Posted September 16, 2005 to Career News | Section Home | Print

Katrina and Labor Market Indicators

Three government reports reveal the stressors in our current job market. 
 
First, the report on new Unemployment Insurance claims for the week that ended September 10, shows the first evidence of job loss from Hurricane Katrina.  New UI claims spiked up by 71,000 from the previous week, with 68,000 attributed to the impact of the hurricane.  That represents the largest weekly jump in layoffs in nearly a decade, greater than those related to the terrorist attacks of 9/11.  Hurricane-related jobless claims are expected to rise further in coming weeks as UI systems in the affected states have time to process the growing number of applicants.
 
Second, consumer prices also spiked last month.  This largely reflected higher energy costs before the hurricane, which occurred at the very end of the month (next month’s inflation report will reflect Katrina’s impact on prices). 
 
The third report, on the real earnings of production, non-supervisory workers (blue-collar and non-managerial workers) reveals the impact of these higher consumer prices on inflation-adjusted wages. Compared to last year, real hourly and weekly earnings both fell 1.1 percent, the largest real declines for both measures since last November.  Except for a 0.1 percent increase in June, real hourly earnings, which form the building blocks of working families’ living standards, have been flat or falling for the last 16 months.  Though the recovery began in November of 2001, both hourly and weekly earnings have actually lost buying power since then.
 
Again, note that these real wage results from August do not reflect the impact of the storm. Eventually, the cleanup and rebuilding initiatives associated with Katrina will help boost activity and the job market, but over the next few months, the economic impact of the disaster will continue to hurt real wage and employment growth. Clearly, the displaced victims need a wide variety of income supports.  At the same time, millions of workers unaffected directly by the storm continue to lose ground.
 
The Economic Policy Institute is an independent, nonprofit, nonpartisan research institute – or “think tank” – that researches the impact of economic trends and policies on working people in the United States and around the world.