In New Orleans, recovery from disaster feels different this time

Key takeaways

  • The unemployment rate is low in New Orleans, but the economy has shrunk.
  • With a smaller workforce, the labor market is especially tight, and employment in some industries is still far below pre-pandemic levels.
  • Our new presence in New Orleans will help businesses to find the labor they need, as well as providing extra income for residents.

When Hurricane Katrina hit New Orleans in 2005, the local economy experienced a sudden and unprecedented shock. Though the cause was different, the Covid-19 pandemic had some similar effects. Recovery from Katrina took many years, and now New Orleans is trying to bounce back again amid challenges in the labor market.

The mystery of the missing GDP

The unemployment rate in the New Orleans metro area peaked above 16% in 2005 and again in 2020, coming down almost immediately both times:

14 Feb 2023 New Orleans unemp

Now as in the late 2000s, the unemployment rate has hit its all-time lows a few years after the disaster. Today, people who want jobs in the New Orleans area are finding them.

Yet the economy hasn't fully recovered. Here's what gross domestic product, adjusted for prices, has looked like in New Orleans (annual data) and Louisiana as a whole (quarterly data), with both series indexed to 100 in the fourth quarter of 2011:

14 Feb 2023 New Orleans gdp

Neither the metro area's economy nor the state's have fully recovered from the initial blow of the pandemic. So why is the unemployment rate so low?

The answer is that the labor force has shrunk. Here is the total non-farm employment in the New Orleans area:

14 Feb 2023 New Orleans nf

Before the pandemic began, New Orleans' labor force was still smaller than before Katrina. The drop from Covid-19 wasn't as steep, but the metro area is still short about 25,000 workers.

This is not a question of participation in the labor force. The participation rate in January 2023 was 58.5%, almost the same as the rate of 58.8% in January 2020, accounting for only a couple of thousand workers. Rather, people have simply left the area. While other southern municipalities like Jacksonville and San Antonio have attracted residents during the pandemic, New Orleans has lost them.

A hamstrung labor market

The effects on the labor market have been plain to see. These are the employment numbers for transportation, warehousing, and utilities at one of the nation's most important ports:

14 Feb 2023 New Orleans twu

All of the gains in this sector since 2012 have been erased by the pandemic. In service industries that are already facing a nationwide shortfall in labor supply, the recovery has been uneven at best. In restaurants and bars, the recovery started out fast but is flattening out:

14 Feb 2023 New Orleans fsdp

The situation is more drastic for hotels, in one of the nation's tourist capitals:

14 Feb 2023 New Orleans acc

It's been more than 15 years since employment in New Orleans hotels was so low. And yet, tourism came roaring back last year as consumers rushed to spend their savings from earlier in the pandemic. How will the area cope with the demand that it so clearly needs?

One answer will surely be flexible labor. And that's why we've launched in New Orleans – to help local businesses find the workers they need. We'll also help residents who have stayed in New Orleans, despite hurricanes and the pandemic, to earn the income they need to keep up with rising prices and interest rates. It hasn't been an easy time in the Big Easy, but we're hoping to make things a little bit better for everyone.

These links offer more information:

Bureau of Labor Statistics: Economic Summary

Louisiana Workforce Commission: Labor Market Information

The Data Center (for Southeast Louisiana)


Realtime metrics

These metrics, derived from data aggregated across the Instawork platform, compare the two weeks starting 1/31/2023 to the previous two weeks. To control for the overall growth of the Instawork marketplace, only shifts involving businesses that booked shifts in both periods are included:

  • $0.22 rise in hourly pay
  • 0.9% point rise in share of short-notice shifts
  • 0.8 hours rise in hours per existing worker

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