Hurricane Katrina's Effects on Industry Employment and Wages: Rapid Development of Alternative Methods in Two BLS Programs Resulted in a Clearer View of the Economic Impact of This Storm Than Would Have Been Possible Otherwise," the Number of Jobs in Many Affected Areas and Industries Is Still Down

Article excerpt

The Bureau of Labor Statistics (BLS) has two programs that measure employment and wages by industry: The Current Employment Statistics (CES) program and the Quarterly Census of Employment and Wages (QCEW) program. Both operate as Federal-State cooperative programs in which BLS partners with workforce agencies in each State.

The CES program surveys approximately 400,000 business establishments nationwide and publishes estimates of employment, hours, and earnings for the Nation, States, and metropolitan areas. Estimates are released 1 month after the reference month; for example, March estimates are published in April.

The QCEW provides a virtual census (97 percent) of monthly employment and quarterly total wages, derived from Unemployment Insurance tax records that almost all employers are required to file quarterly. QCEW series for the Nation, States, metropolitan areas, and counties are published 7 months after the end of the reference quarter. For example, first quarter (January through March) employment and wage counts are published in October.

Thus, the CES estimates are timelier, but the QCEW series are more comprehensive, publishing far more industry and geographic detail. The CES employment estimates are benchmarked annually to the QCEW employment counts. The benchmarking process is intended to correct for sampling error and nonsampling error in the CES estimates.

Both the CES and the QCEW programs faced major operational and analytical challenges collecting data following Hurricane Katrina. At the same time, there was great demand for these data as policymakers tried to assess the immediate and long-term effects of the storm. This article describes the CES and QCEW responses to the difficulties posed by the hurricane and its aftermath and presents some of the employment and wage trends measured by the programs both before and after the storm.

Scope of damage

Hurricane Katrina made landfall on August 29, 2005, near Buras, Louisiana. Although it had weakened to a strong Category 3 hurricane by then, with sustained winds of 115 to 130 miles per hour, the massive cyclone generated a storm surge as high as 27 feet along the gulf coast from New Orleans to Mobile, Alabama. Significant failures in the levees of New Orleans caused flooding in approximately 80 percent of the city.

The storm unleashed widespread devastation across the region. Katrina affected 138 counties and parishes covering 93,000 square miles--roughly the same land area as Great Britain. It became the costliest hurricane on record, with an estimated $96 billion in damage. (1) Some 300,000 homes were either destroyed or rendered uninhabitable, displacing over 770,000 people. I ms is over three times the number of homes lost in 2004 to Hurricanes Charley, Frances, Ivan, and Jeanne combined.

The economic ramifications of the hurricane are immense for the gulf coast region. In addition, storm damage produced short-term reverberations across the country in the form of higher gasoline prices, crippled communications, and displaced individuals crossing State lines seeking shelter and jobs.

Hurricanes strike the United States every year, and the effect of an "average" hurricane on a local economy is fairly predictable: after some temporary disruption caused by evacuation, property damage, and power outages, employment recovers and may even surge for a short time in industries such as construction as residents return to their homes and businesses and repair the storm damage.

Katrina, however, was clearly no average hurricane. The massive scale of destruction to property, infrastructure, communications, and the environment, as well as the scale of human displacement, challenged BLS conventions for measuring the impact of a natural disaster on a local economy.

Identifying affected areas, establishments

Immediately following the hurricane, BLS assembled data from the CES survey and the QCEW as well as from other BLS programs into a pre-hurricane profile of the affected areas in Alabama, Louisiana, and Mississippi. …