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The effect of Hurricane Katrina on employment and unemployment
Sharon P. Brown, Sandra L. Mason, and Richard B. Tiller
The Local Area Unemployment Statistics (LAUS) estimates for the month of September 2005 were among the first subnational data to reflect the impact of Hurricane Katrina, which struck the gulf coast on August 29 with catastrophic effects in parts of Louisiana, Mississippi, and Alabama. Beginning in September and continuing to the present, the Bureau of Labor Statistics (BLS, the Bureau) and its State partners made a number of critical modifications to standard estimating procedures to better reflect the employment and unemployment situation in the affected areas. The Bureau analyzed the subnational Current Population Survey (CPS) estimates and verified that they did not reflect the economic upheaval created by the hurricane and its aftermath. The Bureau also evaluated unemployment insurance statistics and State and area nonfarm employment estimates. To address estimating issues at the State level, models were modified to allow the State-supplied inputs of nonfarm employment and unemployment insurance claimants to have far greater weight in the calculations of estimates. In addition, breaking with longstanding practice, the Bureau introduced special intervention variables into the models in real time in order to immediately reflect the effect of Katrina. Area estimation procedures also were modified. The identification and implementation of revised estimation approaches at the State and area levels and of model interventions necessary each month in Louisiana and Mississippi required innovation and risk taking, as standard methods were adapted in an attempt to fully reflect the impact of Katrina. This article describes the process of determining appropriate actions to take in the areas affected by the hurricane, the implementation of those actions to date, and the key labor market trends as measured by the LAUS program.
This excerpt is from an article published in the August 2006 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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Local Area Unemployment Statistics
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