22 Monthly Labor Review August 2006

Industry Employment and Wages Industry Employment and Wages

Rapid development of alternative methods in two BLS programs resulted

in a clearer view of the economic impact of this storm than would have

been possible otherwise; the number of jobs in many affected areas and

industries is still down

Hurricane Katrina’s effects on

industry employment and wages

Molly Garber, Linda

Unger, James White,

and

Linda Wohlford

Molly Garber and James

White are economists in

the Division of Current

Employment Statistics;

Linda Unger is a

statistician, and Linda

Wohlford is an economist

for the Quarterly Census

of Employment and

Wages program, in the

Division of Administrative

Statistics and Labor

Turnover. All are in the

Office of Employment

and Unemployment

Statistics at BLS.

T he Bureau of Labor Statistics (BLS) has

two programs that measure employment

and wages by industry: The Current

Employment Statistics (CES) program and the

Quarterly Census of Employment and Wages

(QCEW) program. Both operate as Federal-State

cooperative programs in which BLS partners

with workforce agencies in each State.

The CES program surveys approximately

400,000 business establishments nationwide

and publishes estimates of employment, hours,

and earnings for the Nation, States, and

metropolitan areas. Estimates are released 1

month after the reference month; for example,

March estimates are published in April.

The QCEW provides a virtual census (97

percent) of monthly employment and quarterly

total wages, derived from Unemployment

Insurance tax records that almost all employers

are required to file quarterly. QCEW series for

the Nation, States, metropolitan areas, and

counties are published 7 months after the end

of the reference quarter. For example, first

quarter (January through March) employment

and wage counts are published in October.

Thus, the CES estimates are timelier, but the

QCEW series are more comprehensive, publishing far more industry and geographic detail. The

CES employment estimates are benchmarked

annually to the QCEW employment counts. The

benchmarking process is intended to correct

for sampling error and nonsampling error in the

CES estimates.

Both the CES and the QCEW programs faced

major operational and analytical challenges

collecting data following Hurricane Katrina. At

the same time, there was great demand for these

data as policymakers tried to assess the

immediate and long-term effects of the storm.

This article describes the CES and QCEW

responses to the difficulties posed by the

hurricane and its aftermath and presents some

of the employment and wage trends measured

by the programs both before and after the

storm.

Scope of damage

Hurricane Katrina made landfall on August 29,

2005, near Buras, Louisiana. Although it had

weakened to a strong Category 3 hurricane by

then, with sustained winds of 115 to 130 miles

per hour, the massive cyclone generated a storm

surge as high as 27 feet along the gulf coast

from New Orleans to Mobile, Alabama.

Significant failures in the levees of New Orleans

caused flooding in approximately 80 percent of

the city.

The storm unleashed widespread devastation across the region. Katrina affected 138

counties and parishes covering 93,000 square

miles—roughly the same land area as Great

Britain. It became the costliest hurricane on record, with an estimated $96 billion in damage.1

Some 300,000 homes were either destroyed or

rendered uninhabitable, displacing over 770,000
Monthly Labor Review August 2006 23

Table 1. Employment and wages in heavily affected areas of Louisiana and Mississippi, by State and area, annual

 averages 2004

Annual average Total annual wages,

employment, 2004 2004

Louisiana ............................................................. 1,865,164 $59,460,916,210

Affected parishes, by MSA .................................................................. 595,156 20,525,241,005

New Orleans-Metairie-Kenner MSA: ...............................

Jefferson Parish ......................................................... 213,301 6,942,626,388

Orleans Parish ........................................................... 247,260 9,118,298,381

Plaquemines Parish .................................................... 15,260 622,076,257

St. Bernard Parish ...................................................... 17,386 499,183,111

St. Charles Parish ...................................................... 22,643 1,014,399,343

St. John the Baptist Parish ........................................ 12,698 426,249,127

St. Tammany Parish .................................................... 66,608 1,902,408,398

Mississippi .......................................................... 1,105,915 31,557,062,544

Affected counties, by MSA: .................................................................. 153,907 4,640,440,535

Gulfport-Biloxi MSA ...............................................................................

Hancock County ......................................................... 13,470 476,140,734

Harrison County .......................................................... 89,631 2,512,013,761

Stone County .............................................................. 3,811 97,007,856

Pascagoula MSA .....................................................................................

Jackson County ......................................................... 46,995 1,555,278,184

..........................................................................................

Combined affected area, Louisiana and Mississippi ...... 749,063 25,165,681,540

NOTE: MSA=metropolitan statistical area

 State/area

people. This is over three times the number of homes lost in 2004

to Hurricanes Charley, Frances, Ivan, and Jeanne combined.

The economic ramifications of the hurricane are immense for

the gulf coast region. In addition, storm damage produced shortterm reverberations across the country in the form of higher

gasoline prices, crippled communications, and displaced

individuals crossing State lines seeking shelter and jobs.

Hurricanes strike the United States every year, and the

effect of an “average” hurricane on a local economy is fairly

predictable: after some temporary disruption caused by

evacuation, property damage, and power outages,

employment recovers and may even surge for a short time in

industries such as construction as residents return to their

homes and businesses and repair the storm damage.

Katrina, however, was clearly no average hurricane. The

massive scale of destruction to property, infrastructure,

communications, and the environment, as well as the scale of

human displacement, challenged BLS conventions for

measuring the impact of a natural disaster on a local economy.

Identifying affected areas, establishments

Immediately following the hurricane, BLS assembled data from

the CES survey and the QCEW as well as from other BLS

programs into a pre-hurricane profile of the affected areas in

Alabama, Louisiana, and Mississippi. BLS posted the

information on its Web site. Many key elements of the prehurricane profile of the area are included below.

Defining heavily affected areas. Although many areas were

affected to varying degrees by Katrina, this article focuses

on gulf coast counties and associated metropolitan areas in

zones designated by Federal Emergency Management

Agency (FEMA) as flooded or having extensive or

catastrophic damage, herein referred to as “heavily affected

areas.” These included portions of several Louisiana parishes

in and around New Orleans and portions of several

Mississippi counties in and around Gulfport and Biloxi.

There are 11 such areas. (See table 1.) Seven are in

Louisiana and make up the New Orleans-Metairie-Kenner

metropolitan area. In Mississippi, there are four counties

designated as heavily affected, three of which are in the

Gulfport-Biloxi metropolitan area; the fourth is located in the

Pascagoula metropolitan area.

For calendar year 2004, these 11 areas employed a

combined 749,063 workers. In Louisiana, the number of jobs

reported in 2004 in the seven Katrina-affected parishes

represented nearly one-third of the State’s workforce.2

 In

contrast, the four affected counties in Mississippi accounted

for 14 percent of that State’s employment in 2004.

Tourism is a vital part of the local economies in these gulf

coast communities. Before the storm, 43 percent of private

industry jobs in these 11 areas were found in two broad

industry groupings: Trade, transportation, and utilities (24

percent) and leisure and hospitality (19 percent). This is a

higher concentration of employment than is found nationwide

in these industries (35 percent). These industries accounted

for 263,400 jobs and 35 percent of the business

establishments in the area.

Among the 11 areas, Harrison County, which encompasses
24 Monthly Labor Review August 2006

Industry Employment and Wages

Gulfport and Biloxi, had the greatest share of its workers

employed in these 2 industries (60 percent). Breaking it out

further, 37 percent of private industry workers (26,600) in

Harrison County were employed in the leisure and hospitality

industry. Half of this employment was concentrated in the

accommodation industry, with the largest number of jobs

(12,300) located in casino hotels.

Using geocoding to locate establishments. BLS began

geocoding QCEW establishment-level files in 2003. The basic

procedure involves the assignment of longitude and latitude

codes, based on physical addresses. This geocoding allowed

BLS to create maps and data tabulations that more precisely

pinpoint establishments, employment, and wages in Katrinaaffected areas.

Detailed geographic damage assessments were developed

by FEMA using aerial photography. FEMA identified six

damage categories: Flooded, saturated, limited damage,

moderate damage, extensive damage, and catastrophic

damage. For a map of these areas, see the FEMA Web site:

www.gismaps.fema.gov/2005graphics/storms/Katrina/

rs_Damage_overview_090605_1800.pdf.

Working with BLS, the California Employment

Development Department matched damage areas defined

through the aerial photography (as of September 6, 2005) and

FEMA maps to geocoded QCEW establishment data to

estimate the expected level of damage for each. Files

containing this detailed information were provided to BLS

and used by both the CES and the QCEW programs in their

response to the hurricane.

Adapting the CES survey following Katrina

Katrina’s unique combination of intense destruction and

widespread geographic impact affected nearly every aspect

of CES program operation. The QCEW-based pre-hurricane

profiling described above provided a basis for the CES

program to plan its post-hurricane response. The program

faced three immediate concerns:

• Would BLS be able to contact sampled businesses

in the heavily affected areas and collect employment

and earnings information?

• Would the CES standard estimation procedures

produce useful employment estimates in this

extraordinary situation?

• Would BLS be able to approximate the impact of

 Katrina on employment trends in the first months

following the hurricane?

Data collection. Data collection for the CES survey began

roughly 2 weeks after Katrina hit the gulf coast, while the

region was still reeling from the storm. Large portions of the

area remained under evacuation order; many also still had

phone and power outages. Despite these circumstances, BLS

and its State partners attempted to collect September reports

from all the businesses in the CES sample. Response rates

were lower than normal in Louisiana and Mississippi,

particularly in the heavily affected areas in and around New

Orleans and the Mississippi gulf coast, where many

businesses were temporarily or permanently closed.

Although the gulf coast of Alabama was also hit by the storm,

survey response rates were normal in that area. For preliminary September estimates, BLS received responses from

57 percent of the sample in Louisiana (50 percent in the

heavily affected parishes), and 62 percent in Mississippi (53

percent in the heavily affected counties). This compares with

responses from 67 percent of the sample received across all

States. The 67-percent national response rate for September

was in a normal range for the payroll survey for the preliminary

estimates.

More than one-third of the sample reports covering

hurricane-affected areas in these States actually originated

from outside the local areas. Large national and regional

companies with many locations across the country often

report data for all of their locations from a single, central site.

BLS uses several data collection techniques in the payroll

survey, including several forms of respondent-initiated selfresponse, mostly touchtone data entry, fax, and mail. BLS

attempted telephone followup with all respondents who did

not initiate a self-response during the September collection

cycle; for subsequent months, the Bureau contacted as many

such respondents as resources permitted. This effort helped

increase response rates in the Katrina-affected areas. Since

the storm, response rates have rebounded in these areas;

however, these rates are still substantially below the response

rates in unaffected areas of Mississippi and Louisiana.

Estimation methods. BLS staff reviewed their estimation

methods, including their underlying assumptions, and

concluded that several facets of the estimation procedures

should be modified to reflect the effects of Hurricane Katrina

on employment estimates for the months immediately

following the storm. Because of the high visibility of the CES

employment estimates and the sensitivity of U.S. financial

markets to them, the Bureau also determined that changes in

estimation methods needed to be announced ahead of the

October 7 release of national CES estimates. BLS decided on

its course of action and announced its plans in a posting to

its public Web site nearly 2 weeks before the national data

release.

BLS made two changes to compensate for higher-thanusual survey nonresponse. For sample establishments that

BLS was unable to contact in the most heavily affected areas,
Monthly Labor Review August 2006 25

BLS assumed the business was not operating and therefore

had an employment level of zero—except when research

indicated that the business was paying its employees for the

pay period including the 12th of the month. (Employees on

paid leave are counted as employed in the survey.) September

employment was set to zero for 82 sample units that were in

the heavily affected areas and that normally respond to BLS

for its preliminary estimates. If CES had followed its usual

imputation procedure for nonrespondents, all nonresponding

units in these areas would have been assigned the over-themonth trend of all responding sample units in that industry

with similar characteristics. This assumption, given the

circumstances in the heavily affected areas, was unlikely to

be accurate, and, therefore, following standard imputation

procedure carried a strong risk of understating employment

loss. This was particularly true for national estimates, for

which “similar” units are defined almost exclusively by

industry, not segmented by geography.

In addition to imputing zero employment for nonrespondents in the heavily affected areas, BLS also decided

to reweight the sample. Because the September survey

response rates in Mississippi and Louisiana disaster areas

were substantially lower than usual, the sample units

reporting data were reweighted to reflect sample units that

did not respond. This procedure resulted in a more accurate

representation of the disaster areas in the CES estimates; if

there were large differentials in response rates and sample

units were not reweighted, disaster areas would be underrepresented in the estimates. Reweighting adjustments were

made for 1,260 sample units, whose weights were increased

by about 30 percent on average.

Finally, BLS made temporary changes to the CES procedure

for estimating the effect of business births (openings) and

deaths (closures) on employment. First, under standard CES

estimation procedures, sample units reporting zero

employment are excluded from the calculation of estimates.

This is done to offset new business employment, which the

survey is unable to capture in real time. This technique is

used because research has shown that, in most months, the

employment gain from business births and the employment

loss from business deaths largely offset one another.

However, for the disaster areas, this assumption of reported

business deaths in September accurately imputing for

unsampled births was unlikely to hold. Therefore, any sample

units from the heavily affected areas in Louisiana and

Mississippi reporting zero employment were used in the

calculation of September estimates. There were 111 sample

units reporting zero employment for September 2005 that were

used in the CES estimates.

Second, under standard procedures, the CES program adds

a net birth-death employment adjustment, derived from a time

series model, to account for the residual net of birth-death

employment not captured by the technique described above.

This model-based component was omitted from the

September and October employment estimates for New

Orleans, Gulfport-Biloxi, and Pascagoula. The change

affected the employment estimates slightly for these

metropolitan areas and minimally for the Louisiana and

Mississippi statewide estimates. This modification did not

affect national estimates because the residual net birth-death

adjustment originating from these areas is negligible at the

national level.

These modified estimation procedures were used for

September and October estimates. Beginning with the

November reference month, the CES returned to its standard

estimation procedures because the number of sample units

reporting zero employment had dropped, and the differential

between overall national response rates and rates for the

heavily affected areas had shrunk somewhat.

CES national estimates

Until Hurricane Katrina hit, BLS had never tried to quantify

the effect of this type of shock on national employment

estimates. However, given the magnitude of the event, and

because the CES State and metropolitan area estimates are

not published until 2 weeks following national estimates, BLS

believed it was important to attempt to isolate a likely Katrina

effect on the national estimates when those estimates for

September 2005 were first published in October. Because of

improved analytical capabilities that now exist in BLS, it was

also feasible. The deputy commissioner’s “Statement on the

Employment Situation” from October 7, 2005, roughly

quantified Katrina’s impact on national employment:

 Turning to the data from our payroll survey, one

way to roughly gauge the impact of the hurricane

on job growth in September is to compare the overthe-month employment change with the monthly

average for the prior year. The change reported for

September—a loss of 35,000 jobs—is about 230,000

less than the average monthly gain over the previous

12 months. Using this simple approach to gauge the

hurricane impact assumes that, in the absence of

the storm, employment growth would have followed

its recent trend. To test that assumption, we

constructed a rough estimate of the change in

payroll employment from August to September

excluding all of the sample units in the disaster areas.

This exercise showed that total nonfarm employment

would have increased by an amount in line with the

prior year’s average. We will know more about the

hurricane’s impact when local employment estimates

become available later this month.
26 Monthly Labor Review August 2006

Industry Employment and Wages

CES State and metropolitan area estimates

September 2005 CES State employment estimates for Louisiana

show a decrease in total employment for the State of 216,000

(as revised).3 While employment losses were widespread

across all private industries, the hardest hit supersectors were

leisure and hospitality; education and health services; and

trade, transportation, and utilities. Substantial losses in eating

and drinking places, hospitals, and general merchandise

stores were at the heart of these precipitous declines.

The overwhelming majority of employment losses in

Louisiana were concentrated in the New Orleans-MetairieKenner metropolitan area. CES calculated that nonfarm payroll

employment in New Orleans fell by 204,700 or 34 percent from

August to September 2005. Some 60 percent of the industries

in New Orleans-Metairie-Kenner had estimated over-themonth employment losses of one-third or greater (not

including industries that are aggregates of component

estimates, such as total nonfarm, total private, and the like).

The most affected supersectors in the metropolitan area mirrored

those affected statewide: Trade, transportation, and utilities;

leisure and hospitality; and education and health services.

Because Hurricane Katrina did not strike Mississippi’s

major population and industrial centers as it had Louisiana’s,

the storm’s impact on employment in Mississippi was less

severe. For September 2005, CES estimates show an employment decline of 16,700 or 1.2 percent in Mississippi (as

revised). Also, the employment losses in Mississippi, unlike

those in Louisiana, were largely in industries concentrated

on the gulf coast: Ship building; amusement, gambling, and

recreation; accommodation; and general merchandise stores.

Nearly two-thirds of the jobs lost in Gulfport-Biloxi belonged

to the leisure and hospitality and to the trade, transportation,

and utilities industries. More than half the jobs lost in

Pascagoula were in manufacturing.

In contrast, employment in Alabama posted an increase of

1,300 or 0.1 percent in September 2005. Accommodation and

food services, as well as retail trade, experienced small overthe-month losses. Although Mobile County qualified for

disaster assistance from FEMA, employment in the Mobile

metropolitan area remained relatively unscathed by Hurricane

Katrina. Mobile reported an employment increase of 800 or

0.5 percent. Small losses in industries such as manufacturing

and trade, transportation, and utilities were offset by gains in

local government and financial activities.

Employment recovery measured by CES

Most areas have posted increases in total nonfarm employment since their post-Katrina lows. In general,

employment in construction has increased in the aftermath

of the hurricane as heavily affected areas have begun

rebuilding; however, this growth has not returned

construction employment to pre-storm levels in all areas. In

both Mississippi and Louisiana, the trade, transportation,

and utilities supersector has experienced the largest share of

employment growth since the hurricane. Gains in

professional and business services have also accounted for

large portions of employment growth in both States since

September 2005. In Louisiana, employment in the leisure and

hospitality supersector has remained depressed but stable,

while in Mississippi employment in this supersector

continues to decline. Pascagoula and New Orleans have both

increased total nonfarm employment since the immediate

aftermath of the storm, while Gulfport-Biloxi has continued to

shed jobs. Construction employment in New Orleans has

rebounded in the months following Katrina, although the

over-the-year change as of May 2006 continued to be

negative. Employment in the trade, transportation, and

utilities supersector has recovered to different degrees in

each of the three heavily affected areas: in New Orleans, trade,

transportation, and utilities employment has rebounded

slightly since the initial decrease after the storm, while in

Pascagoula, employment in this supersector has surpassed

the pre-Katrina levels, and in Gulfport-Biloxi, it has remained

depressed. Tables 2 through 6 contain over-the-year changes

in not seasonally adjusted employment data for September

2004 to September 2005 and May 2005 to May 2006 for

Mississippi, Louisiana, Gulfport-Biloxi, Pascagoula, and New

Orleans-Metairie-Kenner; data for May 2006 are preliminary.4

The decrease in employment in Mississippi from

September 2004 to September 2005 was 14,200 jobs or 1.3

percent of payroll employment. (See table 2.) By May 2006,

the over-the-year decrease in employment had shrunk to 1,000

jobs or 0.1 percent of payroll employment. From September

2004 to September 2005 in Mississippi, only the construction

and the professional and business services supersectors

posted increases in payroll employment. Joining them in

posting over-the-year employment increases in May 2006

were the following: Natural resources and mining; trade,

transportation, and utilities; education and health services;

and government. From September 2004 to September 2005,

Mississippi payroll employment in trade, transportation, and

utilities decreased 3,200 jobs or 1.5 percent; by May 2006,

this supersector posted an over-the-year increase of 5,400

jobs, with payroll employment 2.4 percent higher than prestorm levels. The education and health services supersector

has also posted job gains since Hurricane Katrina, adding

2,300 jobs that expanded its workforce 1.9 percent from May

2005 to May 2006. The leisure and hospitality supersector in

Mississippi continued to shed a substantial number of jobs

after the storm’s initial impact. The over-the-year loss in this

supersector was 6,100 jobs or 4.8 percent of employment in

September 2005; by May 2006, the 8.8-percent drop in total
Monthly Labor Review August 2006 27

Table 2. Employment and over-the-year changes in employment in Mississippi, by industry, not seasonally

 adjusted, September 2004–May 2006

May 2005 May 20061 Number Percent Number Percent

Total nonfarm ............................... 1,132.1 1,117.9 1,139.3 1,138.3 –14.2 –1.3 –1.0 –0.1

Natural resources and mining ................... 8.8 8.7 8.8 9.1 –.1 –1.1 .3 3.4

Construction .............................................. 50.6 53.7 51.4 56.0 3.1 6.1 4.6 8.9

Manufacturing ............................................ 179.5 172.6 180.0 175.8 –6.9 –3.8 –4.2 –2.3

Trade, transportation, and utilities ............ 220.1 216.9 221.0 226.4 –3.2 –1.5 5.4 2.4

Information ................................................ 14.4 14.0 14.4 14.0 –.4 –2.8 –.4 –2.8

Financial activities ..................................... 46.1 45.9 46.4 45.7 –.2 –.4 –.7 –1.5

Professional and business services ........ 83.3 87.0 85.8 88.6 3.7 4.4 2.8 3.3

Education and health services ................. 120.8 120.7 121.4 123.7 –.1 –.1 2.3 1.9

Leisure and hospitality .............................. 126.6 120.5 128.8 117.5 –6.1 –4.8 –11.3 –8.8

Other services .......................................... 37.4 36.4 37.8 37.4 –1.0 –2.7 –.4 –1.1

Government ............................................... 244.5 241.5 243.5 244.1 –3.0 –1.2 .6 .2

1 Preliminary data

[Numbers in thousands]

Industry

employment amounted to 11,300 jobs. Employment in

Mississippi’s remaining supersectors did not decline substantially as a result of Hurricane Katrina.

Total nonfarm employment in Louisiana decreased by

184,600 jobs or 9.6 percent from September 2004 to September

2005 because of Hurricane Katrina. (See table 3.) In May 2006,

the year-to-year loss was slightly less: 177,600 jobs or 9.1

percent. Natural resources and mining was the only

supersector to produce growth in employment over the year

in either September 2005 or May 2006; all other supersectors

posted at least modest over-the-year losses for both months.

The education and health services and the leisure and

hospitality supersectors posted the largest year-to-year job

losses in September 2005: 44,700 (17.7 percent) and 39,600

(19.3 percent), respectively. Employment in these supersectors remained depressed in May 2006 with over-the-year

decreases of 44,900 jobs (17.4 percent) and 40,600 jobs (18.8

percent), respectively. Employment in the information and

government supersectors has continued to decline since the

storm. The over-the-year decline in September 2005 in these

supersectors was 600 jobs (1.9 percent) and 5,200 jobs (1.4

percent) respectively. By May 2006 the over-the-year

declines in employment had increased to 1,800 (6.1 percent)

jobs in information and 10,900 jobs (2.9 percent) in

government. The construction; trade, transportation, and

utilities; and financial activities super-sectors substantially

decreased their initial over-the-year losses by May 2006.

Total nonfarm payroll employment in Gulfport-Biloxi has

continued to decline since Hurricane Katrina. (See table 4.)

The CES sample supports publication of only a limited number

of supersectors in Gulfport-Biloxi. Of these published

supersectors, only the combined natural resources mining

and construction supersector has posted employment

increases since the storm. In May 2006 employment in

manufacturing had largely rebounded from its immediate

post-storm low, but was still slightly below its May 2005 level.

Employment in the trade, transportation, and utilities and the

government supersectors has remained depressed since the

hurricane, while employment in the leisure and hospitality

supersector has continued to decline even after the initial job

loss in September 2005.

Total nonfarm payroll employment in Pascagoula has

recovered from its initial post-Katrina low; however, the

employment level in May 2006 was still slightly below the

previous year’s level. (See table 5.) Employment in natural

resources, mining, and construction actually improved

slightly in September 2005 and continued to be higher than

the prior year in May 2006. The manufacturing supersector

has replaced about half the jobs lost after the storm’s initial

impact, while employment in government has not recovered.

After a loss in September 2005, employment in trade,

transportation, and utilities rebounded, posting an over-theyear gain in May 2006.

New Orleans-Metairie-Kenner was the hardest hit MSA in

terms of employment loss following Hurricane Katrina. By

May 2006, total nonfarm payroll employment continued to be

nearly one-third lower than it had been before the storm. (See

table 6.) All supersectors in this MSA posted large over-theyear decreases in employment in September 2005, and

employment in all supersectors continued to be below prestorm levels in May 2006. A few industries—leisure and

hospitality, and construction, in particular—have added jobs

after the storm’s initial impact, while employment in information and government has continued to decline.

September 2004–

September 2005

May 2005–

May 2006

 Employment level

September

 2004

September

 2005

Change in employment
28 Monthly Labor Review August 2006

Industry Employment and Wages

Table 3. Employment and over-the-year changes in employment in Louisiana, by industry, not seasonally adjusted,

 September 2004–May 2006

(Numbers in thousands)

May 2005 May 20061 Number Percent Number Percent

Total nonfarm ................. 1,913.3 1,728.7 1,952.4 1,774.8 –184.6 –9.6 –177.6 –9.1

Natural resources and mining ......... 43.9 46.5 45.8 47.7 2.6 5.9 1.9 4.1

Construction .................................... 114.1 95.5 121.6 107.7 –18.6 –16.3 –13.9 –11.4

Manufacturing ................................. 154.3 144.6 154.7 144.0 –9.7 –6.3 –10.7 –6.9

Trade, transportation, and utilities . 376.0 347.9 382.9 363.9 –28.1 –7.5 –19.0 –5.0

Information ...................................... 31.1 30.5 29.3 27.5 –.6 –1.9 –1.8 –6.1

Financial activities .......................... 100.1 92.2 99.0 94.5 –7.9 –7.9 –4.5 –4.5

Professional and business

services ....................................... 182.9 163.9 191.7 171.6 –19.0 –10.4 –20.1 –10.5

Education and health services ....... 252.7 208.0 257.4 212.5 –44.7 –17.7 –44.9 –17.4

Leisure and hospitality ................... 205.2 165.6 215.7 175.1 –39.6 –19.3 –40.6 –18.8

Other services ................................ 71.2 58.5 71.9 58.8 –12.7 –17.8 –13.1 –18.2

Government .................................... 383.0 377.8 382.4 371.5 –5.2 –1.4 –10.9 –2.9

1 Preliminary data

Industry Employment level

Industry

Employment level

Table 5. Employment and over-the-year changes in employment in Pascagoula MSA, by industry, not seasonally

 adjusted, September 2004–May 2006

[Numbers in thousands]

May 2005 May 20061 Number Percent Number Percent

Total nonfarm ........................ 54.1 49.6 56.0 55.8 –4.5 –8.3 –0.2 –0.4

Natural resources, mining,

and construction ................................ 2.1 2.9 2.5 2.9 .8 38.1 .4 16.0

Manufacturing ........................................ 16.3 12.8 16.4 14.7 –3.5 –21.5 –1.7 –10.4

Trade, transportation, and utilities ........ 8.2 7.5 8.5 9.1 –.7 –8.5 .6 7.1

Government ........................................... 11.1 10.8 11.2 10.9 –.3 –2.7 –.3 -2.7

1 Preliminary data NOTE: MSA=metropolitan statistical area

Table 4. Employment and over-the-year changes in employment in Gulfport-Biloxi MSA, by industry, not seasonally

 adjusted, September 2004–May 2006

[Numbers in thousands]

May 2005 May 20061 Number Percent Number Percent

Total nonfarm ...................... 114.6 99.4 116.3 94.3 –15.2 –13.3 –22.0 –18.9

Natural resources, mining,

and construction ........................... 5.2 5.7 5.7 6.1 .5 9.6 .4 7.0

Manufacturing ................................... 5.9 4.7 6.0 5.9 –1.2 –20.3 –.1 –1.7

Trade, transportation,

and utilities .................................... 20.5 16.2 20.8 16.4 –4.3 -21 –4.4 –21.2

Leisure and hospitality ..................... 29.8 24.5 30.1 15.6 –5.3 –17.8 –14.5 –48.2

Government ...................................... 24.7 23.6 24.8 23.7 –1.1 –4.5 –1.1 –4.4

1 Preliminary data

Change in employment

 September 2004–

September 2005

 September 2004–

September 2005 May 2005–May 2006

 September 2004–

September 2005

 September

2004

September

2005

September

2004

September

2005

September

2005

September

2004

Change in employment

Change in employment

May 2005–May 2006

NOTE: MSA=metropolitan statistical area

 Employment level

May 2005–May 2006 Industry
Monthly Labor Review August 2006 29

Table 6. Employment and over-the-year changes in employment in New Orleans-Metairie-Kenner MSA, by industry,

 not seasonally adjusted, September 2004–May 2006

[Numbers in thousands]

May 2005 May 20061 Number Percent Number Percent

Total nonfarm ........................ 610.1 405.5 614.7 429.7 –204.6 –33.5 –185.0 –30.1

Natural resources and mining ............. 38.1 21.6 38.4 29.8 –16.5 –43.3 –8.6 –22.4

Construction ........................................ 29.8 12.7 30.0 19.5 –17.1 –57.4 –10.5 –35.0

Manufacturing ..................................... 38.8 27.2 38.4 28.6 –11.6 –29.9 –9.8 –25.5

Trade, transportation, and utilities ..... 121.1 83.0 123.5 90.2 –38.1 –31.5 –33.3 –27.0

Information .......................................... 10.1 8.3 9.6 7.3 –1.8 –17.8 –2.3 –24.0

Financial activities .............................. 34.3 25.2 32.9 24.5 –9.1 –26.2 –8.4 –25.5

Professional and business services .. 71.0 43.7 75.6 45.3 –27.3 –38.5 –30.3 –40.1

Education and health services ........... 84.3 41.5 81.7 45.7 –42.8 –50.8 –36.0 –44.1

Leisure and hospitality ....................... 84.2 46.5 87.4 57.8 –37.7 -44.8 –29.6 –33.9

Other services .................................... 22.4 8.5 22.6 9.8 –13.9 –62.1 –12.8 –56.6

Government ........................................ 105.8 100.0 104.6 90.7 –5.8 –5.5 –13.9 –13.3

1 Preliminary data NOTE: MSA=metropolitan statistical area

Employment level

Adapting QCEW following Katrina

Unlike the CES employment data, which come from a voluntary

survey of employers, the QCEW employment and wage data

come from mandatory Unemployment Insurance tax records.

However, many of the same collection and methodology

issues that CES experienced also affected QCEW.

The percentage of missing reports—that is, nonrespondents—in the QCEW in the heavily affected areas of

Louisiana and Mississippi was greater than normal, especially

in the New Orleans area. There, 27.4 percent of units had

imputed employment for the third quarter of 2005, compared

with 12.9 percent a year earlier. When a report is not received,

QCEW allows for employment in that firm to be imputed for up

to two consecutive quarters, unless the firm is confirmed to

be out of business. Table 7 shows the imputation rates for

the two quarters following Hurricane Katrina as compared

with imputation rates a year earlier.

Nonresponse followup. Most employers in the heavily

affected areas continued to report data to the Unemployment

Insurance program for the third quarter of 2005. Employers

were required to report employment and wages for July and

August and explain any changes in September according to

the normal time schedule.

The QCEW data collection and processing schedule

includes time and resources to collect as much detailed data

as possible before relying on imputations for nonrespondents. State and BLS staff made numerous attempts to

contact virtually all nonrespondents. Doing so was difficult,

particularly because mail and telephone service were curtailed

or limited in many areas for several weeks, and some employers did not receive quarterly collection forms.

Traditional and nontraditional information sources were

used to follow up with nonrespondents to determine whether

they were still open for business and employing workers.

Traditional sources included employers, whom staff

contacted and visited personally. Nontraditional sources

included the following:

• The United States Postal Service, to identify fivedigit zip codes with no or limited mail access in

which collection forms were not mailed in a timely

manner or could not be mailed at all

• Telephone companies, to identify areas with limited,

sporadic, or no service

• State and city Web sites, such as the site for the city

of New Orleans, which posted reports on business,

school, and road openings and closings and on

disruptions to services such as sewer, gas, electric,

trash, and fire prevention. This information not only

identified when schools, hospitals, and other critical

businesses were reopened, but also identified areas

where lack of access to services made it unlikely

that normal businesses could function.

• News media

• Professional and business organizations

• Unions

• Universities and other organizations that did special

surveys

• Local field offices of State agencies

The State partners in Louisiana and Mississippi made

hundreds of phone calls and some personal visits to obtain

Change in employment

 September 2004–

September 2005 Industry May 2005–May 2006

September

2004

September

2005
30 Monthly Labor Review August 2006

Industry Employment and Wages

Table 7. Response and imputation rates for QCEW business establishments in Louisiana and Mississippi, third and fourth

 quarters 2004 and 2005

[Rates in percent]

Third quarter Fourth quarter Third quarter Fourth quarter

2004 2004 2005 2005

 Louisiana

Responded ...................................... 88.9 90.7 83.5 84.2

Imputed ........................................... 11.1 9.3 16.5 15.8

Katrina-affected areas:

Responded ...................................... 87.1 88.8 72.6 74.2

Imputed ........................................... 12.9 11.2 27.4 25.8

Standard methods ........................ 12.9 11.2 15.1 15.6

Hand-adjusted ............................... 0 .1 .7 1.9

Special system-adjusted .............. 0 0 11.6 8.3

 Mississippi

Responded ...................................... 93.3 93.4 93.7 92.2

Imputed ........................................... 6.7 6.6 6.3 7.8

Katrina-affected areas:

Responded ...................................... 92.9 93.2 90.8 89.8

Imputed ........................................... 7.1 6.8 9.2 10.3

Standard methods ........................ 6.8 6.3 4.9 3.1

Hand-adjusted ............................... .3 .5 .9 1.1

Special system-adjusted .............. 0 0 3.4 6.1

detailed information from employers who did not initially

respond or gave unexpected responses. This information

helped determine whether the business was operating,

whether it was operating at full strength or partial capacity or

rebuilding, and whether it had relocated in the State.

All detailed data on monthly employment or quarterly

wages that were obtained directly from the employer were

treated as reported data. When other useful information was

available to modify a computer-generated imputation or to

replace missing or imputed data, it was collected, and changes

based on it were identified as hand-entered imputations. This

enabled BLS to distinguish reported data, standard and

special system-imputed data, and manually modified data

based on reliable information.

Standard imputation methodology. For most businesses

that do not report employment or total wages, missing data

are imputed by assigning over-the-month and over-thequarter percentage changes for the current time period

identical to the changes for the same months 1 year ago.

For example, if Company X’s September 2005 employment

was not reported, it was derived by obtaining the ratio of employment for September 2004 (if the business were operating

a year ago) to employment for August 2004 and multiplying

that ratio by the August 2005 employment level. Using a

numerical example, if September 2004 = 110, August 2004 =

100, and August 2005 = 130, September 2005 would be

imputed as (110 ÷ 100) × 130 = 1.1 × 130 = 143.

If the business was not in business a year ago or there is

insufficient data to use the standard methodology, other

methods are used.

In cases of multiestablishment accounts, the aggregate totals

are prorated, or distributed, among the individual worksites

based on the prior quarter’s third-month distribution.

The standard methodology, which relies heavily on

historical trends, would have been inappropriate in the postKatrina environment, likely overstating both employment and

total wages. Without confirmation of whether a business was

actually operating in September 2005, wages would have

been imputed at levels associated with 3 months of employment, including wages assumed to have been earned in

September. Employment growth or decline for July through

September would be imputed so as to be comparable with

second quarter employment adjusted to reflect third-quarter

2004 employment trends.

BLS and its partners in the Mississippi and Louisiana State

Workforce Agencies therefore agreed on modified imputation

procedures. Imputed employment and wage totals generated

from these procedures were edited and screened by QCEW

systems using standardized quality control procedures, and

large-firm imputations were manually reviewed by State and BLS

analysts. Where possible, employers were contacted to verify

levels or to obtain improved information.

For the most affected areas in Mississippi and Louisiana,

the following adjustments were made to the methodology:

• Wages were adjusted to only two-thirds of what

would normally have been imputed for the period.

• July and August were imputed using standard

methodology; September employment was set to

zero.

• For multiestablishment accounts, September

Area
Monthly Labor Review August 2006 31

employment for the worksites located in the heavily

affected areas was set to zero, and wages were reduced to two-thirds their normal levels; the

remaining employment and wages were distributed

to the remaining worksites.

Fourth-quarter 2005 adjustments. While fourth-quarter

collection reports were due to the States by the end of January

2006, the actual data were not due to BLS until the end of April

2006. From February to early April, reported data were analyzed

periodically to determine if patterns in reported data differed by

location and might warrant additional changes to nonstandard

imputation procedures. Preliminary data from the 74-percent

response in Louisiana and almost 90-percent response in

Mississippi were examined in each of the major damage areas

to determine if areas had response rates below normal or

demonstrated unusual employment change patterns. Using

information on the extent of response, the types of response

(for example, steady employment reported, zeros reported, or

very volatile employment reported), the direction of the

response (continued to be zero, employment decreased,

employment increased), and previously provided employer

plans and information, BLS made some additional modifications

to the imputation procedures.

Employment totals for all 3 months (October, November,

and December) for nonrespondents in Orleans, St. Bernard,

and Plaquemines parishes—areas that continue to experience

response problems—were set to zero. Total quarterly wages

were also set to zero.

Records with missing employment in Jefferson and St.

Tammany, Louisiana, and in all three affected counties in

Mississippi— areas that are beginning to show more normal

response—were imputed by using the trends of responding

units in their industry that were of roughly the same size. For

example, if all responding units in Industry X of size class Y

reported total employment of 3,000 in September 2005 and

3,200 in December 2005, and a nonrespondent in Industry X

of size class Y had September employment of 100, the October

value for the nonrespondent would be imputed as (3,200 ÷

3,000) × 100 = 1.067 × 100 = 107 employees.

The main reason for choosing this imputation method was

to eliminate the potential bias from using the standard yearago-trend method, which was unlikely to be accurate for this

unusual event.

For other areas in Louisiana and Mississippi, employment

and wages for nonrespondents were imputed using standard

methods.

All imputations were reviewed through computergenerated editing and screening, and those with an

employment level of more than 25 were also manually

reviewed. When available, additional employer information

was used to update or adjust these imputations.

QCEW measures of economic impact

The first published QCEW data to reflect post-hurricane

conditions was for the third quarter of 2005 (July through

September) and was published by BLS in April 2006. It

reflected less employment loss than that measured by the

CES sample-based estimates.

Mobile. Compared with that in neighboring counties,

damage to Mobile was moderate, having little overall impact

on the labor market. Only 76 establishments in Mobile were

located in the FEMA-designated damage zone. Before the

hurricane struck, Mobile was experiencing steady

employment growth. In August 2005, employment had grown

3.1 percent over the year. Hurricane Katrina did not interrupt

this employment growth. In fact, Mobile experienced a slightly

higher over-the-year growth rate (3.5 percent) in September,

which exceeded the 2.0 percent national growth rate by 75

percent. Mobile experienced some storm-related job growth

in the fourth quarter. Employment growth occurred in the

insurance and specialty trade contractors industries. Twelvemonth changes in employment in Mobile, shown as

percentages, are shown below for the third and fourth

quarters of 2005:

Third quarter: Fourth quarter:

July ............... 2.4 October.............. 4.1

August .......... 3.1 November .......... 3.6

September .... 3.5 December ........... 3.4

Heavily affected areas. The macroeconomic effects of this

disaster were evident almost immediately in local job markets

in the third quarter of 2005. Substantial employment declines

were recorded in the combined affected area for the month of

September. The QCEW also registered a significant stormrelated impact on third-quarter wages: the average weekly

wages of workers climbed in the third quarter of 2005 in the

hardest hit areas, primarily due to the elimination of many

thousands of relatively low-paying jobs.

Overall, 158,346 jobs were eliminated in the combined

heavily affected area between August and September 2005.

Some of this loss, however, is the result of seasonal variation.

QCEW employment change is generally reported on an overthe-year basis to remove large seasonal movements. For

heavily affected areas, year-to-year job losses as of September

2005 totaled 151,195. The number of job losses would have

been greater, but some employers continued to pay their

employees in September despite the fact that the employees

could not work. Because these employees remained on the

payroll, they were included in the September employment

count. September job losses were distributed as follows:

Percent

 change

Percent

 change
32 Monthly Labor Review August 2006

Industry Employment and Wages

Number Percent

Louisiana parishes (7) ........ –134,718 –22.9

Mississippi counties (4) ..... –16,477 –10.7

Combined area (11) ............. –151,195 –20.3

In July and August, before the hurricane, the 11 areas

combined experienced modest over-the-year employment

growth, 0.4 percent and 0.6 percent, respectively. The rate

plummeted to –20.3 percent in September for the combined

area. The sharpest drop occurred in the combined Louisiana

parishes.

Ten of the 11 areas posted over-the-year employment

declines in September. St. Charles, a relatively small parish

west of New Orleans, was the only exception, adding 479

jobs (2.1 percent) during this period. (See map 1.)

Nearly 90 percent of the overall September employment

decline occurred in the Louisiana parishes—134,718 jobs; 5

of the 7 parishes experienced more than a 10-percent decrease

in employment over the year. All four of the Mississippi

counties registered job losses in September, and the

percentage decline over the year reached above 10 percent in

two of these counties. Overall, job losses in these affected

Mississippi counties totaled 16,477 over the year.

Orleans Parish suffered the largest over-the-year employment loss in September among the 11 affected areas.

Approximately 65,800 jobs disappeared almost immediately,

representing a 27-percent reduction in the number of payroll

jobs. The employment situation in Jefferson Parish was

similar: job losses reached 51,713 or 24.5 percent of total

employment during this period. More than 10,000 jobs were

eliminated in nearby Harrison County, which saw an 11.7-

percent reduction in its workforce, and in St. Tammany Parish

8,714 jobs were lost, leading to a 13.1-percent employment

decline in September.

From September 2004 to September 2005, St. Bernard Parish

lost the greatest share of its workforce, 38 percent, a decline of

6,614 jobs. Plaquemines, also a small parish, saw a 14.9-percent

reduction in its workforce, as 2,248 jobs disappeared. Among

Map 1. Changes in employment in heavily affected areas, September 2004–September 2005
Monthly Labor Review August 2006 33

the affected Mississippi counties, Hancock, 40 miles east of New

Orleans, had the largest percentage decline in employment, 13.6

percent, with an over-the-year loss of 1,814 jobs.

QCEW measures of industry impact

Employment losses in the affected areas occurred in every

major industry group in September, reflecting the widespread

destruction caused by the storm. Nearly half of the job loss

occurred in leisure and hospitality (37,461) and in trade,

transportation, and utilities (34,899). (See table 8.) These

industry supersectors are integral parts of tourism, which has

been a driving force in many of the local economies in this

region. Job losses in leisure and hospitality represent 25.6

percent of all the jobs in private industry that disappeared in

September, and these losses are concentrated in three areas:

Orleans Parish, Jefferson Parish, and Harrison County.

Leisure and hospitality employment fell 32.3 percent over

the year in September 2005. This loss was especially severe in

Orleans Parish, where, before the storm, the concentration of

workers in leisure and hospitality (22 percent in 2004) was

twice that for the Nation as a whole. The parish, which

encompasses the city of New Orleans, took the biggest hit in

this industry of all 11 heavily affected areas, losing 17,030

jobs, representing 39.7 percent of its workforce. Jefferson

Parish, adjacent to Orleans, experienced the loss of a

comparable share of its workforce, 37.7 percent, or 9,869 jobs.

In Harrison County, jobs in leisure and hospitality fell by

5,396 (20.3 percent). Significant industry losses also occurred

in St. Tammany (2,643 jobs, 30.3 percent of the workforce) and

St. Bernard (1,222 jobs, 60.4 percent of the workforce). The

leisure and hospitality industry in the affected Louisiana

parishes fell 38 percent over the year in September (31,281

jobs), while the Katrina-affected counties in Mississippi lost

about 19 percent of their workers in this industry (6,180 jobs).

Job losses in the trade, transportation, and utilities sector

(34,899) were nearly as high as in leisure and hospitality, but

the percentage of employment loss was not quite as high (24

percent). Almost 90 percent of losses in trade, transportation,

and utilities occurred in the Louisiana parishes (30,739 jobs).

The magnitude of job losses was greatest in retail trade, where

more than 25,200 jobs were eliminated, representing about 70

percent of employment decreases in this sector. Jefferson and

Orleans parishes had the largest reduction of retail jobs, 9,600

and 9,100, respectively. Food and beverage stores accounted for

nearly 36 percent of the loss of retail jobs. Approximately 9,000

jobs in these stores were destroyed, representing an over-theyear reduction of about 60 percent. Orleans Parish posted the

greatest loss, with almost 80 percent of workers in these stores

no longer employed (3,814). Jefferson Parish had the next largest

employment decline in food and beverage stores, 2,945 jobs,

representing a loss of 58 percent of its workforce. Gasoline

stations also suffered significant losses—a 52-percent drop in

workforce and a loss of 2,748 jobs—as did motor vehicle and

parts dealers, whose workforce dropped by 25.4 percent or 2,497

jobs. Clothing stores lost approximately 27 percent of their

workforce, or about 2,300 jobs. Employment in wholesale trade

was reduced by 4,574 jobs or 16 percent of the workforce over

the year in September, following a pre-hurricane job loss of 0.2

percent over the year in August.

Transportation and warehousing activities were severely

disrupted in the affected areas following the hurricane,

leading to a 17.6-percent over-the-year employment decline

in September. Approximately 4,700 jobs were destroyed, with

the greatest share of the loss occurring in two industries:

Support activities for transportation, which dropped nearly

2,300 jobs, and truck transportation, which lost 1,013 jobs.

Both of these industries saw over-the-year declines exceeding

20 percent. Most of the jobs eliminated in these two industries

were in Orleans Parish, which lost more than 1,630 workers.

QCEW measures of third-quarter wages

There was a notable effect on average wages resulting from

the immense damage inflicted on gulf coast businesses. At a

time when there was so much job loss, the average weekly

wages of workers in the heavily affected areas spiked upward

because there was a disproportionate loss in employment

and pay in low-paying industries.

In the third quarter of 2005, the U.S. average weekly wage

grew by 6.1 percent. During the same period, 9 of the 11

heavily affected areas saw relatively higher average pay

gains, 30 percent or more above the national growth rate. The

Percent of total

private industry

job loss

Industry

1

1

 Number Percent

Table 8. Employment change in private industry in

 heavily affected areas, September 2004–

 September 2005, by industry

Leisure and hospitality ................ –37,461 –32.3 25.6

Trade, transportation,

and utilities ............................... –34,899 –24.0 23.9

Education and health services .... –20,538 –24.3 14.0

Professional and business

services .................................... –16,242 –19.5 11.1

Manufacturing .............................. –13,350 –21.9 9.1

Other services ............................. –8,096 –40.0 5.5

Construction ................................. –7,350 –20.0 5.0

Financial activities ....................... –7,307 –18.7 5.0

Information ................................... –761 –6.4 .5

Natural resources and mining ...... –195 –2.2 .1

Unclassified ................................. 76 11.9 –.1

Total private industry ........ –146,267 –24.1 100.0

1 Changes were based on data that exclude information for Plaquemines

Parish, as some of the data for that area were found not to be disclosable.

Corresponding data for other industries, and the all-industry totals, include
34 Monthly Labor Review August 2006

Industry Employment and Wages

Table 9. Average monthly employment, total quarterly wages, and average weekly wages in heavily affected areas,

 third quarter 2004–third quarter 2005

Average weekly wages

Number Percent Amount Percent

Louisiana parishes .................... –44,754 –7.6 $59,474,212 1.2 $701 9.5

Jefferson .............................................. –16,526 –7.8 –6,450,720 –.4 660 8.0

Orleans ................................................ –24,548 –10.0 –18,993,898 –.9 746 10.2

Plaquemines ......................................... –655 –4.3 6,419,698 4.3 836 9.0

St. Bernard ........................................... –2,126 –12.2 1,942,609 1.6 620 15.9

St. Charles ........................................... 362 1.6 23,259,563 9.9 883 8.1

St. John the Baptist ............................. 7 .1 12,979,444 12.8 678 12.8

St. Tammany ......................................... –1,268 –1.9 40,317,516 8.7 601 10.7

Mississippi counties .................. –3,154 –2.0 79,543,880 7.0 622 9.2

Hancock ............................................... –121 –.9 14,204,055 12.4 745 13.4

Harrison................................................ –3,056 –3.4 53,833,666 8.8 586 12.5

Jackson ............................................... –97 –.2 10,088,275 2.6 664 2.8

Stone .................................................... 120 3.2 1,417,884 6.1 486 3.0

Combined affected area....................... –47,908 –6.4 139,018,092 2.3 684 9.4

Heavily affected area

average weekly wages of workers in the combined affected

Louisiana parishes increased sharply—by 9.5 percent—in the

third quarter of 2005, and the average weekly wages of workers

in the combined affected Mississippi counties advanced by 9.2

percent. (See table 9.) Among the three largest areas, Harrison

County posted the strongest over-the-year growth in average

weekly wages (12.5 percent), followed by Orleans Parish (10.2

percent) and Jefferson Parish (8.0 percent).

In contrast, total quarterly wages grew in Harrison County

by 8.8 percent ($53.8 million), while average monthly

employment dropped by 3.4 percent in the third quarter. Most

of the growth in total wages was in the private sector ($37

million): Leisure and hospitality and construction wages grew

by $9.4 million each, and professional and business services

gained by $8.3 million.

In Orleans Parish, which of the three largest areas had the

largest drop in average monthly employment, almost half of the

employment decreases occurred in three industries that were

paying workers average weekly wages below $677, the previous

year’s average for the parish. (See table 10.) Average weekly

wages of workers in leisure and hospitality in Orleans Parish

rose 10.5 percent in the third quarter, as the average number of

these jobs dropped 12.5 percent. In Jefferson Parish, over 60

percent of the jobs eliminated over the year were in industries

with average weekly wages below $611, the previous year’s

average for the parish. The average weekly wages of workers

employed in leisure and hospitality in Jefferson climbed by

nearly 21 percent over the year in the third quarter.

QCEW measures of fourth-quarter job recovery

In the aftermath of this disaster, the local business communities struggled to deal with the destruction of their

establishments, a large number of displaced workers, and

critical infrastructure deficiencies. In some industries work

stoppages were short lived, while in other industries

operations ceased, and employment losses continued to

climb. In the fourth quarter of 2005, employment in some of

the heavily affected areas showed signs of improvement. (See

table 11.) Although 8 of the 11 counties registered over-theyear employment declines in December, the number of job

losses in some of these areas was less than in the preceding

months, evidence of some recovery.

Eighty-five percent of the job loss in the entire reference

area was concentrated in the three largest areas—Jefferson

Parish, Orleans Parish, and Harrison County—where the

combined workforce dropped by 128,040 jobs or 23.5 percent

over the year in September. Chart 1 shows monthly

employment for these three large areas from January 2004 to

December 2005.

In heavily affected Louisiana parishes, the net over-theyear job loss of 150,945 in December was 12 percent greater

than the September loss of 134,718. (See table 12.) While

Jefferson Parish did show significant job recovery, as did St.

Tammany, Orleans Parish’s employment levels continued to

plummet, down by more than 98,000 over the year in

December. From September to December, over 32,000 more

jobs were eliminated in Orleans, and the workforce reduction

amounted to 39.7 percent over the year in December,

compared with a 27-percent decline as of September.

Although the net job loss in Orleans was higher in December

than in September, there was some good news: job losses

over the year peaked at 105,298 in November, and fewer jobs

(98,283) were eliminated in the following month, indicating

some recovery might be taking place. Over-the-year

employment losses in the combined Louisiana parishes

1

1 Using rounded data

Changes in average monthly

employment

Changes in total quarterly

wages

Amount, third

quarter 2005

Over-the-year

percent change
Monthly Labor Review August 2006 35

Heavily affected

area

Table 10. Average monthly employment, total quarterly wages, and average weekly wages in Harrison County,

 Mississippi, and Orleans and Jefferson parishes, Louisiana, by industry, third quarter 2004–third quarter 2005

Average monthly Total quarterly Average weekly Average weekly

 employment wages wages wages

Number Percent Amount Percent Amount Percent

All Industries ....................................... –3,056 –3.4 $53,833,666 8.8 $65 12.5 $521 $586

Leisure and hospitality ..................... –2,416 –9.0 9,449,032 7.2 67 18.0 372 439

Trade, transportation, and utilities ... –909 –5.5 5,661,456 5.5 56 11.6 482 538

Manufacturing ................................... –543 –12.7 264,145 .7 102 15.4 664 766

Orleans Parish:

All industries ........................................ –24,548 –10.0 –18,993,898 –.9 69 10.2 677 746

Leisure and hospitality ..................... –5,339 –12.5 –6,294,337 –3.2 37 10.5 352 389

Trade, transportation, and utilities ... –4,193 –11.6 –10,329,773 –3.5 58 9.1 635 693

Other services .................................. –1,239 –16.7 –4,483,178 –11.0 30 7.1 424 454

Jefferson Parish:

All industries ........................................ –16,526 –7.8 –6,450,720 –.4 49 8.0 611 660

Trade, transportation, and utilities ... –4,676 –8.8 –11,298,998 –2.7 39 6.5 597 636

Leisure and hospitality ..................... –2,956 –11.1 7,650,990 7.1 64 20.5 312 376

Professional and business services –2,084 –7.4 2,149,176 1.0 55 9.1 603 658

Third quarter

2004

Third quarter

2005

Over-the-year change Level

Harrison County:

 Area

Table 11. Percent changes in employment in heavily

 affected areas, September 2004–September

 2005 and December 2004–December 2005

September 2004– December 2004–

September 2005 December 2005

 Louisiana parishes

Jefferson .......................... –24.5 –16.6

Orleans ............................ –27.0 –39.7

Plaquemines ..................... –14.9 –7.6

St. Bernard ....................... –38.0 –65.2

St. Charles ....................... 2.1 –3.7

St. John the Baptist ......... –.7 3.3

St. Tammany ..................... –13.1 –5.8

 Mississippi counties

Hancock ........................... –13.6 –26.4

Harrison............................ –11.7 –19.9

Jackson ........................... –8.7 1.8

Stone ................................ –2.0 8.1

peaked a month earlier, with 173,197 jobs eliminated largely

because of substantial increases that month in the number of

jobs destroyed in Orleans and St. Bernard. The overall

employment situation in the Louisiana parishes began to

improve in November in three parishes: Jefferson, St.

Tammany, and Plaquemines. Recovery was evident as early

as October in St. Tammany and Plaquemines, and by

November in Jefferson. Fewer job losses in these parishes

helped reduce the overall job losses in the affected Louisiana

parishes in November (165,484) and December (150,945).

Over-the-year job losses in the combined Mississippi

counties were higher in December than in any of the previous

3 months. Net job losses in December exceeded 20,000 and

were 25 percent higher than they had been in September.

Jackson rebounded quickly from the 8.7 percent September

losses, and by December experienced 1.8 percent over-theyear job growth (858 jobs). Stone County posted the highest

employment growth in December, 8.1 percent, albeit with

modest job gains (317). In contrast and offsetting this gain

were deeper employment losses in Hancock and Harrison

Counties. In Harrison County, employment fell by 17,969

over the year in December, which exceeded the year-to-year

September losses by approximately 7,500. The nearly 3,600

jobs that were eliminated in Hancock in December were about

double the September job losses.

QCEW measures of fourth-quarter wages

Increases in average weekly wages in the affected counties

were more pronounced in the fourth quarter than in the third

quarter primarily because fourth quarter employment losses

were far greater. The over-the-year increase in the average weekly

wage of workers in the combined affected area was 18 percent,

almost twice the 9.4-percent increase in the prior quarter. (See

chart 2.) The average weekly wage went from $696 in December

2004 to $821 in December 2005 in the heavily affected areas.

Employment losses occurred in only 1 month of the third

quarter because of the timing of the storm. Nevertheless, as

discussed above, the very large September employment

losses resulted in large declines in third-quarter average

monthly employment in many areas, contributing to large

increases in the average weekly wages. In the fourth quarter,
36 Monthly Labor Review August 2006

Industry Employment and Wages

 Over-the-year change in total employment in heavily affected areas, third and fourth quarters 2005, by month

 Heavily affected August September October November December

 area 2005 2005 2005 2005 2005

Louisiana parishes ...... 460 –134,718 –173,197 –165,484 –150,945 –151,405 –16,227

Jefferson ............................ 1,945 –51,713 –51,250 –41,957 –35,619 –37,564 16,094

Orleans .............................. –4,733 –65,824 –102,234 –105,298 –98,283 –93,550 –32,459

Plaquemines ....................... 219 –2,248 –1,661 –1,399 –1,167 –1,386 1,081

St. Bernard ......................... 155 –6,614 –11,409 –11,694 –11,498 –11,653 –4,884

St. Charles ......................... 293 479 241 –569 –849 –1,142 –1,328

St. John the Baptist ........... 21 –84 103 475 429 408 513

St. Tammany ....................... 2,560 –8,714 –6,987 –5,042 –3,958 –6,518 4,756

Mississippi counties ... 3,712 –16,477 –16,940 –13,057 –20,392 –24,104 –3,915

Hancock ............................. 749 –1,814 –2,922 –2,648 –3,598 –4,347 –1,784

Harrison .............................. 524 –10,503 –13,191 –10,881 –17,969 –18,493 –7,466

Jackson ............................. 2,221 –4,085 –1,007 191 858 –1,363 4,943

Stone .................................. 218 –75 180 281 317 99 392

Combined affected area ..... 4,172 –151,195 –190,137 –178,541 –171,337 –175,509 –20,142

Difference in

over-the-year

change:

August to

December

Difference in

over-the-year

change:

September to

December

Table 12.

significantly larger declines in average monthly employment

were observed in several counties. Average weekly wage

growth rates in all 11 areas exceeded the 1.5-percent national

growth rate in the fourth quarter, with gains ranging between

3 and 39 times the national average.

In the third quarter, 5 of the 11 heavily affected areas—

Orleans, Jefferson, Harrison, St. Bernard, and St. Tammany—

had average monthly employment losses that exceeded 1,000.

(See table 13.) Orleans experienced the greatest average monthly

employment loss, 24,548 jobs. Average weekly wages in these

five areas grew by between 8 and 15.9 percent over the year in

the third quarter. St. Bernard Parish had the highest wage growth

in the third quarter, 15.9 percent. This parish also had the largest

percentage drop in its workforce: 12.2 percent.

Number of jobs Number of jobs

Chart 1. Monthly employment in Jefferson Parish, Louisiana; Orleans Parish, Louisiana; and

 Harrison County, Mississippi, January 2004–December 2005

Orleans

Jefferson

Harrison

Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05

0

50,000

100,000

150,000

200,000

250,000

300,000

0

50,000

100,000

150,000

200,000

250,000

300,000
Monthly Labor Review August 2006 37

QCEW data on establishments

Another way to examine the hurricane’s effects is by reviewing the number of businesses operating in the stormdamaged areas before and after Katrina. QCEW data show

that the number of business establishments operating in the

heavily affected reference area in 2004 totaled 44,091—36,149

establishments in Louisiana and 7,942 in Mississippi. (See

table 14.) Based on FEMA-designated damage areas, BLS was

able to determine the number of QCEW establishments in the

damage zones by damage category.

Of all establishments in the seven heavily affected

Louisiana parishes, 46.5 percent were in the FEMA-designated

flooding and storm damage areas. These 16,793 establisments

posted an over-the-year loss of 112,621 jobs in December

2005, accounting for more than 99 percent of all establishments in designated damage areas of Louisiana and almost

all of their December employment loss. More than 75 percent

of the business establishments in FEMA-designated damage

areas in Louisiana and Mississippi were in Orleans and

Jefferson parishes. Not surprisingly, Orleans and Jefferson

had substantial percentages of their businesses located in

the damage areas, 65.2 percent and 48.6 percent, respectively,

but it was St. Bernard Parish that had the largest percentage

of its establishments in the damage zones—83.1 percent.

Reconciling CES and QCEW results

As noted, the CES program benchmarks its sample-based

employment estimates to the QCEW employment counts.

Although both programs experienced collection difficulties

following Katrina, CES and QCEW post-Katrina employment

trends will eventually be reconciled through the benchmarking process. However, the relatively low response rates

in both programs and use of special imputation procedures

in CES confound the normally straightforward process and

interpretation of the CES benchmark revisions.

Publication of the next CES benchmark revision for State and

area series is scheduled for March 2007; that revision will

incorporate QCEW data through the third quarter of 2006. At

that point both programs will have completed nonresponse

followup and analysis of the effects of special procedures, and

the picture of Katrina job loss and recovery will be more complete and more consistent between the two programs.

Future disaster response procedures

Both the CES and the QCEW programs made extraordinary

efforts to continue their normal data collection and

publication schedules immediately after Hurricane Katrina.

Both programs made adjustments to their normal estimation

Percent change Percent change

Q1 Q3 Q1 Q3 Q1 Q3

0

4

8

12

16

20

0

4

8

12

16

20

2003 2004 2005

Chart 2. Over-the-year percent changes in average weekly wages in heavily affected areas, first

 quarter 2003–fourth quarter 2005
38 Monthly Labor Review August 2006

Industry Employment and Wages

Table 13. Average monthly employment and average weekly wages in heavily affected areas, third and fourth quarters,

 2004–05

Average weekly Average weekly

wages wages

Number Percent Amount Number Percent Amount

Jefferson ..................... –16,526 –7.8 $660 8.0 –42,942 –20.0 $812 17.5

Orleans ....................... –24,548 –10.0 746 10.2 –101,938 –41.2 968 27.7

Plaquemines ................ –655 –4.3 836 9.0 –1,409 –9.2 928 11.0

St. Bernard .................. –2,126 –12.2 620 15.9 –11,534 –65.8 934 58.6

St. Charles .................. 362 1.6 883 8.1 –392 –1.7 948 5.2

St. John The Baptist ... 7 .1 678 12.8 336 2.6 741 10.4

St. Tammany ................ –1,268 –1.9 601 10.7 –5,329 –7.9 680 12.8

 Mississippi counties:

Hancock ...................... –121 –.9 745 13.4 –3,056 –22.4 912 26.7

Harrison....................... –3,056 –3.4 586 12.5 –14,014 –15.6 680 18.9

Jackson ...................... –97 –.2 664 2.8 14 0 731 9.9

Stone ........................... 120 3.2 486 3.0 259 6.6 542 5.0

Combined affected

area ........................... –47,908 –6.4 684 9.4 –180,005 –23.9 821 18.0

1 Using rounded data

Heavily affected

area

Louisiana parishes:

1

Employment

change,

December

2004–

December

2005

Total

establishments

 (annual

average

2004)

Establishments in

damage areas

(flooded and storm)

December 2004

Establishments

in flooded damage

areas,

December 2004

Establishments

 in storm damage

areas,

December 2004 State/area

Table 14. Employment in FEMA–designated damage areas and employment change in those establishments,

 December 2004–December 2005

 Number Percent Number Percent Number Percent

 Louisiana

All FEMA damage areas ............... 104,668 16,920 16.2 16,101 15.4 819 0.8 –113,106

Heavily affected parishes ....... 36,149 16,793 46.5 16,008 44.3 785 2.2 –112,621

Jefferson ............................... 13,910 6,766 48.6 6,536 47.0 230 1.7 –26,204

Orleans .................................. 12,496 8,150 65.2 8,053 64.4 97 .8 –73,776

Plaquemines .......................... 851 241 28.3 165 19.4 76 8.9 –1,061

St. Bernard............................. 1,268 1,054 83.1 1,049 82.7 5 .4 –10,265

St. Charles ............................. 1,034 135 13.1 131 12.7 4 .4 –202

St. John the Baptist .............. 775 0 0 0 0 0 0 226

St. Tammany .......................... 5,815 447 7.7 74 1.3 373 6.4 –1,339

....................................................

 Mississippi

All FEMA damage areas ............... 23,642 2,678 11.3 57 .2 2,621 11.1 –20,551

Heavily affected counties ....... 7,942 2,663 33.5 57 .7 2,606 32.8 –20,593

Hancock ................................ 823 555 67.4 52 6.3 503 61.1 –3,502

Harrison ................................. 4,537 1,609 35.5 2 0 1,607 35.4 –16,836

Jackson ................................. 2,299 498 21.7 3 .1 495 21.5 –257

Stone ..................................... 283 1 .4 0 0 1 .4 2

and imputation procedures to reflect the extraordinary

situation that existed, but, owing to the relatively high levels

of nonresponse in both programs, some uncertainty remains

regarding the employment trends measured. BLS continues

to review its disaster preparedness and the results of the

special procedures developed in response to Katrina. In the

event of another major disaster, many of the same special

procedures will likely be followed. 

Over-the-year change

 in average monthly

employment

Over-the-year change

in average monthly

employment

Over-the-year

percent change

Over-the-year

percent change

1

Third quarter 2005 Fourth quarter 2005

Notes

ACKNOWLEDGMENTS: The authors thank Pat Getz, Larry Huff and his

staff, the CES and QCEW staff in the Atlanta regional office, the CES and

QCEW staff in the Dallas/Kansas City regional office, Rich Speigle, the

ACES and EXPO staff, the Labor Market Information division of the

Alabama Department of Industrial Relations, the Research and Statistics

section of the Louisiana Department of Labor, the Labor Market

Information division of the Mississippi Department of Employment

Security, the BLS Data Collection Center staff, and the BLS Electronic Data

Interchange Center staff. The authors also thank Ryan Martin, Jay Miller,

Reuel Paredes, Sally Williams, Debbie Winter, and Bill Yowler.
Monthly Labor Review August 2006 39

1

 The Federal Response to Hurricane Katrina: Lessons Learned,

Washington, The White House, February 2006.

2

 The term “jobs” refers to the number of workers counted as employed

for the pay period that includes the 12th of the month. “Workforce”

refers to the count of all workers employed in a defined geographic area.

3

 Estimates are not seasonally adjusted. For further information

on CES State and metropolitan area estimates for September 2005, see

www.bls.gov/sae/home.htm#data.

4

 For more information on CES employment estimate revisions,

see www.bls.gov/sae/790faq2.htm#1q12.