Top 20 Industries Most Affected by Hurricane Katrina

While we watch and do what we can to support another region begin the long road to recovery from Hurricane Sandy, the economist in me is wondering which industries suffer the most and which bounce back the quickest from natural disasters. While it is much too early to fully understand the economic implications of Sandy, I used EMSI to take a quick look at the Orleans County, LA economy before and after Hurricane Katrina.


 

Katrina ravaged the Gulf coast in August 2005. Orleans Parish, LA was one of the hardest hit regions; from 2004 to 2006, the Parish lost over half of its population (falling from 494,351 to 230,353) and almost 40% of its workforce (106,000 jobs).

At the 6-digit NAICS level, the industry that suffered the most significant job loss was Elementary and Secondary Schools, which decreased by 9,450 jobs from 2004 to 2006. The Hotels, Local Government, General Medical and Surgical Hospitals,and Full-Service Restaurants industries also declined significantly, each losing well over 4,000 jobs.

Around 2006-2007 is finally when things began to turn around for the region, as residents slowly began moving back and the local economy started adding jobs. By 2008, the Parish gained back almost 21,000 jobs, though the labor force was still only 69% of its pre-Katrina size.

Of the 20 hardest hit industries, those that rebounded the quickest were Colleges, Universities, and Professional Schools; Full-Service Restaurants; Federal Government; Corporate, Subsidiary, and Regional Managing Offices; and Hotels. Industries that remained at less than 50% of their 2004 size (by employment) included Elementary and Secondary Schools, Offices of Physicians, Temporary Help Services, Nursing Care Facilities, and Janitorial Services.

Note that before Katrina, most of the postsecondary education in Orleans was provided by the local government; however, following Katrina the State of Louisiana stepped in. This is why the chart above shows the Elementary and Secondary Schools (Local Government)industry with a very poor recovery. When combining both local and state postsecondary education, 2008 employment in this industry group was 40% of its 2004 level.

It is interesting how the postsecondary education industry rebounded so much slower than the Colleges, Universities, and Professional Schoolsindustry; but makes perfect sense when thinking about the markets they serve. By 2008, the population of Orleans Parish was just over 300,000, about 60% of its 2004 level, which means that the K-12 schools had a much smaller resident population to serve. On the other hand, Katrina brought a significant amount of national and international media attention to the region and college-bound students took notice.

A similar trend occurs in many of industries examined here. While there were countless factors at play during this time (including the beginning of a national recession), the degree to which a certain industry serves the resident population seems to have a big influence on determining its speed of recovery.  In many cases, industry sectors that serve the resident population recovered slower than those that serve more regional, national, and international markets. 

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