Post-Katrina New Orleans is a window into America’s economic doldrums
This weekend marks the 10th anniversary of Hurricane Katrina, and a lot has been written about New Orleans’ remarkable comeback from one of the nation’s deadliest disasters.
Though smaller, metro New Orleans is now within reach of its pre-Katrina job and population levels. Signs of optimism abound—with more restaurants, several new chemical plants and a new corporate office for GE Capital Technology. The city has earned a reputation as a center of entrepreneurship.
But New Orleans’ economic progress is fragile and not broadly shared. While the city’s recovery may stand out, the region’s primary challenge today resembles that of many other American cities: how to foster a more prosperous economy that provides better opportunities for its residents.
What’s more, economic growth has not generated good jobs or raised incomes. Seven out of every 10 jobs the metro area has added since 2010 are in industries, such as hospitality, retail and administrative services, which pay less than the average wage. This low-quality job growth coincides with a slight decline in average wages. Given this, it is not surprising that the share of people who are poor has increased. The share of people living in poverty, defined as those with incomes of less than $23,550 per year for a family of four, in greater New Orleans climbed to 19.3% by 2013, up from 18.4% in 2000.
These trends may reflect the economic malaise that defined pre-Katrina New Orleans. But these may also reflect the structural economic challenges facing much of the rest of the nation.
America’s largest metro economies have experienced a similar proliferation of low-wage job growth and increasing poverty. Two-thirds of jobs were created in industries that pay below the average wage. Average annual wages in the nation’s 100 largest metro areas have grown a meager 1% per year since 2010, and their average poverty rate rose from 11.6% in 2000 to 15% in 2013.
With growing concerns about a lackluster U.S. economy and sagging household incomes, New Orleans can be at the forefront of meaningful solutions, much as it has led bold reforms in public education, criminal justice and health care delivery post-Katrina.
Our recent analysis shows there are good jobs in the New Orleans economy. In fact, one-third of the region’s jobs offer stable, full-time work with high earnings potential for workers without a four-year college degree. These jobs include, among many others, machinists, insurance claims adjusters and computer support specialists.
The problem is that there are not enough of these good jobs and they are not growing fast enough. Meanwhile, many of the industries that produce sizeable shares of good jobs—such as transportation and distribution, energy and petrochemicals and insurance and financial services—are either losing jobs or growing much more slowly than their peers nationally.
To their credit, New Orleans and local community colleges and employers have launched efforts to help disconnected youth and other adults, especially black males, find meaningful work.
But more must be done. Leaders in New Orleans must make growing more good-paying jobs—not just any job—a priority. To do that, local and state leaders must first support the growth of firms in industries that provide good jobs. Rather than toss tax subsidies at them, leaders can work closely with firms to solve industry problems: creating applied research capabilities to fuel innovation, deepening the pool of suppliers or generating a broader mix of on-the-job training and classroom education to increase the supply of skilled labor.
Education and workforce professionals need to orient job training and placement efforts toward finding a first good job, especially for young adults, workers of color and women. Real opportunities exist to help low-wage workers trapped in dead-end jobs move into better jobs and careers.
New Orleans’ bold experiments in the last 10 years have rightly captured national attention. If leaders apply similar energies to growing good jobs, opportunity-rich industries and a skilled, diverse workforce, New Orleans will be remembered not simply for its post-disaster recovery, but also for showing the rest of the nation how to achieve broader economic transformation.
Amy Liu is a senior fellow at the Brookings Institution and co-director of its Metropolitan Policy Program. Richard Shearer is a senior research analyst there. They are authors of “Opportunity Clusters: Identifying Pathways to Good Jobs in Metro New Orleans.”