Monthly Labor Review August 2006 11

Worker Mobility

A substantial number of workers were displaced

from the New Orleans metropolitan statistical area

after Hurricane Katrina; those who

quickly found jobs in Texas experienced

a substantial decline in their short-term earnings

Worker mobility before and

after Hurricane Katrina

Richard L. Clayton

James R. Spletzer

Richard L. Clayton is

chief of the

Administrative Statistics

and Labor Turnover

Division. James R.

Spletzer is a

supervisory economist,

and both are in the

Office of Employment

and Unemployment

Statistics, Bureau of

Labor Statistics.

E-mail:

Clayton.Rick@bls.gov

and

Spletzer.Jim@bls.gov

Hurricane Katrina formed over the

Bahamas on August 23, 2005, and

crossed southern Florida on August 25th

as a moderate category 1 hurricane. During the next

several days, Hurricane Katrina strengthened

rapidly in the Gulf of Mexico, attaining the status

of a category 5 storm. On August 29, 2005,

Hurricane Katrina recorded its second landfall as a

category 3 storm in southeast Louisiana. Hurricane

Katrina was the costliest and one of the deadliest

hurricanes in the history of the United States. The

storm caused devastation along the Gulf coasts of

Alabama, Mississippi, and Louisiana, with

catastrophic effects on the city of New Orleans.

Levees separating Lake Pontchartrain from New

Orleans were breached by the storm surge,

ultimately flooding roughly 80 percent of the city

and many areas of neighboring parishes.1

The States and the Bureau of Labor Statistics

have done much to measure the labor market effects

resulting from Hurricane Katrina. Many of these

efforts are described in the other articles in this

issue of Monthly Labor Review. This article studies

the labor market effects of Hurricane Katrina using

wage records from Louisiana and Texas, enhanced

with data from the Quarterly Census of Employment

and Wages (QCEW). Wage records are administrative data collected as part of the Federal and

State Unemployment Insurance programs (UI), and

are increasingly used by economists for research

purposes. The analysis presented in this article

shows that QCEW-enhanced wage records are a

useful tool for studying the employment and earnings impact from a large displacement event such

as Hurricane Katrina.

A dynamic economy depends on a range of

existing relationships, such as those between

employers and employees (and their families),

customers and suppliers, private and public institutions, and other community infrastructure.

These relationships can take decades to establish

and perhaps only days to destroy. In any economy,

there is a constant level of change to these relationships; firms are born and some firms die, employees

are hired and some are separated—some employees move to other jobs and some move to other

locations. This creative-destruction process, along

with a normal level of worker mobility, is healthy

and positive.

However, New Orleans after Katrina is a changed

economy. The tightly knit socio-economic fabric

of relationships in the New Orleans area was

severely damaged by the physical devastation to

the New Orleans area and the resulting evacuation

of large numbers of people. Statistics from the

Census Bureau show that the population in

Orleans Parish dropped from 437,186 on July 1, 2005

to 158,305 on January 1, 2006, and the population

of the seven parishes that make up the New Orleans

metropolitan statistical area (MSA) dropped by 29

percent, from 1,292,774 to 914,745, over the same

timeframe.2

Natural disasters such as hurricanes, tornadoes,

and floods usually involve rather temporary

disruptions to the local economy. Typically,

hurricanes affect immediate coastal areas and lose
12 Monthly Labor Review August 2006

Worker Mobility

their force within a short time over land. Winds die down, flood

waters recede, and evacuees return within days of the event to

examine their households and businesses and begin the process

of rebuilding. Many economic relationships are bent, and a few

are broken.

Hurricane Katrina, however, was a truly unusual and abnormal

event. New Orleans is a bowl-shaped flood area that is very

densely populated. The New Orleans flooding from Hurricane

Katrina and the re-flooding from Hurricane Rita roughly 4 weeks

later resulted in severe damage to the housing stock and

business structures, as well as severe damage to infrastructure

and utilities (telephones, water, and electric power). This damage

forced a long-term evacuation of a significant portion of the

population and labor force.

The abnormal character of the Hurricane Katrina event makes

for a compelling study of changing relationships. The lengthy

evacuation forced many people to move far away from their

homes and stay away, providing a strong incentive to find new

employment in their new locations. This article studies the normal

level of worker mobility between the New Orleans area and Texas,

and contrasts this with the level of worker location change in the

months immediately following Hurricane Katrina. The employment and earnings differences between normal mobility and

the post-event mobility can be considered estimates of some of

the labor market effects of Hurricane Katrina.

Wage records

Basic description of the wage records. The Federal and State

Unemployment Insurance programs provide benefits to eligible

workers who are unemployed through no fault of their own and

meet certain eligibility requirements. UI benefits are intended to

provide temporary financial assistance to unemployed workers.

When an individual applies for UI benefits, the State will review

the person’s eligibility and will calculate what the weekly UI

benefits will be. In general, UI benefits are based on a percentage

of an individual’s earnings over a recent 52-week period. To

calculate an individual’s benefits, the State needs the individual’s

earnings history available in an electronic database. These

earnings histories are supplied by employers in the State who

are subject to State UI laws.3

Every quarter, employers subject to State UI laws are required

to file two forms: the Quarterly Contributions Report and the

Quarterly Wage Records. The contributions report lists the

employer’s monthly employment and quarterly wages in the

State. It is filed jointly with the quarterly Multiple Worksite Report.

Funded by BLS, the Multiple Worksite Report is designed to

collect accurate employment and wage data at the local level. For

employers with multiple establishments in the State, the Multiple

Worksite Report disaggregates the employer’s State-wide

employment and wages into the employment and wages for each

establishment in the State. After the Quarterly Contribution

Report and Multiple Worksite Report microdata are thoroughly

reviewed and checked for errors by the State Labor Market

Information staff every quarter, the States submit these data to

BLS as part of the Federal-State cooperative Quarterly Census of

Employment and Wages program. The data gathered in the QCEW

program are comprehensive and accurate sources of employment

and wages by county and industry, and provide a virtual census

(98 percent) of employees on nonfarm payrolls. In the third

quarter of 2005, the QCEW statistics show, in the U.S. economy,

an employment level of 132.9 million, with 8.6 million

establishments.

The quarterly wage records list the Social Security number

and quarterly wages of all individuals who worked for the

employer in the State during the quarter. The wage records are

not edited by the State staff, unlike the Quarterly Contributions

Report and the Multiple Wage Report data. The primary purpose

of the wage records is to administer the State UI programs—in

particular, to create the earnings history of an individual at a

specific employer; this earnings history is necessary for

calculating UI benefits. There are several limitations to using the

wage records for economic analysis: the wage records do not

indicate how many hours or weeks the individual worked (the

individual could have worked 1 hour during the quarter, or could

have worked all 13 weeks during the quarter), and the wage

records are not specific to any particular establishment in the

State for employers with multiple establishments.

Despite these inherent limitations, the wage records are

useful for purposes other than administration of the State UI

programs, particularly when merged with the QCEW microdata.

The QCEW data include information on industry, geography, and

other identifiers that allow linking establishments within firms.

The QCEW-enhanced wage records are used to evaluate the

effectiveness of government programs, in which the employment

and earnings of individuals can be tracked after they receive

their welfare payments or job training. The QCEW-enhanced wage

records also are used by the States to analyze economic

development such as employment histories of new hires in

growing industries or locations, or employment and earnings of

individuals involved in large layoffs. A relatively recent use of

QCEW-enhanced wage records is to follow large groups of

workers from one employer to another, which may be indicative

of “SUTA dumping” (SUTA stands for “State Unemployment Tax

Administration”). SUTA dumping refers to employers attempting

to lower their tax payments by moving their workers out of one

UI account with a high tax rate to a different UI account with a

lower tax rate. A more thorough description of the analytical uses

of QCEW enhanced wage records can be found in the May 2004

Monthly Labor Review.

4

The QCEW-enhanced wage records also are used by academic

economists who research labor market issues. Analysis of worker

and job flows is one of the main research topics using the wage

records.5 QCEW-enhanced wage records also are used to study
Monthly Labor Review August 2006 13

the earnings losses of displaced workers, the impacts of

government programs on earnings and employment, and the

dynamic interactions between workers and employers.6

Preparing the wage records for economic analysis. The wage

records microdata are very sparse with regard to data elements.

The wage records have information on the employer’s State UI

account, the individual’s Social Security number, and the

individual’s quarterly wages. We enhance the wage records

microdata by merging in information on industry and location

from the QCEW. We also enhance the wage records by merging

in the employer identification number (EIN) from the QCEW. The

Internal Revenue Service assigns the employer identification

number to legal taxpaying business entities. The employer

identification number will allow us to analyze whether workers

are employed in the same firm, or in different firms, even if workers

move to a different State.

For this analysis, it is crucial to identify individuals who were

working in New Orleans when Hurricane Katrina struck in August

2005. These are the affected workers whom we expect to be

displaced by the flooding and devastation of the city and

surrounding areas. However, identifying the location of the

individual’s worksite is not always possible because the wage

records identify the individual’s statewide UI account rather than

the specific establishment where the individual worked during

the quarter. In Louisiana, in the second quarter of 2005, 62

percent of jobs are in businesses with one establishment in the

State (this statistic is not available from the wage records data,

but is immediately apparent when enhancing the wage records

with the QCEW microdata). There is no difficulty determining the

exact location of the worksite for individuals who work in singleestablishment firms. The other 38 percent of jobs in Louisiana

are in firms with multiple locations throughout the State. Our

analysis of the wage records, enhanced with QCEW information,

shows that 29 percent of the employment in multi-establishment

businesses can be defined to a particular MSA. Thus, we know the

MSA for 73 percent of employment in Louisiana–the 62 percent in

single establishment firms, and the 11 percent (29 percent of 38

percent) of employment in multi-establishment firms in which all

of the employer’s establishments are located within the same MSA.

In the empirical work reported later in this article, we will refer

to workers in the New Orleans MSA.

7

 We can identify these

workers from the enhanced wage records data as working in the

New Orleans MSA. Because we are not able to define geography

for workers who have employers with establishments in multiple

MSA’s, our label “Workers in the New Orleans MSA” in the

forthcoming tables and charts refers to only a subset of all

workers employed in the New Orleans MSA.

Basic descriptive statistics

Number of jobs and number of employers. Louisiana and Texas

sent their 2004 and 2005 wage records to BLS for our analysis of

the labor market impacts of Hurricane Katrina. Two transmissions

of the third quarter 2005 data were sent—one transmission in

spring 2006 accompanying the submission of the third quarter

2005 QCEW data to the BLS, and a second transmittal 3 months

later (accompanying the submission of the fourth quarter 2005

QCEW data to BLS). As described later in this article, these two

separate transmissions of wage records microdata provide

important information for interpreting our analytical conclusions.

Table 1 reports on some basic descriptive statistics from the

2004 and 2005 quarterly wage records. The top half of the table

reports the number of wage records for Texas and Louisiana, and

the number of wage records where all establishments in the UI

account are located in the New Orleans MSA. The bottom half of

the table reports the number of UI accounts, which we refer to as

the number of employers. Chart 1 illustrates the same statistics

graphically.

In Texas, there are 10.3 million jobs reported in the first-quarter

2004 wage records data. In the Texas labor market, there is an

increase in the number of jobs in the second and third quarters,

followed by a decline in the fourth quarter. The Louisiana wage

records data show 2 million jobs in the first quarter of 2004, with

higher employment levels in the second and third quarters and a

decline in the fourth quarter. The wage records data enhanced

Quarterly wage records and UI accounts in

Texas, Louisiana, and New Orleans

metropolitan statistical area (MSA), 2004 and

2005

Number of wage records,

2004

Quarter I ......................... 10,348,878 2,030,547 475,604

Quarter II ........................ 10,644,947 2,068,035 490,477

Quarter III ...................... 10,783,247 2,060,937 486,891

Quarter IV ...................... 10,650,813 2,010,233 476,212

Number of wage records,

2005

Quarter I ......................... 10,582,806 2,027,316 467,410

Quarter II ........................ 10,943,773 2,023,430 461,718

Quarter III ...................... 11,133,727 1,965,717 425,474

Quarter IV ...................... 10,948,552 1,936,403 351,212

Number of unemployment

insurance accounts, 2004

Quarter I ......................... 376,253 82,581 25,758

Quarter II ........................ 381,205 82,655 25,901

Quarter III ...................... 382,819 82,441 25,743

Quarter IV ...................... 388,519 79,774 25,201

Number of unemployment

insurance accounts, 2005

Quarter I ......................... 381,577 79,941 24,880

Quarter II ........................ 386,260 79,085 24,459

Quarter III ...................... 386,979 77,468 22,537

Quarter IV ...................... 388,617 75,569 19,905

Louisiana New Orleans

MSA

Texas

Table 1.

Period
14 Monthly Labor Review August 2006

Worker Mobility

Chart 1. Number of wage records and number of unemployment insurance accounts based on

 quarterly data from Texas, Louisiana, and New Orleans MSA, 2004 and 2005

NOTE: MSA = Metropolitan statistical area.

Number of wage records, Texas

Number of wage records, Louisiana

Number of UIaccounts, Texas

Number of wage records, New Orleans MSA

2005

2005

2005

2005

2004

2005

2005

2004

2004

2004 2004

2004

Number of UI accounts, New Orleans MSA

Number of UI accounts, Louisiana

11,500,000

11,000,000

10,500,000

10,000,000

Q1 Q3 Q2 Q4

Q1 Q2 Q3 Q4 18,000

20,000

22,000

24,000

26,000

28,000

Q1 Q2 Q3 Q4 350,000

400,000

450,000

500,000

Q1 Q2 Q3 Q4 1,900,000

1,950,000

2,000,000

2,050,000

2,100,000

Q1 Q2 Q3 Q4 75,000

80,000

85,000

Q1 Q2 Q3 Q4 370,000

380,000

390,000
Monthly Labor Review August 2006 15

with information from the QCEW identifies 476,000 workers in the

New Orleans MSA in the first quarter of 2004, and the labor market

in the New Orleans MSA has a quarter-to-quarter pattern in 2004

similar to the State of Louisiana.8

The statistics in table 1 clearly show the effects of Hurricane

Katrina on the New Orleans MSA labor market. The number of

jobs in the New Orleans MSA, as reported in the wage records

data, falls from 461,718 in the second quarter of 2005 to 351,212 in

the fourth quarter of 2005 — a 24-percent decline. The number of

employers in the New Orleans MSA falls from 24,459 in the second

quarter to 19,905 in the fourth quarter — a 19-percent decline.

Comparing the 2005 New Orleans MSA statistics with the

2004 statistics provides an initial measure of how Hurricane

Katrina affected the local labor market. Between the second

and fourth quarters of 2004, the wage records data show that

the number of jobs and the number of employers in the New

Orleans MSA both declined by 3 percent. If this is used as an

indication of the expected seasonal pattern absent a major

economic displacement, then the basic descriptive statistics

in table 1 show that Hurricane Katrina decreased the number

of jobs in the New Orleans MSA by 21 percent (24 percent in

2005 subtract 3 percent in 2004), as measured from the second

to the fourth quarters, and similarly, Hurricane Katrina

decreased the number of employers in the New Orleans MSA

by 16 percent.

The statistics in table 1 for Texas also provide an informative

comparison group. In Texas, the number of jobs between the

second and fourth quarters of 2005 show a similar seasonal

pattern to 2004. This finding suggests that what happened to

the New Orleans MSA was a localized effect rather than a regional

effect.9 Using both the 2004 New Orleans MSA labor market and

the 2004 and 2005 Texas labor markets as comparison groups, the

statistics in table 1 and chart 1 show that Hurricane Katrina

delivered a substantial economic shock to the New Orleans MSA

in the latter half of 2005.

The statistics in table 1 and chart 1 for the State of Louisiana

show less drastic effects relative to the New Orleans MSA. The

number of jobs in Louisiana declined by 4.3 percent between the

second and fourth quarters of 2005, relative to the 2.8-percent

decline in the similar period of 2004. Furthermore, the wage

records statistics reported in table 1 show that employment in

Louisiana declined by 87,000 from the second to fourth quarters

of 2005, whereas employment in the New Orleans MSA declined

by more than 110,000 (which is undoubtedly an underestimate,

because we are only measuring a subset of the New Orleans MSA

labor market). This comparison suggests that the statewide loss

of jobs is less than the loss of jobs in the New Orleans MSA,

which is possible if individuals employed in the New Orleans

MSA before Hurricane Katrina found work in other parts of

Louisiana after the hurricane, or if there was an inflow of workers

after the hurricane from other States into areas of Louisiana other

than the New Orleans MSA.

Possible caveats to simple interpretation. The descriptive

statistics in table 1 and chart 1 suggest a large loss of jobs

and a large loss of employers in the New Orleans MSA

following Hurricane Katrina. Could these empirical estimates

be affected by issues of data quality: are these estimates true

economic effects, or might they be (in whole or in part) an

artifact of the data? This question is particularly relevant

when using administrative data, such as wage records, that

were designed for purposes other than economic analysis of

natural disasters.

There are indications that the quality of the UI wage records

might have suffered following Hurricane Katrina. From a

conceptual perspective, the wage records are supposed to record

any employment and wages earned at any point during the

quarter. As such, the third quarter wage records should record

all employment and wages during the months of July, August,

and September. Hurricane Katrina hit New Orleans on August

29, 2005, and thus the normal seasonal employment patterns for

July and early August 2005 should not be affected by the storm.

Our finding that the number of UI accounts declined substantially in the third quarter leads to questions about nonreported wage records.

We have some evidence regarding late filing of the administrative wage records. As mentioned earlier, we received two

submissions of the third quarter 2005 wage records from both

Louisiana and Texas. For Texas, the initial submission of 2005

third-quarter wage records in spring 2006 had 369,434 employers

reporting 10,923,716 jobs, whereas the latter submission of 2005

third-quarter wage records in summer 2006 had 386,979 employers

reporting 11,133,727 jobs. These statistics imply that 4.5 percent

of employers (accounting for 1.9 percent of jobs) filed their third

quarter 2005 wage records with a delay. Some of this delay is

undoubtedly attributable to Hurricane Rita, which made landfall

on September 24th near the Texas-Louisiana border and

devastated some coastal communities.

The late filing of 2005 third quarter wage records is much more

striking in Louisiana than in Texas. The initial submission of 2005

third-quarter wage records from Louisiana had 67,111 employers

reporting 1,804,019 jobs, whereas the later submission had 77,468

employers reporting 1,965,717 jobs. In Louisiana, 13.3 percent of

employers (accounting for 8.2 percent of jobs) filed their 2005

third-quarter wage records with a delay. Many of these late

reporters were businesses in the New Orleans MSA. These

statistics on late reporting should not be surprising: Hurricane

Katrina was a catastrophic storm in terms of lives lost and

property damaged, and businesses that were affected by the

storm might not have viewed prompt filing of their administrative

tax data as a high priority.

This delayed reporting has two implications on the conclusions that we draw from the wage records data. First, on a

general note, we have learned that caution is necessary when

using wage records to estimate the economic effects of cata-
16 Monthly Labor Review August 2006

Worker Mobility

strophic events. The initial file of wage records from the affected

State might be missing large numbers of businesses who will

eventually file their wage records, and not accounting for these

late reporters might bias the initial economic conclusions drawn

from the analysis. Second, there might still be some businesses

in the New Orleans MSA that have not yet filed their wage records

for the third and fourth quarters of 2005. We can not quantify

this, but we do note that the State of Louisiana has gone to remarkable efforts to obtain the highest quality data it can get for its

Labor Market Information programs. However, if there are still

some businesses that have not yet filed their wage records for

the third or fourth quarters of 2005, the statistics presented in

table 1 and chart 1 should be considered upwardly biased estimates

of the labor market impacts resulting from Hurricane Katrina.

Further aggregate analysis of the wage records. Wage

records are increasingly used as a statistical tool to understand

the dynamic nature of the economy. Analysts can track individuals from one employer to another, and thus document the

number of hires and separations occurring in any quarter. As we

have learned from the new Business Employment Dynamics

(BED) data and the new Job Openings and Labor Turnover

Survey (JOLTS) data from BLS, the relatively smooth time series

of net employment growth across time masks large underlying

gross job flows and gross worker flows.10 We have computed

hires and separations statistics from the 2004 and 2005 Texas

and Louisiana quarterly wage records. Hires are defined as an

individual not working at an employer in the previous quarter

yet working at the employer in the current quarter, and separations are defined as an individual working at an employer in the

previous quarter yet not working at the employer in the current

quarter. These quarterly hires and separations statistics are reported in table 2 and chart 2.

As seen in table 2, the wage records data show that there

are approximately 2 million hires in any quarter in Texas. The

number of quarterly separations in the Texas wage records data

is between 1.6 million and 2.2 million, and the separations exhibit

strong seasonal variation. By definition, the difference between

hires and separations is the change in employment.11 The

seasonal pattern of the hires and separations data in the 2004

Texas wage records appears basically similar to the seasonal

pattern of hires and separations in the 2005 data, which suggests

that there are no obviously large differences that might be

thought to be attributable to Hurricanes Katrina and Rita.

The effects of Hurricane Katrina are immediately obvious in

the hires and separations statistics for Louisiana and the New

Orleans MSA. The large decline in employment in the New Orleans

MSA is due to a large increase in the number of separations, but

not to a fall in the number of hires. The number of separations in

the New Orleans MSA averaged roughly 100,000 per quarter in

2004, yet climbed to 126,000 in the third quarter of 2005 and

climbed to 172,000 in the fourth quarter of 2005. Interestingly,

the number of quarterly hires in the New Orleans MSA remained

constant during 2005. Although this article presents no statistical

evidence for this supposition, this constancy of hiring after

Hurricane Katrina is consistent with press accounts of

construction workers moving into New Orleans to begin the

massive demolition and reconstruction efforts necessary to

rebuild the city.

It is also interesting that both the number of hires and the

number of separations in the State of Louisiana (table 2 and chart

2) increased during the latter half of 2005. The number of hires

was 30 percent higher in the fourth quarter of 2005, relative to the

fourth quarter of 2004, and the number of separations was higher

by 22 percent over the same period. This is indicative of increased

job churning within the State—exactly what one would suspect

if persons displaced out of the New Orleans MSA were finding

jobs in other parts of Louisiana, and construction workers were

moving into the New Orleans MSA from elsewhere in the State.

Further empirical analysis, which is beyond the scope of this

article, would be informative on this supposition.

An analysis of displacement

Cross-State mobility analysis. We now turn our analysis to a

focus on wages, and ask how individuals’ earnings were affected

by Hurricane Katrina. There is a large economics literature that

estimates the earnings losses resulting from job loss.12 We build

on this literature and analyze the short-term earnings of

individuals who were displaced by Hurricane Katrina.

The measure of displacement we use is based on the earnings

profiles of individuals who were working in the New Orleans MSA

before Hurricane Katrina and were working in Texas after the

hurricane. This is a restrictive measure of displacement in two

respects: first, it requires that individuals cross a State line, and

Hires and separations based on quarterly

wage records from Texas, Louisiana, and UI

accounts in New Orleans metropolitan

statistical area (MSA), 2004 and 2005

Number of hires, 2004

Quarter I – II .................. 1,925,295 408,237 102,181

Quarter II – III ................ 2,001,630 400,021 98,221

Quarter III – IV .............. 1,885,762 395,190 95,513

Number of hires, 2005

Quarter I – II .................. 2,025,559 415,425 97,868

Quarter II – III ................ 2,138,387 441,106 90,399

Quarter III – IV .............. 1,987,400 514,919 98,234

Number of separations,

2004

 Quarter I – II .................. 1,629,226 370,749 87,308

 Quarter II – III ................ 1,863,330 407,119 101,807

 Quarter III – IV .............. 2,018,196 445,894 106,192

Number of separations,

2005

 Quarter I – II .................. 1,664,592 419,311 103,560

 Quarter II – III ................ 1,948,433 498,819 126,643

 Quarter III – IV .............. 2,172,575 544,233 172,496

Louisiana New Orleans

MSA Texas

Table 2.

Period
Monthly Labor Review August 2006 17

CHART 2

Chart 2. Number of hires and separations based on quarterly wage records from Texas and

 Louisiana, 2004 and 2005

Number of hires, Texas Number of separations, Texas

Number of separations, Louisiana

Number of separations, New Orleans MSA

Number of hires, Louisiana

2005

2005

Number of hires, New Orleans MSA

2005

2005

2005

2004 2004

2004

2004

2004

2005

2004

NOTE: MSA = metropolitan statistical area.

Q1 Q2 Q3 Q4 50,000

100,000

150,000

200,000

Q1 Q2 Q3 Q4 50,000

100,000

150,000

200,000

Q1 Q2 Q3 Q4 350,000

400,000

450,000

500,000

550,000

Q1 Q2 Q3 Q4 350,000

400,000

450,000

500,000

550,000

Q1 Q2 Q3 Q4 1,600,000

1,800,000

2,000,000

2,200,000

Q1 Q2 Q3 Q4 1,600,000

1,800,000

2,000,000

2,200,000
18 Monthly Labor Review August 2006

Worker Mobility

second, it requires that individuals are working both before and

after the hurricane (the post-hurricane timeframe in this article is

relatively short, due to having wage records data only through

the fourth quarter of 2005). The estimates we present in this

article are an initial estimate of some of the earnings losses resulting from Hurricane Katrina, and in the future when additional

quarters of data become available, we hope to look at both the

short-term and long-term earnings gains and losses of individuals displaced by Hurricane Katrina.

Table 3 presents the number of individuals who work in

different States in consecutive quarters. Chart 3 illustrates these

comparisons graphically. The first column of table 3 documents

the number of individuals who were working in Texas in the previous quarter and working in Louisiana in the current quarter

(these individuals may still be working in Texas in the current

quarter).13 We refer to these workers as “newly employed in

Louisiana from Texas.” There are 7,897 individuals who are working in Louisiana during the fourth quarter of 2004 who were

working in Texas, but not in Louisiana, during the third quarter of

2004. Interestingly, in 2004, the cross-State movement of workers

the other way is of a similar magnitude: there are 7,904 individuals

who are working in Texas during the fourth quarter of 2004 who

were working in Louisiana, but not in Texas, during the third

quarter of 2004.

Table 3 and chart 3 present the displacement effects of

Hurricane Katrina, based on the cross-State mobility statistics.

The number of persons moving from the New Orleans MSA into

Texas rises quite rapidly in the last two quarters of 2005. There

are 5,615 persons who are newly employed in Texas from the

New Orleans MSA in the third quarter of 2005, which is much

larger than the 1,608 persons classified as such in the same quarter

of 2004. Similarly, there are 9,566 persons who are newly employed

in Texas from the New Orleans MSA in the fourth quarter of 2005,

which is also much larger than the 1,212 persons classified as

such in the same quarter of 2004.

The statistics in table 3 enable us to compute a rough

estimate of the number of persons displaced from the New

Orleans MSA who found work quickly in Texas. In 2004, there

are 3,164 persons who are working in the New Orleans MSA in

either the second or third quarter and then working in Texas

one or two quarters later (3,164 = 1,608 + 1,212 + 344). The

similar estimate for 2005 is 17,270 (5,615 + 9,566 + 2,089). If

2004 serves as an expected cross-State mobility estimate for a

normal year, then the difference between 2004 and 2005 is an

estimate of how many persons were displaced from the New

Orleans MSA as a result of Hurricane Katrina. This statistic is

14,106 persons (and we emphasize that this is an underestimate

since our classification of persons as working in the New

Orleans MSA misses many workers truly working in the New

Orleans MSA). Furthermore, this is an estimate of the number

of persons who moved into Texas and found work quickly—

we are unable as of yet to estimate the number of persons

who crossed State lines but did not quickly find work in Texas.

We should also note that the number of persons who enter the

Louisiana labor market from Texas spikes upward in the fourth

quarter of 2005. In the fourth quarter of 2004, there are 7,897

persons who move from the Texas labor market to the Louisiana

labor market. In the fourth quarter of 2005, this number is 13,462.

This is consistent with our observation mentioned earlier that

the hires in the State of Louisiana increased during the latter half

of 2005, which might be indicative of persons moving into

Louisiana from other States.

Earnings losses from displacement. What happened to the

earnings of the persons displaced by Hurricane Katrina? We

provide some evidence on this by focusing on the persons

moving from employment in the New Orleans MSA during the

third quarter to employment in Texas during the fourth quarter.

In 2004, this is a sample of 1,212 persons (from the final column of

table 3), and in 2005, this is a sample of 9,566 persons. Earnings

statistics for these two samples are presented in table 4.

The first column of table 4 presents earnings statistics for the

1,212 cross-State movers in the fourth quarter of 2004. In the

third quarter, when these persons were working in the New

Orleans MSA, their average quarterly earnings at all jobs in the

New Orleans MSA is $6,279. In the fourth quarter of 2004, when

they were working in Texas (and perhaps also in the New Orleans

MSA), their quarterly earnings from all jobs in both States is

$8,541. These statistics indicate that, on average, persons who

moved from the New Orleans MSA to Texas in the fourth quarter

Cross-State mobility statistics based on

quarterly wage records from Texas, Louisiana,

and New Orleans metropolitan statistical area

(MSA), 2004 and 2005

Cross-State mobility, 2004 ..

 Quarter I – II .................... 7,792 7,702 1,215

 Quarter II – III .................. 8,803 9,160 1,608

 Quarter III – IV ................ 7,897 7,904 1,212

 Quarter II –IV

(No quarter III)2 ............. 1,383 1,507 344

Cross-State mobility, 2005 ..

 Quarter I – II .................... 8,487 8,927 1,463

 Quarter II – III .................. 9,953 15,511 5,615

 Quarter III – IV ................ 13,462 21,556 9,566

 Quarter II –IV

(No quarter III)2 ............. 2,014 3,535 2,089

Newly

employed

in Texas

from

Louisiana1

Newly

employed in

Texas from

New Orleans

MSA1

Newly

 employed

in Louisiana

from Texas1

Table 3.

Period

1

 “Newly employed, in Texas from Louisiana,” for example, is defined as

1) having a wage record in Louisiana in the previous quarter and no wage

record in Texas in the previous quarter, and 2) having a wage record in Texas

in the current quarter. 2

 Refers to persons moving across States from the second quarter to the

fourth quarter, with no employment in either State in the third quarter of that

year.
Monthly Labor Review August 2006 19

Chart 3. Cross-State mobility statistics, based on quarterly wage records from Texas and Louisiana,

2004 and 2005

Newly employed in Louisiana from Texas

Newly employed in Texas from New Orleans MSA

Newly employed in Texas from Louisiana

NOTE: MSA = metropolitan statistical area.

2004

2005

2005

2005

2004

2004

Q1–Q2 Q2–Q3 Q3–Q4 0

2,000

4,000

6,000

8,000

10,000

0

2,000

4,000

6,000

8,000

10,000

Q1–Q2 Q2–Q3 Q3–Q4 6,00 0

8,00 0

1 0,00 0

1 2,00 0

1 4,00 0

1 6,00 0

1 8,00 0

2 0,00 0

2 2,00 0

6,0 00

8,0 00

10 ,00 0

12 ,00 0

14 ,00 0

16 ,00 0

18 ,00 0

20 ,00 0

22 ,00 0

Q1–Q2 Q2–Q3 Q3–Q4 7,000

8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

7,000

8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000
20 Monthly Labor Review August 2006

Worker Mobility

of 2004 experienced an earnings gain of $2,262 in quarterly

earnings.

The second column of table 4 presents earnings statistics for

the 9,566 cross-State movers in the fourth quarter of 2005. In the

third quarter, these persons earned, on average, $5,585 in the

New Orleans MSA. This earnings amount is lower than the 2004

amount reported in column 1, which might be suggestive of two

things: perhaps lower wage individuals were more likely

displaced by Hurricane Katrina, and that individuals displaced

by Hurricane Katrina did not work all 13 weeks in the third quarter

of 2005.14 A similar labor supply explanation might explain why

the fourth quarter average earnings of cross-State movers is

lower in 2005 than in 2004: persons displaced by Hurricane

Katrina probably spent some time not working while dealing

with their sudden and unexpected displacement.

The sample of 9,566 persons who are newly employed in Texas

from the New Orleans MSA in 2005 has a very different mean

earnings profile than the sample of 1,212 persons who are newly

employed in Texas from the New Orleans MSA in 2004. For 2004,

we expect these persons to be voluntary movers—they moved

into Texas because of improved job prospects or for personal

reasons. On average, these persons experienced a large increase

in quarterly earnings when moving from New Orleans to Texas. In

2005, there are undoubtedly some voluntary movers, but the sample

(which in 2005 is almost eight times larger in magnitude than the 2004

sample) also contains the persons displaced by Hurricane Katrina.

On average, these persons did not experience an increase in quarterly

earnings, and their level of earnings is substantially lower in 2005

than the group of voluntary movers in 2004. Table 4 presents the

distribution of individual earnings growth from the third quarter to

the fourth quarter. The median person in this sample in 2004 had

quarterly earnings growth of $1,025, whereas in 2005, the median

person had earnings losses of $285.

We emphasize that the earnings statistics in table 4 provide

rough estimates of the short-run earnings effects only for

workers who were displaced by Hurricane Katrina and found

work in Texas relatively quickly. As time progresses, analysts will

be able to add additional quarters of QCEW-enhanced wage

records from both Louisiana and Texas for further refinement of

the economic effects of displacement. As such, analysts can

look at the long-term earnings effects, they can look at the

earnings effects for individuals who might not have found work

in Texas relatively quickly, and they can look at whether the

displaced persons stay in Texas during 2006 or whether they

migrate back to the New Orleans MSA.

Two other statistics in table 4 warrant mention: the percent of

cross-State movers who stay in the same company, and the

percent of cross-State movers who stay within the same industry.

Defining companies by their employee identification number, we

see that 15.1 percent of individuals who move from the New

Orleans MSA to Texas in the fourth quarter of 2004 stay within the

company, whereas 10.9 percent of movers in the same quarter in

2005 stay within the company. This indicates that voluntary

movers are somewhat more likely to move across State lines and

stay within the same national company. The statistics in table 4

also suggest that individuals who were displaced by Hurricane

Katrina and who quickly get a job in Texas are more likely than

voluntary movers to stay within the same two-digit NAICS

industry code. In the 2005 wage records data, enhanced with

QCEW information, the industry with the largest group of workers

leaving New Orleans and getting a job in Texas the following

quarter (1,876 persons, or 20 percent of the cross-State movers

between quarters three and four) is in the accommodation and

food services industry (NAICS 72), and 44 percent of the

individuals in this industry in the cross-State sample find jobs in

the same industry in Texas. In the same quarter of 2004, a smaller

percentage (13 percent) of cross-State movers are from the

accommodation and food services industry, and a smaller

percentage (36 percent) of these persons stay in the same

industry in their new job in Texas.

Conclusions

Using 2004 and 2005 quarterly wage records data from Louisiana

and Texas, enhanced with QCEW data, this article finds many

striking employment and wage effects of Hurricane Katrina. The

data show that the number of jobs in the New Orleans MSA fell by

21 percent as a result of Hurricane Katrina, the number of persons

who were employed in Texas one quarter after working in the

Cross-State mobility statistics based on

quarterly wage records from Texas, Louisiana,

2004 and 2005

Earnings, quarter III ........................... $6,279 $5,585

Earnings, quarter IV ........................... 8,541 5,604

Earnings gain, quarter III–IV ............. 2,262 20

 10th percentile ............................... –3,680 –4,595

 25th percentile ............................... –818 –2,248

 50th percentile ............................... 1,025 -285

 75th percentile ............................... 3,834 1,629

 90th percentile ............................... 8,471 4,541

Same employer identification number

(EIN) (in percent) ............................. 15.1 10.9

Same industry (in percent) ................ 33.9 40.8

Sample size (number) ........................ 1,212 9,566

2005

Quarterly

III–IV

movers

2004

Quarterly

III–IV

movers

Table 4.

Category

NOTE: The sample is defined as 1) having a wage record in New Orleans

in the third quarter and no wage record in Texas in the third quarter, and 2)

having a wage record in Texas in the fourth quarter.
Monthly Labor Review August 2006 21

New Orleans MSA is five times higher in the latter half of 2005,

relative to the latter half of 2004, and the people who moved from

the New Orleans MSA and quickly found work in Texas have

lower earnings levels and lower earnings growth in the latter half

of 2005, relative to the latter half of 2004.

This analysis is merely an initial look at the enhanced wage

 records data, and much more remains to be done. For example,

the data suggest some interesting dynamics of mobility within

Louisiana, as well as increased flows of workers both out of and

into the New Orleans MSA. Furthermore, this article emphasizes

that the data are short-run estimates of the displacement effects

resulting from Hurricane Katrina; additional analysis of longterm effects would be valuable when the data become available.

The significance of this research is that QCEW-enhanced wage

records are a useful tool for studying the employment and earnings dynamics resulting from Hurricane Katrina, and the

methodology used in this article could be applied to other large

displacements.

Notes

1 Much of the text from this introductory paragraph has been

taken from Wikipedia, the free encyclopedia, on the Internet at http:/

/en.wikipedia.org/wiki/Hurricane_katrina (accessed June 2006).

2

 These statistics are from a June 2006 press release titled “Special

Population Estimates for Impacted Counties in the Gulf Coast Area,”

on the Internet at www.census.gov/Press-release/www/

emergencies/impacted_gulf_estimates.html, accessed June 2006.

The seven parishes within the New Orleans metropolitan statistical

area are: Orleans, Jefferson, St. Bernard, St. Tammany, Plaquemines,

St. Charles, and St. John the Baptist.

3 Much of the text from this paragraph has been taken from the

Department of Labor Web site http://workforcesecurity.doleta.gov/

unemploy/uifactsheet.asp (accessed June 2006).

4

 For a thorough description of the analytical uses of QCEWenhanced wage records, see Richard L. Clayton and Jay A. Mousa,

“Measuring labor dynamics: the next generation in labor market

information,” Monthly Labor Review, May 2004, pp. 3–8.

5

 See Patricia M. Anderson and Bruce D. Meyer, “The Extent and

Consequences of Job Turnover,” Brookings Papers on Economic

Activity, 1994, pp. 177–236. For information about the LEHD program,

see John M. Abowd, John Haltiwanger, and Julia Lane, “Integrated

Longitudinal Employer-Employee Data for the United States,” The

American Economic Review Papers and Proceedings, vol. 94, no. 2,

May 2004, pp. 224–229.

6

 On the first topic, see Louis S. Jacobson, Robert J. LaLonde, and

Daniel G. Sullivan, “Earnings Losses of Displaced Workers,” The

American Economic Review, vol. 83, no. 4, September 1993, pp.

685–709. On the second topic, see Robert Kornfeld and Howard S.

Bloom, “Measuring Program Impacts on Earnings and Employment:

Do Unemployment Insurance Wage Reports from Employers Agree

with Surveys of Individuals?” Journal of Labor Economics, vol. 17,

no. 1, January 1999, pp. 168–197. On the third topic, see John C.

Haltiwanger, Julia I. Lane, and James R. Spletzer, “Wages, Productivity,

and the Dynamic Interaction of Businesses and Workers,” Labour

Economics, forthcoming 2006.

7

 There are eight MSA’s in Louisiana (Alexandria, Baton Rouge,

Houma, Lafayette, Lake Charles, Monroe, New Orleans, and

Shreveport), plus the “balance of State” geographical area. See

www.state.la.us/census/93metro.htm for a map and other information about MSA definitions (accessed June 2006). The 2003

definition of the New Orleans MSA is the following seven parishes:

Jefferson, Orleans, Plaquemines, St. Bernard, St. Charles, St. John the

Baptist, and St. Tammany.

8 Comparing the 2004 statistics in table 1 to the BLS employment

statistics for the New Orleans MSA allows us to roughly calculate how

much employment we are missing from not being able to assign a geography

to all wage records. A necessary first step in this calculation is to note that

the wage records employment count exceeds the BLS statistics: the number

of jobs in the first quarter 2004 Louisiana wage records is 2,030,547,

compared with the Louisiana March 2004 employment estimate of

1,925,654 from the BLS Local Area Unemployment Statistics (LAUS)

program. This overstatement is expected, because the wage records count

all employment during the quarter rather than the conventional BLS “week

of the 12th” reference period for a given month. In table 1, we report

475,604 jobs in the first quarter of 2004 in the New Orleans MSA, whereas

the LAUS program reports 586,544 jobs in the New Orleans MSA for March

2004. Taking into account an overstatement of approximately 5.4 percent

(calculated from the Statewide totals: 2,030,547 / 1,925,654) due to

different reference periods, we estimate that our employment count for

the New Orleans MSA is understated by approximately 23 percent.

9

 The summer and fall of 2005 was an active hurricane season in the

Gulf of Mexico, and Hurricane Rita in September 2005 affected both

western Louisiana and eastern Texas. We do not believe that Hurricane

Rita severely affects our use of the Texas wage records as a regional

comparison for what happened in the New Orleans MSA.

10 For more information about the BED, see Richard L. Clayton, R.

Jason Faberman, Akbar Sadeghi, James R. Spletzer, and David M. Talan,

“Business employment dynamics,” Monthly Labor Review, April 2004,

pp. 29–42. For more information about the JOLTS, see Kelly A. Clark

and Rosemary Hyson, “New tools for labor market analysis: JOLTS,”

Monthly Labor Review, December 2001, pp. 32–37.

11 For example, the 1,925,295 hires in the second quarter of 2004

subtracted by the 1,629,226 separations shows a quarterly net employment

change of 296,069. This quarterly net employment change is identical to

the difference between the first quarter and second quarter employment

levels reported in table 1: 10,644,947 subtracted by 10,348,878.

12 For reviews of the literature, see Bruce C. Fallick, “A Review of the

Recent Empirical Literature on Displaced Workers,” Industrial and Labor

Relations Review, vol. 50, no. 1, 1996, pp. 5–16, and Lori G. Kletzer,

“Job Displacement,” Journal of Economic Perspectives, vol. 12, no. 1,

Winter, 1998, pp. 115–136.

13 Transitions cannot be timed within quarters using wage records

microdata. For example, if there is a wage record in Louisiana and Texas

in same quarter, we do not know the number of weeks worked in Louisiana

nor the number of weeks worked in Texas. The individual might even be

holding the two jobs in different States simultaneously. By restricting on

not working in one State in the previous quarter but working in that State

in the current quarter, this allows us to claim with confidence that the

individual “entered” the labor market of this State sometime during the

current quarter.

14 See Molly Garber, Linda Unger, James White, and Linda Wohlford,

“Hurricane Katrina’s effects on industry employment and wages,”

Monthly Labor Review, August 2006, pp. 22–39.