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June 2007, Vol. 130, No. 6

The effects of Hurricane Katrina on the New Orleans economy

Michael L. Dolfman, Solidelle Fortier Wasser, and Bruce Bergman

On August 29, 2005, Hurricane Katrina made landfall on the gulf coast of the United States, east of New Orleans,¹ with the storm’s eye passing within 10 to 15 miles of the city. The effect on New Orleans, as well as on the entire coastal region, was devastating.

In the aftermath of the storm, about 80 percent of the city (much of which is below sea level) was flooded. A recent article estimated damages in excess of $200 billion, making Katrina one of the most economically costly hurricanes ever to strike the United States.² Reacting to the widespread destruction, the 109th Congress enacted two supplementary appropriation bills totaling $62.3 billion for emergency response and recovery needs.³ The death toll has been estimated at more than 1,200.⁴ In addition, tens of thousands of citizens were evacuated to other parts of the Nation.

Besides taking its toll on the human, social, and psychological fabric of the city, the storm had a notable effect on the city’s economy, its labor market dynamics, and its individual businesses. Just what these effects were has been the subject of some discussion. This article joins the discussion in its analysis of employment and wage data.

In what follows, trends in employment and wage patterns based on data provided by the Quarterly Census of Employment and Wages (QCEW) program of the Bureau of Labor Statistics (BLS, the Bureau) are compared before and after the storm to measure the extent of the losses during the first 10 months (September 2005 to June 2006) following Katrina.

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Footnotes
1 For the purposes of this article, "New Orleans" refers to the city of New Orleans (Orleans Parish), as opposed to the larger metropolitan area composed of 12 parishes. The city’s employment and wage losses were just part of the total economic damage caused by Katrina. The analytic framework presented herein will focus on second-quarter data to maintain consistency with the latest quarter (the second quarter of 2006) for which data are available for New Orleans.

2 Roger D. Congleton, "The Story of Katrina: New Orleans and the Political Economy of Catastrophe," Public Choice, vol. 127, April 2006, pp. 5–30, especially pp. 5, 6.

3 Congressional Research Service, Library of Congress, May 16, 2006, RS22239.

4 See Congleton, "Story of Katrina," p. 5.

Related BLS programs

Employment Projections
Quarterly Census of Employment and Wages

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