information Administration just crunched the numbers and says gas prices on average were 21 cents lower per gallon in 2024 than they were in 2023, partly due to lower and more stable crude oil prices recently. Marketplace's Mitchell Hartman has that one.

You might be forgiven for discounting the importance of energy prices in driving inflation. In fact, even the terms economists use suggest energy can be ignored because it's volatile. But that's a mistake, says Jay Hatfield and infrastructure capital advisors. Oil is critical not just to headline inflation, but even core inflation, which excludes oil prices. Rising oil prices feed through to all prices. Hatfield says it impacts manufacturers that use oil to make stuff and service businesses.

Even a restaurant has substantial energy costs. From transporting ingredients to cooking the food. We saw this during the pandemic when global oil prices spiked after Russia invaded Ukraine, says Joe Brusuelis at consulting firm RSM. An inflation rate that probably would have leveled out between six and seven percent ended up between nine and ten percent. But now things are very different, says Stephen Shorke, publisher of the Shorke Report on the energy industry. It's been a very stable market for the past year and a half with prices more or less in the $70 range, plus or minus $10.

The main reason, in spite of wars in Ukraine and the Middle East disrupting supplies, says Joe Bursuelis. Globally, we have a surplus of oil. There's too much supply sloshing around for the first time in many years. The US has ramped up production while weak global growth is keeping demand low. There are risks going forward, says Jay Hatfield. The Trump administration has historically been very tough on Iran, so they're likely to try to constrain their exports. All out war in the Middle East would spell big trouble says Jobber

Suelas. We would have a global oil crisis that could put at risk the current business expansion and result in much higher inflation. But for now says Stephen Schorck. We have kind of a Goldilocks market where the producer is making money, the consumer is not getting banged as it were at the pump. With the average price of gas right now at $3.06 a gallon, a penny less than this time last year. I'm Mitchell Hartman from Marketplace. The option to work remotely is getting more remote for much of corporate America. Today Bloomberg reported that JP Morgan Chase, whose CEO Jamie Dimon has been an outspoken critic of remote work, plans to

bring its workers back to the office five days a week. The bank joins Amazon, Walmart, Dell, and other big companies that have rolled back remote work policies. Marketplace's Kristen Schwab has more on the push-pull between workers who want more flexibility and employers who want them on-site. GIGI BELLAMY If you look at what's changed most since remote work's peak a few years ago, it is the labor market. Back in 2021 and 22, we'd coined phrases like the great resignation and quiet quitting. Employees had power. Harry Holzer is former chief economist for the Department of Labor.

Workers were sitting on a big wad of cash. So that gave them a confidence, you know, if I get fired for this, that's okay. Fast forward to today. And while unemployment is still low at 4.2%, it's higher than it was a couple years ago. And job openings have come down. So that incredible bargaining power that workers had a couple of years ago is not nearly as strong. A recent survey by KPMG says nearly 80% of CEOs envision employees back at work in person in the next three years. Erika Groshin, former commissioner of the Bureau of Labor Statistics, says data from

the BLS shows that though more people are still working from home than they did before the pandemic. Erika Groschen, former commissioner of the Bureau of Labor Statistics, says data from the BLS shows that though more people are still working from home than they did before the pandemic. The number of hours that people who could work from home did work from home, that seems to be declining. Thing is, employees do not like back-to-office mandates, says Melissa Jesior, CEO of Eagle

Hill Consulting. And she warns that because of how the labor market ebbs and flows, there will be labor shortages someday in the future. So companies that keep flexible workplace policies? That could keep you as a competitive employer when the power dynamic shifts back to the employee. Right now, though, the dynamic still favors employers. And employees know it. That's one reason why the number of people quitting their jobs is much lower than it was in 2022. And if you're an employer, sometimes you need workers to leave.

Perhaps you wanted to drive more attrition. Perhaps you wanted to drive more turnover. For whatever reason, you could think about employing a policy like this. Employees quitting on their own instead of forced to leave through layoffs. I'm Kristin Schwab for Marketplace. Wherever they work, one interesting finding in the latest employment data is that more people in the U.S. these days find it necessary to do multiple jobs. We'll get an update on Friday when the report for December comes out from the Bureau of Labor Statistics. As of November, nearly five and a half percent of workers held down more than one job.

That number has been growing. It's now higher than it was before the pandemic. Marketplace's Samantha Fields looked into it. Last spring, Ariel Clark moved from New York to Tulsa, Oklahoma for a job as a program manager at a local nonprofit. Within the first few months, even though she was working full-time, she felt like she was living paycheck to paycheck. Just having money for rent, then making sure that I had money for groceries, then making sure that I had

money to travel here and there. Clark is 23 and recently graduated with both a bachelor's degree and a Masters and she's paying off her student loans now too. After a few months of intense budgeting, she decided to take on a second job as a part time peer health educator.

Honestly, it is financial stability. I will say that first and foremost, and also just allowing myself to feel comfortable because there's always a bill for something or just to have, I guess, cushion money if something were to come up. Clark says a lot of people she knows in Tulsa are working more than one job to get by.

So are a growing number of people around the country. I think some of it is just that the labor market has taken a while to fully recover from the pandemic. Emma Harrington is an assistant professor of economics at the University of Virginia. Before COVID, she says the percentage of people working multiple jobs had been on an upward trajectory for years.

Then really took a nosedive during the pandemic and then have been sort of ticking up towards the pre-pandemic trend for a while now. You can see this clearly if you look at a chart. There's a steep drop-off in the spring of 2020, then a slow rebound that more or less tracks the economy's recovery. Julia Pollack, chief economist at ZipRecruiter,

says more people working multiple jobs is actually a sign of a healthy labor market. Many people have referred to this number as evidence that the labor market is under strain and that workers are struggling to make ends meet. But historically, the number of people holding multiple jobs tends to be high when there are multiple jobs to be had. When the economy is strong. Women, black people, and those who are single, widowed, or divorced are more likely than others to work multiple jobs. And that does suggest, perhaps, that some of this is driven by need and by low-wage

work. But Pollock says not all of it. It's not only your bartender and your hotel restaurant worker who may be juggling multiple jobs. Often it is white collar workers too. Doctors who are also professors and who are also consultants. It is not just one thing. And there's not just one reason people take on more than one job at a time. Lonnie Golden is a professor of economics and labor human resources at Penn State University Abingdon. And in a survey he did? When we ask people, why are you holding multiple jobs, about half say they just want to make

some additional money. But there's a significant minority that say they can't find a suitable full-time job, or they're not able to make ends meet with just their one job. There are also others who do it because they're just interested in the work or want something else to do. These days, Emma Harrington at UVA says technology and the rise of remote work have also made it easier to both find and juggle multiple opportunities. Work from home makes it more feasible to do multiple jobs at once.

It's easier to have two jobs if you don't have to also do two commutes. Easier, but not easy. Harrington says it's often a strain. A lot of people, when they're surveyed, they often say that they would prefer a more stable, traditional work arrangement. That's true for Ariel Clark in Tulsa, even though she likes both of her current jobs. It's exhausting. It very much so can feel like a burden at times. Clark's goal is to become a lawyer and eventually just have one job.

And not even think twice about it just being enough. Though she says it's entirely possible if she does become a lawyer that she'll end up working just as many hours at one job as she does now with two. I'm Samantha Fields for Marketplace. This final note on the way out today, continuing with the working theme. The World Economic Forum is out with a new Future of Jobs report. More than 40% of employers said they plan to downsize their workforce in the next five years as artificial intelligence takes over more tasks, though most also plan to hire new people with AI skills. Also worth noting in that

report, nearly half of employers expected efforts to reduce carbon emissions to transform their business in the latter half of this decade. Our media production team includes Brian Allison, Jake Cherry, Jessen Duller, Drew Jostad, Gary O'Keefe, Charlton Thorpe, Juan Carlos Torrado, and Becca Weinman, with help today from Alexander Simpson and Jess Berg. Jeff Peters is the manager of media production. I'm Amy Scott. We'll be back tomorrow. This is APN.