Monthly Labor Review August 2006 3

The labor market impact of

Hurricane Katrina: an overview

The Labor Market Impact

Hurricane Katrina struck the gulf coast on August

29, 2005, causing unprecedented damage and

resulting in the relocation of more than a million

people.

The displacement of people and destruction of property

complicated the collection of labor force information from

households and businesses in our employment programs. A

further description of the Bureau of Labor Statistics

adjustments to data collection and estimation methodologies

for Katrina-affected areas is available in accompanying

articles in this issue of the Monthly Labor Review or online

at www.bls.gov/katrina.

 This overview was prepared by staff members from several data programs in the Bureau of Labor Statistics and was

assembled by Karen Kosanovich. E-mail: kosanovich.karen

@bls.gov

 1. Approximately 38 percent of business establishments in Louisiana and Mississippi were within a

100-mile corridor of the path of Hurricane Katrina's center

SOURCE: Bureau of Labor Statistics, Quarterly Census of Employment and Wages.
The Labor Market Impact

4 Monthly Labor Review August 2006

roughly 25 percent each in neighboring Jefferson and

Orleans Parishes.

• In Mississippi, employment in Jackson, Harrison, and

Hancock Counties declined by approximately 9 percent

to 14 percent in the year ending September 2005.

• The impact of Katrina on employment in specific

counties (or parishes in Louisiana) can be determined by looking at over-the-year changes in employment. Employment in St. Bernard Parish, Louisiana, was down by nearly 40 percent in September

2005 from a year earlier. Employment fell by

NOTE: Over-the-year percent change in employment from September 2004 to September 2005.

SOURCE: Bureau of Labor Statistics, Quarterly Census of Employment and Wages.

2. St. Bernard, Orleans, and Jefferson Parishes had the largest percent declines in employment between

September 2004 and September 2005
 Monthly Labor Review August 2006 5

• The Mississippi coast was hit with a 30-foot storm surge

that destroyed businesses and residences close to the gulf.

This map shows the concentration of businesses in damage zones defined by the Federal Emergency Management Agency (FEMA). Significant damage was limited primarily to the coastal areas as the storm lost strength rapidly after making landfall.

• An estimated 17 percent of Louisiana’s employment and

5 percent of Mississippi’s employment were within the

FEMA-designated damage zones.

• Louisiana’s damage was more concentrated—New Orleans

was devastated by flooding first from Hurricane Katrina

and then again a month later from Hurricane Rita. New

Orleans residents faced long-term evacuation as well as

flood damage to housing, businesses, and infrastructure.

• In both areas, jobs, incomes, facilities, business relationships, and production were severely disrupted.

3. FEMA-designated damage zones contained an estimated 17 percent of Louisiana's employment

and 5 percent of Mississippi's employment

SOURCE: Bureau of Labor Statistics, Quarterly Census of Employment and Wages.
The Labor Market Impact

6 Monthly Labor Review August 2006

NOTE: State data are seasonally adjusted; metro area data are not seasonally adjusted.

SOURCE: Bureau of Labor Statistics, Current Employment Statistics.

US

ma

da

na

ppi

rie

MS

-250 -200 -150 -100 -50 0 50 100

-250 -200 -150 -100 -50 0 50 100

5. Payroll employment declined in Louisiana and Mississippi

between August and October 2005

• In the 2 months following Hurricane Katrina, nonfarm payroll employment in Louisiana fell by

241,000, a decline of 12 percent.

In the New Orleans-MetairieKenner metro area, employment

declined by 215,000, or 35 percent.

• In Mississippi, nonfarm payroll

employment fell by 14,000, or

about 1 percent, from August to October 2005. However, the GulfportBiloxi metro area lost 18,000 jobs,

or 15 percent of the area's nonfarm

employment.

Thousands

Thousands

Mississippi

United States

Alabama

Louisiana

Gulfport-Biloxi, Mississippi

New Orleans-MetairieKenner, Louisiana

Florida

4. Louisiana businesses suffered primarily from flooding, while

Mississippi establishments had more typical hurricane damage

• The hurricane's impact varied by location. Louisiana suffered primarily

from flooding, while Mississippi

suffered from more typical hurricane damage, such as that due to

high winds or storm surge. Florida

and Alabama had less damage.

• In Louisiana, there were 16,920

businesses located in the Katrinadamaged areas, nearly all in the

designated flooded area. Businesses in the flooded area in Louisiana lost 110,080 jobs between December 2004 and December 2005.

• Mississippi had 2,678 businesses

located in the damaged areas, nearly

half within the “catastrophic” storm

damaged areas. Businesses in this

category in Mississippi lost 16,294

jobs, about half of their employment, between December 2004 and

December 2005. By contrast, businesses in areas with “moderate”

damage lost about a third of employment over the period.

Employment

change,

December

2004–05

Total ........................ 16,920 –113,106 2,678 –20,551

Flooded area................. 16,101 –110,080 57 –174

Nonflooded area

Limited damage .......... 668 –1,862 794 –1,028

Moderate damage ....... 125 –1,061 468 –1,731

Extensive damage ...... 40 –219 95 –1,324

Catastrophic damage .. 47 –149 1,264 –16,294

Louisiana Mississippi 1

Damage type

Establishments

December

2004

Establishments

December

2004

Employment

change,

December

2004–05

1 Totals for Louisiana were adjusted for 61 establishments that were classified as both

"flooded" and "limited damage." The employment change total was adjusted for the employment in these establishments.

NOTE: Data are restricted to businesses located in Katrina-damaged areas during the

third quarter of 2005.

SOURCE: Bureau of Labor Statistics, Quarterly Census of Employment and Wages.
 Monthly Labor Review August 2006 7

n

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-60 -50 -40 -30 -20 -10 0

-60 -50 -40 -30 -20 -10 0

• From August to October 2005, nonfarm employment in Louisiana fell

by 241,000, a decline of 12 percent.

• All the major industry sectors lost

jobs in Louisiana.

• The largest job losses occurred in

education and health services, in

leisure and hospitality, and in trade,

transportation, and utilities.

6. In Louisiana, the education and health services and leisure and

hospitality industries lost the most jobs between August and

October 2005

NOTE: Data are seasonally adjusted.

SOURCE: Bureau of Labor Statistics, Current Employment Statistics.

Employment change, in thousands

Employment change, in thousands

Information

Construction

Manufacturing

Trade, transportation, and

utilities

Professional and business

services

Education and health

services

Leisure and hospitality

Other services

Government

Financial activities

• From August to October 2005, nonfarm payroll employment in Mississippi fell by 14,000, or about 1

percent.

• The largest job losses occurred in

the leisure and hospitality industry.

Employment in construction edged

up slightly from August to October

2005.

7. In Mississippi, the leisure and hospitality industry lost the most

jobs between August and October 2005

Employment change, in thousands

NOTE: Data are seasonally adjusted.

SOURCE: Bureau of Labor Statistics, Current Employment Statistics.

Employment change, in thousands

Natural resources and

mining

Construction

Manufacturing

Trade, transportation, and

utilities

Professional and business

services

Education and health

services

Leisure and hospitality

Other services

Government

o

s

s

t

-8 -6 -4 -2 0 2 4

-8 -6 -4 -2 0 2 4
The Labor Market Impact

8 Monthly Labor Review August 2006

8. Louisiana's employment is still below its pre-Katrina level, while

Mississippi's employment has returned to its earlier level

Thousands Thousands

• Employment in Louisiana fell

sharply following Hurricane Katrina and remains well below its August 2005 level. In June 2006, nonfarm payroll employment in the

New Orleans metro area was about

30 percent below the level a year

earlier.

• Employment in Mississippi edged

down after Hurricane Katrina, but

returned to its prehurricane level by

February 2006. In the GulfportBiloxi metro area, however, employment was down 19 percent

over the year ending June 2006.

NOTE: Data are seasonally adjusted.

SOURCE: Bureau of Labor Statistics, Current Employment Statistics.

2004 2005 2006

Louisiana

Mississippi

August December April August December April 1,000

1,200

1,400

1,600

1,800

2,000

2,200

1,000

1,200

1,400

1,600

1,800

2,000

2,200

9. Mass layoff events rose sharply in September 2005 after the gulf

coast hurricanes

Mass layoff

events

Mass layoff

events

2004 2005 2006

Louisiana

Mississippi

NOTE: Data are not seasonally adjusted.

SOURCE: Bureau of Labor Statistics, Mass Layoff Statistics.

• A mass layoff event occurs when 50

or more initial claims for unemployment insurance benefits are

filed against an establishment during a 5-week period. The number

of mass layoff events rose sharply

in September 2005 after the gulf

coast hurricanes, with 2,219 layoff

actions affecting nearly 284,000

U.S. workers. In Louisiana, 791

mass layoffs affected some 104,000

workers. The 113 events in Mississippi in September 2005 affected

almost 27,000 workers.

• From September to December

2005, there were 358 extended

mass layoff events (lasting at least

31 days) related to the gulf coast

hurricanes, involving 57,551 workers. By industry, accommodation

and food services, retail trade, and

health care and social assistance accounted for the highest number of

separations.

August December April August December April

0

100

200

300

400

500

600

700

800

0

100

200

300

400

500

600

700

800
 Monthly Labor Review August 2006 9

10. Unemployment rates for Louisiana and Mississippi rose sharply

after Hurricane Katrina

Percent Percent

NOTE: Data are seasonally adjusted.

SOURCE: Bureau of Labor Statistics, Local Area Unemployment Statistics.

2004 2005 2006

Louisiana

Mississippi

• The unemployment rate for Louisiana rose sharply after Hurricane

Katrina to 12.1 percent. It began

falling in December and in June

2006 was near its prehurricane

level.

• The unemployment rate for Mississippi rose to 10.4 percent after Hurricane Katrina, but has edged down

since. In June 2006, the unemployment rate was comparable to its

prehurricane level.

August December April August December April

0

5

10

15

20

25

0

5

10

15

20

25

11. Unemployment rates for the Gulfport-Biloxi and New Orleans

metro areas rose sharply after Hurricane Katrina

• The unemployment rate for the New

Orleans metro area rose sharply in

September 2005 to 17.7 percent. It

began falling in December and in

June 2006 was at 7.2 percent,

slightly higher than the rate a year

earlier.

• The unemployment rate for the

Gulfport-Biloxi metro area rose

sharply to 22.0 percent in September 2005, but has fallen since.

However, at 12.5 percent in June

2006, the Gulfport unemployment

rate remained substantially higher

than the rate a year earlier.

NOTE: Data are not seasonally adjusted.

SOURCE: Bureau of Labor Statistics, Local Area Unemployment Statistics.

Percent Percent

2004 2005 2006

Gulfport–

Biloxi

New Orleans

August December April August December April

0

5

10

15

20

25

0

5

10

15

20

25
The Labor Market Impact

10 Monthly Labor Review August 2006

Unemployment rate

Labor force participation rate

12. Between October 2005 and June 2006, 15.4 percent of

Hurricane Katrina evacuees were unemployed

Percent Percent

African American

NOTE: Data are not seasonally adjusted.

SOURCE: Bureau of Labor Statistics, Current Population Survey.

Unemployment rate

Labor force participation rate

• Information gathered from October

2005 to June 2006 showed that

about 1.1 million persons age 16

and older had evacuated from their

August residence, even temporarily,

because of Hurricane Katrina. The

unemployment rate for these evacuees averaged 15.4 percent over the

time period. More than half of the

evacuees (58.7 percent) were in the

labor force—either working or

looking for work.

• Black evacuees were nearly 5 times

more likely to be unemployed than

their white counterparts. Their labor force participation rates were

lower than those for whites.

• These national data on Katrina

evacuees do not account for all persons who evacuated; those living

outside of the scope of the survey—

such as persons living in hotels or

shelters—are not included.

Total Men Women White Black or

0

10

20

30

40

50

60

70

80

0

10

20

30

40

50

60

70

80

0

10

20

30

40

50

60

70

80

0

10

20

30

40

50

60

70

80

• About 6 in 10 persons age 16 years

and older who had evacuated because of Hurricane Katrina were

again living in their August 2005

residences when surveyed in June

2006; the rest were in other residential units covered in the survey.

• The June 2006 unemployment rate

for persons identified as evacuees

was 13.4 percent. The rate for evacuees who were again living in their

August (pre-Katrina) homes (5.9

percent) was much lower than for

those who were not (25.9 percent).

• The labor force participation rate for

evacuees who were again living in

their August homes (64.5 percent)

was about the same as the rate for

those who were not (61.8 percent).

However, evacuees living in their

pre-Katrina residences were more

likely to be employed (60.6 percent) than those not living in their

prehurricane homes (45.7 percent).

13. Evacuees again living in their pre-Katrina homes in June 2006

had a lower unemployment rate than those who were not

Percent Percent

Total evacuees June 2006

residence same

as August 2005

June 2006

residence different

than August 2005

NOTE: Data are not seasonally adjusted.

SOURCE: Bureau of Labor Statistics, Current Population Survey.