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Hurricanes and Workers

One year ago, Hurricane Katrina hit the gulf region. In addition to the enormous human loss, Hurricane Katrina put a major gash in the American economy. Workers in the gulf region were particularly hard hit, as unemployment soared and working conditions deteriorated. As it turned out, however, Mother Nature was not the only one to blame for Katrina’s devastating effects on gulf workers.

A Category 5 hurricane, Hurricane Katrina was the sixth-strongest Atlantic hurricane in recorded history and the third-strongest to reach U.S. landfall. Katrina was the costliest hurricane in U.S. history, with damages estimated at $81.2 billion. At least 1,836 people were killed by Katrina, with 705 people still classified as missing.

Early figures by the Congressional Budget Office estimated that Hurricane Katrina would leave 400,000 workers without jobs. Within a week of the hurricane’s assault on the gulf region, 10,000 workers had filed for unemployment, with many workers unable to file for unemployment because of closed offices. During this time, Mississippi waived the one-week waiting period to apply for benefits. By the third week in September, some 214,000 workers had filed claims for unemployment insurance as a result of Hurricane Katrina. By the end of October, combining job losses resulting from Hurricane Rita, the number had eclipsed 500,000.

Davis-Bacon Suspension

On September 8, President Bush issued what the New York Times termed a “shameful proclamation” as he suspended the Davis-Bacon Act—the law that requires employers to pay at least the locally prevailing wages on public works projects—for hard-hit areas. Immediately after the President’s decision, labor groups denounced the President’s act and demanded Davis-Bacon be reinstated, with the AFL-CIO calling on Congress to override the President. Some union workers questioned why workers from outside the region earning a living wage would travel to the gulf region to earn a sub-living wage. Finally, on November 8, two months after issuing it, Bush rescinded the proclamation and restored the Act’s prevailing wage requirement.

But Davis-Bacon’s prevailing wage requirements weren’t the only requirements cast aside. At the same time Davis-Bacon was being squelched, the Department of Labor suspended a regulation that required some government contractors to develop an affirmative action plan to address employment of women, minorities, disabled workers, and Vietnam veterans. The regulation was suspended for first-time government contractors working in the gulf region. In addition, the Department of Homeland Security temporarily suspended its enforcement of regulations concerning employers who hire undocumented workers, essentially allowing employers to hire undocumented workers at will.

Illegal immigrants

Meanwhile, many illegal immigrants came to New Orleans hoping to find work. They found plenty of work to do, but often in dangerous conditions. As workers toiled in the contaminated floodwaters, they often did so without goggles, gloves, or inoculation from disease. Other immigrant workers claimed to be the victims of exploitation after contractors allegedly refused to pay them. As one expert observed, “Katrina is producing a large demand for undocumented workers. That's why [the government is] bending the rules. But then once the job is done, it's back in the shadows. The hypocrisy is astounding.”

According to a study released in June, nearly one-third of Katrina’s illegal immigrant workers reported working in dangerous conditions. These workers earned an average of $10 an hour, compared to $16.50 for documented workers.

Just recently, a group of migrant workers from Latin America—legally authorized to work in the U.S.—sued a New Orleans hotel. The workers claimed that the hotel promised 40 hours a week plus overtime, but the workers are instead working 10 hours per week at $6.14 an hour. Because of their work visas, the workers are unable to get other jobs.

But for contractors, these perks may have been just small potatoes compared to the biggest perk of all. With Congress appropriating billions of dollars to federal contractors, the potential excessiveness of several government contracts had some commentators asking whether fraud, abuse, and mismanagement were at play, notably with contracts going to groups represented by Joe Allbaugh, a former leader of FEMA and former Bush campaign manager.

New Orleans’ relatively high levels of poverty, combined with a workforce consisting of unskilled laborers, also presented unique problems. Half of Katrina evacuees in Houston had no health insurance. Roughly 60% of these evacuee had incomes of less than $20,000, while approximately 12.5% were unemployed when Katrina hit. Before Katrina, approximately 23% of New Orleans residents were living below the poverty level. The average household income in one part of New Orleans, the Ninth Ward, was $27,500—less than half the national mean household income of $60,500. In some New Orleans parishes, less than 43% of the population had attended college.

Meanwhile, as many unskilled workers were forced to evacuate New Orleans and seek work elsewhere, these workers faced stiff competition and found difficulty finding work as a result of already-crowded job markets. For workers with rare and marketable skills in a city seeking to rebuild, the opposite is true. Now, there is an unusually high demand for specially trained laborers such as plumbers, electricians, and mold-removal specialists.

As for governmental responses to create jobs, Louisiana initiated a $62 million program that would temporarily hire up to 10,000 emergency workers at $9 an hour. Meanwhile, the federal government created 41,000 temporary jobs in an effort to clean up the area. But while state and federal governments attempted to create jobs, the city of New Orleans was forced to lay off 3,000 workers—half its workforce.

While New Orleans’ decision may be understandable, some employers’ decisions seem morally baffling. One company fired an employee after she decided to care for her granddaughter rather than come to work when the girl's parents got stuck in New Orleans. According to the grandmother, "There was no decision to make—it was already made. My daughter could have died down there. This was family. You don't walk out on a child—especially my grandbaby."

There were some employers who acted with greater civility. About 8% of employers gave workers paid time off to assist in the Hurricane Katrina recovery. Some companies agreed to pay out-of-work employees after the storm hit. However, many employers, particularly small employers, were forced to set cut-off dates—most commonly in October and November—at which point employees would no longer receive paychecks. And under a new rule by the Department of Labor, employers can force salaried workers to use vacation time in the event of a hurricane if the employee wishes to collect his or her salary.

Good News

Many workers, despite their personal losses, have remained on the job—perhaps to maintain a sense of normalcy amid the devastation, or perhaps to keep their companies up and running in hopes of preserving their jobs in the long run. The other hope for workers is that with much work to be done, the region will see a large growth in jobs, particularly in unskilled jobs that will help rebuild the city. The IRS eased 401(k) restrictions for hurricane victims, allowing workers to access those retirement savings in this time of crisis. While these developments are positive, will workers be able to rebound in New Orleans and the other areas devastated by Katrina?