As the New Orleans area approaches the third anniversary of Hurricane Katrina, one picture of the city is emerging as a community with fewer people but who make more money and have an easier time finding jobs than before the disaster, according to an economic analysis conducted recently by the University of New Orleans.
“As a country, we’ve been very concerned about going into a recession,” says Dr. Janet Speyrer, associate dean for research at UNO’s College of Business, which produced the report. “If you look at New Orleans specifically, you see a different story. It’s not that we’re immune to recession by any means, but we have a different story because of what’s happened here since the storm.”
That story is based, in large part, on higher wages and sharply reduced unemployment claims in the local market, spurred by government spending on recovery programs and private investment in new construction. Further, higher fuel prices historically have benefited the area’s economy with increased spending and higher profits in the local energy sector.
“It’s a tight labor market, with wages at least 21 percent higher overall now than before Katrina,” says Speyrer. “We’re in a very different situation than much of the rest of the nation.”
UNO’s report estimates the metro area’s population has been built back to approximately 1.1 million people, down from the area’s 1.3 million residents early in 2005. But the people making up that 86 percent of the pre-Katrina population now are collectively earning more than the entire metro area population did before the storm, UNO’s analysis found. That has driven per capita income up above the national average for the first time in many years.
Part of the change is attributed to the local reduction in the number of children and retired people, who typically earn less money than fully employed adults, but UNO also found that local wages have been spurred by the sharp demand for workers. While unemployment claims have risen dramatically in the nation this year, unemployment claims in the New Orleans area are at less than half their pre-Katrina levels.
While all these signs are positive for the local economy, Speyrer says the challenge for the area will be to sustain growth once recovery spending slackens and rebuilding projects wrap up.
“The question is, can we replace the workers doing the recovery jobs now with others as the job needs shift?” Speyrer says. “We have to focus on the fundamental quality of life issues if we want people to stay and attract other people to move here.”